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Japan bullet train operator sees $2bn loss and higher maglev costs

JR Central reports first red ink since privatization in 1987 due to pandemic

Passenger totals for the Tokaido Shinkansen line linking Tokyo, Nagoya and Osaka plunged 66% in the previous fiscal year. (Photo by Konosuke Urata)

NAGOYA, Japan -- Central Japan Railway, which operates the shinkansen bullet train connecting Tokyo and Osaka, on Tuesday reported a consolidated net loss of 201.5 billion yen ($1.86 billion) for the year ended March 31 due to the lack of passenger traffic during the coronavirus pandemic.

The train company, also known as JR Central, turned in an operating loss of 184.7 billion yen. Both the net loss and the operating loss are the first for the business since it was spun off and privatized in 1987.

JR Central also announced 1.5 trillion yen in additional construction costs for its planned high-speed maglev train line connecting Tokyo and Nagoya, bringing the total price tag to 7 trillion yen. The overruns stem from higher than expected costs for building complicated segments as well as from earthquake-proofing measures and removing soil produced by drilling tunnels.

Sales declined 55% to 823.5 billion yen on plunging transportation revenue, which accounted for about 80% of the total figure prior to the epidemic. The Tokaido Shinkansen linking Tokyo and Osaka experienced a 66% drop in passenger volume.

The government's travel subsidy program put finances on an upward track last fall. But the winter wave of COVID-19 cases prompted a second emergency declaration in January, which once again reduced the passenger count. Bookings for the upcoming Golden Week holiday are down 83% compared with 2019.

JR Central projects that sales will rise 50% to 1.23 trillion yen for the current fiscal year, generating a net profit of 90 billion yen. The company sees the vaccine rollout restoring shinkansen passenger traffic. A QUICK consensus survey of analysts indicates a rosier forecast of 1.34 trillion in sales and a net profit of 132.8 billion yen.

Passenger traffic "will rise to 65% capacity for the July-September quarter compared to 2018 and to around 80% in the October-December quarter or later," JR Central President Shin Kaneko told reporters Tuesday.

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