Japan Airlines Co. and Japan Air System Co. on Tuesday unveiled details of their upcoming merger, saying they plan to cut 73 billion yen in costs by fiscal 2005 by shedding 3,000 workers and sharing aircraft and facilities.

A holding company, to be named Japan Airlines System Corp., will be set up on Oct. 2 with initial capital of 100 billion yen and a staff of 100, based in Tokyo.

Under the holding company, JAL and JAS -- currently the nation's first and third largest carriers -- will be reorganized by spring 2004 into three operating companies that will separately handle international flights, domestic flights and cargo operations.

The name of the three firms created in this second part of the integration process will be Japan Airlines International Co., Japan Airlines Domestic Co. and Japan Airlines Cargo Co., officials of the two firms said.

The corporate group name will be Japan Airlines Group, and the group brand name will be Japan Airlines. The merger will eliminate the Japan Air System brand, better known as JAS.

JAS President Hiromi Funabiki said he gave up his firm's brand name because Japan Airlines is more widely known both at home and abroad, and the name indicates that the airline is the nation's top airline company.

The companies estimate that the merger will reduce aircraft investment costs by 75 billion yen, and those for facilities by 25 billion yen by 2005.

The new group hopes to increase its return-on-equity ratio to more than 15 percent by fiscal 2005. JAL's current target is 10 percent.

JAL President Isao Kaneko will become president and CEO of the holding company, and Funabiki of JAS will be its chairman.

The number of full time board members will be around 10, including Kaneko and Funabiki, the two companies said.

The holding company is expected to be listed on the first section of the Tokyo Stock Exchange as well as the bourses in Osaka and Nagoya. In turn, JAL and JAS will be delisted, officials said.

The integration is expected to create the world's sixth-largest airline group in terms of passenger traffic.

It will account for nearly half of Japanese domestic flights and about 75 percent of international flights.

JAL gets airline award

NEW YORK (Kyodo) Air Transport World, a U.S.-based airline industry trade journal, on Monday named Japan Airlines as "Airline of the Year" for 2002.

The magazine said its editors singled out the Japanese carrier for remaking itself into an efficient, aggressive competitor despite increasing competition in the global airline industry.

According to Air Transport World, Japan Airlines has slashed unit costs 38 percent and personnel costs 48 percent since 1992, leading to record profits in its most recent fiscal year.

British Airways received the Passenger Service Award, while Lufthansa Cargo won the Cargo Development Award.

Japan Airlines last won Air Transport World's "Airline of the Year" award in 1980.