Business / Corporate

Tokyo to offer JR Hokkaido ¥40 billion while ordering the railway operator to improve management

Kyodo

The government will order struggling Hokkaido Railway Co. (JR Hokkaido) to improve its management, while also offering ¥40 billion in financial aid to the firm over two years through March 2021, transport minister Keiichi Ishii said Friday.

The railway operator has been mired in a serious management crisis after a series of accidents and scandals.

It is the second time JR Hokkaido has received such an order since January 2014, when it was discovered that the operator had left rail defects unfixed and falsified track maintenance data.

“It’s essential for JR Hokkaido to achieve tangible results during the two-year period” when the aid is provided, Ishii told a news conference.

The grant is to be used for new facilities, trains and services on seven routes that the operator wants to keep running but is unable to maintain without funding to repair aging tunnels and bridges. The government funding will also be used to improve services on the route to the international airport located in the southeast of Sapporo.

The ministry will review the progress of improvements to the company’s business every three months. JR Hokkaido executives will be fined up to ¥1 million if they fail to deliver.

The government will decide whether to keep providing financial support after April 2021 based on results achieved by then.

The company posted a record operating loss of ¥41.6 billion in the business year ending in March, saying about half of its routes are difficult to maintain without outside help.

The Hokkaido government and municipalities are also expected to provide some financial assistance.

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