TOKYO, Nov 12: Asia’s biggest carrier Japan Airlines Co. Ltd. (JAL) and domestic rival Japan Air System Co. Ltd. said Monday they will merge next year in a bid to boost business amid a worldwide slump in demand for flights.

We have reached a basic agreement to set up a holding company... we have decided to merge our operations to be more competitive in the increasingly global market, the two said in a statement.

The new holding firm would be created through a stock transfer to be approved by shareholders in June 2002. The merger along with a public listing would be completed by next September after the pair halt trading of their own shares, they said.

The tie-up will create the world’s sixth-largest airline company with a combined revenue of $17.7 billion and around 50,000 employees.

JAL and JAS, Japan’s third largest carrier, would together control some 48 per cent of the domestic airline market and more than 75 per cent of Japan’s international flights, analysts said.

But the move triggered competition fears from the government. JAL is already JAS’ second largest shareholder with an 8.2-per cent stake.—AFP