JAL sells most JAL Hotels shares, merges subsidiary sales companies

Japan Airlines 747-400. Photo: Roger Payne.

Japan Airlines, in the midst of a bankruptcy restructuring, announced it will sell its 79.6% stake in JAL Hotels and additionally will merge four sales subsidiaries into one unit.

The JAL Hotels' shares will be acquired by Hotel Okura under terms of a stock transfer agreement reached Friday. JAL is aiming the complete the transaction by the end of next month. Financial terms were not disclosed.

"There has been intense competition in the hotel industry with a decline in guest figures following challenging economic conditions," JAL said. The airline filed for bankruptcy under Japan's Corporate Rehabilitation Law in January and said last week it is "aiming to make swift, fundamental reforms." The Japanese government reportedly is considering guaranteeing repayment of private bank loans to JAL ahead of the company's deadline at the end of this month to file its official rehabilitation plan (ATW Daily News, July 5).

JAL said it will keep an 11.1% stake in JAL Hotels and the brand names of hotel chains owned by the company, "Hotel Nikko" and "Hotel JAL City," will "be retained" and guests will still be able to accumulate JAL frequent flyer miles. The airline said it plans to cooperate "closely with Hotel Okura as a strong business partner." JAL founded JAL Hotels in 1970. It now manages 58 hotels including 40 in Japan.

Separately, JAL announced that four of its subsidiary sales companies (JAL Sales Co., JAL Sales Hokkaido Co., JAL Sales West Japan Co. and JAL Sales Kyushu Co.) will be merged into a single company called JAL Sales from Oct. 1. The combination "will constructively draw together the strengths of the four companies in terms of marketing and sales expertise, management skills, human resources and know-how," JAL said, adding that it would "rapidly improve …operating efficiencies and…help drive the early recovery of [JAL]."