JAL Seeks Freight Merger with NCA

Japan Airlines said Friday it is in talks with rival Nippon Cargo Airlines to merge their freight businesses because of the dramatic drop in shipping demand.

JAL, which saw its international cargo volume fall 39 percent in the first quarter and 23.4 percent in the second quarter ending June 30, said it hopes to merge the operations by April 1, 2010.

NCA is owned by Japanese transportation giant Nippon Yusen Kaisha, which also owns container liner company NYK Line.

JAL’s announcement follows the carrier’s $1 billion loss in the three-months ending June 30 that included a nearly 50 percent decline in passenger revenue. Although cargo traffic did not fall as much, international freight traffic for JAL has been in decline for 11 straight months and the airline has joined other Asian airlines in cutting back flights, including freighter operations.

"Following the collapse of the economy in the United States last autumn, the financial crisis that spread worldwide caused demand for air cargo transport to fall drastically and market situations to worsen," JAL said.

JAL and NCA already share space on some flights under a cargo code-share agreement.

"Further consolidation is expected to bring about more benefits such as allowing both companies to significantly reduce cost and to fortify their technical expertise," the airline said in a statement.