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JAL And JAS Merger News

Mon Nov 12, 2001 3:32 am

Reports: Japan Airlines Close Merger

.c The Associated Press

TOKYO (AP) - Japan's first- and third-largest airlines are close to a merger that will create the world's number-six carrier in terms of annual passenger miles flown, news reports said Sunday.

Japan Airlines Inc., the world's eighth-biggest airline, and regional carrier Japan Air System Inc. plan to merge their operations under a holding company in the fall of 2002, the Nihon Keizai financial daily reported, without citing sources. They hope to finalize the deal by the end of this year and have it approved by shareholders next June, it said.

Other Japanese news media carried similar reports Sunday.

JAS spokesman Teichi Murayama said late Sunday that the two airlines - which have cooperated in business tie-ups in the past - were discussing methods of making their management more efficient, but said he was unaware of any merger talks.

He declined to speculate on the Nikkei's assertion that a merger would create the world's sixth-largest airline, adding that he believed the ranking may have been based on outdated information.

Japan Airlines spokesman Geoffrey Tudor said Sunday he could not confirm whether the two companies were discussing a merger.

The merger would be the first realignment in the Japanese airline industry in 30 years and give the new company 48 percent of the domestic market at a time that prospects for a recovery in international travel remain uncertain, the Nikkei said.

Japan Airlines is the nation's leading international carrier but its 25 percent share of the domestic market is only half that of Japan's number-two airline, All Nippon Airways Co.

Japan Air System, a regional carrier which serves other destinations in Asia as well as the country's main domestic routes, was itself formed by a merger in 1971. It has been hard hit by Japan's decade-long economic slump.

AP-NY-11-11-01 1245EST