(The following story by Atsuko Fukase appeared on the Wall Street Journal website on December 27.)
TOKYO — Japanese rail travelers may soon be riding one of the fastest trains in the world: a maglev that would zoom between Tokyo and the Nagoya area at double the speed of the current rail link.
But investors weren’t exactly ecstatic over Central Japan Railway Co.’s announcement that it will spend about 5.1 trillion yen ($44.7 billion) on a magnetically levitating train project over the next two decades. The railway’s share price tumbled 8.8% yesterday amid concern that the company will be saddled with heavy debt for a rail line that won’t generate much profit.
The bullet-train operator, known as JR Tokai, said late Tuesday it plans to begin operating the line in 2025.
The company expects pretax profit to fall to about 70 billion yen in fiscal 2026 because of operating costs and depreciation charges, compared with 237 billion yen in the fiscal year that ended in March. Profit would then gradually rise to an average of about 140 billion yen over the next 10 years, starting in 2027.
A spokesman for JR Tokai said the company is considering various ways of raising capital.
A maglev train uses an electromagnetic field to levitate slightly above the guideway and can travel at greater speeds than Japan’s conventional bullet trains. During a test run in 2003 conducted by JR Tokai and the government-affiliated Railway Technical Research Institute, the maglev reached a world record of 360 mph.
The only commercially operating maglev train is in Shanghai, which relied on German technology. Although the technology is mature in Japan, with a number of maglev projects being studied, Japanese railway operators have been reluctant to invest in the business because of obstacles such as cost.
Market participants note that the new maglev plan could weigh on the company’s shares, and they remain skeptical about the financial potential of the construction project.
(Kazuhiro Shimamura, Ayai Tomisawa and Benjamin Garvey contributed to this article.)