JAL Says to Integrate Air Cargo Biz with Nippon Yusen

Tokyo, Aug. 21 (Jiji Press)--Japan Airlines <9205> said Friday that
it will integrate its air cargo operations with Nippon Cargo Airlines, a
unit of Nippon Yusen K.K. <9101>, possibly in April 2010.
Both JAL's air cargo division, the No. 1 player in the Japanese
market, and NCA, which ranks second, suffer losses due to sluggish demand
stemming from the weak economy.
The two sides agreed that cost cuts and economies of scale achieved
through the integration will improve profitability in the business.
JAL's air cargo business is likely to be spun off from the
struggling airline before being integrated with NCA. The new entity emerging
from the integration is likely to be equally owned by JAL and Nippon Yusen.
Nippon Express Co. <9062>, a major shareholder of NCA, is also
expected to invest in the new firm.
JAL and NCA are business partners and jointly operate cargo flights
between Japan and such destinations as North America and South Korea.
JAL's air cargo division logged a loss of some 20 billion yen in
the year ended in March this year and its revamp is an urgent task of the
airline, which is undergoing sweeping restructuring.
The transport ministry has requested JAL to review its cargo
operations, proposing their integration with an industry peer as an option.