Writing down the railway and spending the fund to reach the stock market (2015)

The answer was to spend it, not to give it back

What the 2015 negotiations put in question was not whether to return the stabilisation fund to the state or keep it, but what it could be spent on that would produce the same effect as returning it. The Ministry of Finance held that the fund should be repaid and applied to long-term debt; chairman Karaike Koji answered that if it had to be returned there would be no listing. The settlement was to spend all of it and return none: $1.8B (¥221bn) prepaying the Kyushu Shinkansen track-access charge in a lump sum, $661M (¥80bn) repaying long-term borrowings, $720.5M (¥87bn) into the railway business. A payment of $84.3M (¥10bn) a year disappears for good.

Spending it, however, satisfied the conditions for listing and at the same time made the same move impossible a second time. In the year to March 2016 an impairment of $4.8B (¥522bn) cut the book value of railway fixed assets to $5.5M (¥600m), lifting the weight of depreciation in one stroke. With no change in the number of passengers or the length of the network, a loss-making business appeared in the accounts in the shape of a profitable one. Improvement obtained by tidying the books works only in the period in which the tidying is done. Having removed the prop of the fund in a single move, Kyushu Railway now carries work with no end to it: growing the businesses outside the railway, indefinitely.