Fukui Railway - Overview

Overview

Although Fukui Railway's name refers to its founding as a railway, 75.1% of the company's revenue comes from local and long-distance bus transport— only 16.7% is from its railway operation. Since 1963 the company's railway business has lost money, and although this loss was offset by its bus and real estate operations, by 2006 the company recorded a cumulative loss of 2.2 billion yen and debts of 3.07 billion yen.

As a result of these unsustainable losses, in August 2007 the company formally requested financial support from the cities of Echizen, Sabae, and Fukui. Negotiations with Fukui Prefecture, Nagoya Railroad (the company's parent), Fukui Bank and other financial institutions proved difficult. However, on December 29, 2008, Nagoya Railroad agreed to acquire one share in Fukui Railway for one billion yen then divest all shares in the company to Fukui Town Management Organization (a third sector company established by municipalities) and local support organizations for one yen per share, ending its 45-year ownership of the company.

During an extraordinary shareholders meeting on November 25, 2008, Haruo Murata, formerly of Fukui Bank, was selected as the company's new president. On February 24, 2009, the Ministry of Land, Infrastructure, Transport and Tourism officially approved the "Railway Business Restructuring Plan", which provides one billion yen over ten years for replacing equipment and facilities as well as reducing the company's fixed assets tax burden.