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Low-cost carrier A&F Aviation Co. is in final talks to receive investment from Innovation Network Corp. of Japan, a public and private investment fund, sources said Tuesday.

INCJ is expected to own about a 20 percent stake in the new airline, the sources said. By receiving investment from INCJ, Tokyo-based A&F aims to strengthen its financial base and secure money to procure aircraft.

The airline has been launched by All Nippon Airways Co. and Hong Kong’s First Eastern Investment Group.

A&F plans to seek about ¥15 billion in a bid to raise capital before starting operations in the second half of business 2011.

In addition to domestic flights centering on Kansai International Airport near Osaka, A&F plans to launch international flights linking Japan with China, South Korea and Taiwan, a move that could heat up price competition with Chinese and South Korean low-cost carriers.

INCJ thinks investing in A&F could contribute to the development of Japan’s airline industry and also help in luring overseas tourists to Japan from other parts of Asia experiencing rapid economic expansion.

Koito sued over seats

All Nippon Airways Co. has filed a damages suit against aircraft seat maker Koito Industries Ltd. over delivery delays resulting from the company’s falsification of safety data, Koito said Tuesday.

The ¥20.1 billion damages suit was filed with the Tokyo District Court on Jan. 28.

An ANA official said the airline incurred losses partly because it has been unable to operate some Boeing 737s for up to 15 months after the revelations of Koito’s falsification forced delays in its seat delivery.

The transport ministry ordered Koito in February 2010 to improve its business operations after repeatedly falsifying test data for the fire resistance and strength of its seats. The data was sent to the ministry when the company sought approval to sell the seats.

At the time, then Koito President Takashi Kakegawa admitted to the wrongdoing, saying the company section responsible was “systematically involved” in the falsification.

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