Japan Airlines’ Cargo operations and Nippon Cargo Airlines will merge, aiming at overcoming their losses through cost cuts and economies of scale.

The Transport Ministry had already urged such a merger, along with a round of other drastic reforms. Japan Airlines is surviving on state money, a situation the ministry is exploiting to intrude into the management of the private company as though it were a government entity.

The combined air cargo business is expected to be separate from Japan Airlines and to be held jointly by the airline and by Nippon Yusen, the owner of Nippon Cargo. They aim to complete the merger by April 1.

The two cargo operations, the country’s largest, already cooperate with joint services, but that did not stop Japan Airlines’ freight business from losing ¥20 billion (US$210 million) for the year ended March 31.

The announcement follows a series of demands — politely phrased as suggestions — directed at Japan Airlines from the Transport Ministry.

At the first meeting of an expert panel that the government set up to oversee the turnaround of the carrier, the ministry said the company should cut wages and company pensions and should drop or reduce unprofitable services.

The government will not subsidize money-losing services, except those deemed essential for outlying islands, the ministry says.

Japan Airlines promises to publish a new business plan by the end of September.