JAL International and JAL Domestic to Unify October 1st, 2006

From October 1, 2006, Japan Airlines will be a single operating company, following the unification of the present two operating companies, JAL International and JAL Domestic companies. This change will complete the process of integrating the former Japan Airlines and Japan Air System.

The new single operating company will bear the name Japan Airlines International. Unification of the two JAL operating companies should achieve greater efficiency and cost reduction by the elimination of duplication and will improve intra-company communications. JAL International and JAL Domestic were formed in April 2004 to take over the roles of the former Japan Airlines and the former Japan Air System. The two JAL Group operating companies were based on the legal entities of their separate predecessors. Overseeing their operations was a holding company, Japan Airlines Corporation, which remains in that role.

During the initial process of integration of Japan Airlines and Japan Air Systems (JAS), which took place from October 2002 to April 2004, the group concentrated on enhancing collective strength and corporate value. But this has been negatively impacted by a series of adverse global events: terrorism, the war in Iraq, SARS outbreaks and most recently by record-breaking fuel prices.

As a result of this impact and its effect on fundamental changes in the business environment, JAL management felt that further integration was both necessary and desirable to create a new organization by blending the two operating companies into one. The decision to create the new unified company was announced on February 4, 2005 with the target for completion in FY2006.

The original plan for integration of the two former competitors, JAL and JAS, brought the new organization huge cost benefits in Japan. They were able to combine sales and ticket offices, airport facilities including check-in counters, administration offices, flight operations departments and ground service facilities. Taking into account staff reductions, economies through fleet reduction and other effects, the net integration were estimated at about 50 billion yen for 2005.

Measures now being taken to unify operations further include merging the cabin attendants’ organization by blending crews of JAL International and the former JAL Domestic. This involves international crew training for JAL Domestic crew. There will also be exchanges in cabin crew management teams.

Already underway are unification of safety regulations providing for work standards and work procedures and the unification of operating manuals.

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