Japan Airlines gets offer of $1.1 billion from American


FORT WORTH, Texas — American Airlines and its Fort Worth
equity partner, TPG, have offered to invest $1.1 billion in the struggling
Japan Airlines.

The Fort Worth-based carrier said its investment proposal,
which was formally made to JAL and Japanese government officials this week, is
“far superior” to a $1 billion offer made by Delta Air Lines and its
SkyTeam partners.

Speaking in Tokyo on Thursday afternoon, American Airlines
Chief Financial Officer Tom Horton said JAL also could gain an additional $700
million in new revenues over the next 10 years if it stayed with American’s
Oneworld alliance and applied for an anti-trust immunity joint venture with

“American and Oneworld have a lot invested in JAL’s
success, and we are prepared to do more to ensure a successful partnership for
the long-term,” Horton said.

However, Horton declined to reveal any details of the $1.1
billion “direct capital investment” and would not say how much of the
funds would be provided by American, its Oneworld partners or by TPG. Horton
did say that American and TPG would only seek board or management positions in
a restructured JAL if it was invited to do so by the Japanese government.

JAL has lost hundreds of millions of dollars this year and
is seeking government loans as it cuts routes and tries to restructure the

Horton emphasized that JAL already receives about $500
million in revenues each year from its relationships in Oneworld. He added that
a Delta-JAL anti-immunity application would likely be rejected by government
regulators as a JAL-SkyTeam alliance would have 62 percent of the Japan-US
travel market.

The U.S. and Japanese governments are currently negotiating
a treaty that would give carriers more freedom to open routes and schedule
flights between Japan and the U.S. If an “open-skies” treaty is
reached, American could create a joint venture with JAL, similar to the
agreement it has with British Airways that is being reviewed by government
regulators for an antitrust exemption.

Atlanta-based Delta Air Lines also argued its case publicly
in Japan on Thursday, saying that an anti-trust immunity application between
Delta and JAL would succeed.

“A Delta/JAL alliance would deliver all of the customer
and industry benefits recognized by (the Department of Transportation) in other
joint venture alliances that it has immunized — and the DOT has consistently
approved them without onerous conditions, even on important nonstop overlap
routes,” stated a Delta presentation.

Delta has offered JAL a billion dollars which includes a
$500 million capital investment, $300 million in short-term revenue guarantees
and $200 million in asset-backed financing for the airline. The SkyTeam
alliance has also offered to cover the $20 million cost of switching from
oneworld to SkyTeam.

Via McClatchy-Tribune News Service.


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