Air cargo firms eye merger

       Japan Airlines Corp said it would start talks to merge its ailing cargo business with a unit of shipping firm Nippon Yusen as the airline looks to return to profit with the help of statebacked funds.
       JAL, Asia's largest airline by revenue,secured a deal in June to borrow 100 billion yen ($1.1 billion) from two statebacked lenders and three commercial banks and is now restructuring under state supervision.
       The company has already announced plans to cut domestic and international flights, but is under pressure to come up with more drastic cost-saving measures as it heads for its second-straight annual loss in the year to March 2010.
       JAL and Nippon Yusen said they would begin talks towards a potential merger of their cargo businesses in April, building on a code-sharing alliance between the two firms under which they mutually use each others networks to sell and transport cargo.
       "The air cargo business has been one of the hardest hit industries by the re-cession from last year," Hitoshi Oshika,corporate officer of Nippon Yusen, said at the briefing.
       The combination of JAL's cargo business with the Nippon Yusen unit, Nippon Cargo Airlines Co, would create a company with combined sales of about $3 billion and in control of roughly 30% of Japan's international air cargo market,JAL said.
       Its global competitors would include FedEx Corp and UPS.
       JAL reported a 50.9 billion yen operating loss for the year to March 2009 and has forecast a 59 billion yen loss for the current year, as it struggles to control costs and suffers along with other airlines due to a slump in global travel.
       Nippon Yusen has been looking for ways to turn around its air cargo business,which booked an operating loss of 17.9 billion yen in the year to March 2009 on sales of 79.4 billion yen.
       The shipping firm has implemented cost-cutting measures and replaced its fleet with more fuel-efficient cargo planes.