Talks to merge JAL Nippon Yusen air cargo flounder

DISCUSSIONS concerning the merger of air cargo operations between Japan Airlines Corp (and Nippon Yusen KK are said to have reached an impasse, reported the Nikkei business daily.

This comes after the two companies had planned back in August last year plans to combine their air cargo businesses by April 2010, a Reuters report said.

The plan called for JAL to spin off cargo operations, which would then be absorbed by Nippon Yusen unit Nippon Cargo Airlines Co, reported Nikkei, adding that Nippon Yusen would own a 50 to 60 per cent of the new entity with JAL holding the rest.

After JAL filed for bankruptcy protection last week, said the newspaper, the state-backed Enterprise Turnaround Initiative Corp (ETIC) of Japan sought to sell off the cargo business or keep JAL's stake in the merged company to a minimum.

The Nikkei reported "doing so would remove the cargo operation's aircraft and roughly 3,000 employees from the balance sheet. The segment has been logging an operating loss of more than JPY20 billion a year."

According to Nikkei, Nippon Yusen is refusing to absorb the additional personnel.

Source: www.schednet.com