JAL Group’s Business Operating Companies and Sales Company to Integrate

The JAL Group has decided on the timetable to integrate its business operating companies, Japan Airlines International and Japan Airlines Domestic, and passenger sales company, JAL Sales. This corporate structure, now to be changed, was formed as the result of the integration of Japan Airlines and Japan Air System, which was finalized in April 2004.

Earlier this year in February, JAL announced its intention to integrate the operating companies and in March the JAL Group issued its 2005-2007 Medium-Term Business Plan, which confirmed plans to integrate its holding company and business operating companies by FY2006 at the earliest. The purpose of the integration is to speed up decision making and to streamline management, emphazising better communications between head offices and service branches.

The JAL Group has decided to retain the operating company of Japan Airlines International, which handles international passenger operations and cargo operations, as it is, forming the nucleus of the integration.

JAL Sales, the group travel product sales company will transfer its air ticket sales activities to Japan Airlines International on April 1, 2006, and Japan Airlines Domestic, the operating subsidiary currently in charge of domestic passenger operations, will be integrated with Japan Airlines International on October 1, 2006.

Japan Airlines Corporation, the group holding company, will be retained. This is to maintain flexibility and mobility in the group’s capital policies, and to facilitate the transfer of aviation rights of international passenger operations.

However, the organization of the holding company will be slimmed down as much as possible in order to speed up decision-making and the transmission of information.

As a result of this unification, Japan Airlines International and Japan Airlines Domestic will integrate their personnel and wage systems, achieving greater work efficiency due to the removal of intra-group trading, procedures and adjustments among the integrated companies.

The integration itself will not generate any extra income or affect costs, other than the objectives of the reforms set out in JAL's current medium term corporate plan announced on March 10, 2005. Already accounted for in the corporate plan, the integration process of JAL Domestic with JAL International will result in the elimination of 100 job duplications resulting in cost savings of one billion yen. Costs of about 500 million yen will be incurred due to IT systems' integration, taxes and legal registration fees.

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