American, BA, Qantas eye joint offer to JAL: sources
Written on September 18, 2009
American Airlines will team up with British Airways and Qantas Airways to expand their alliance with cash-strapped Japan Airlines, two people with direct knowledge of the talks said, to beat off a rival offer from another airline.
The proposal, to include a capital injection from American Airlines but may not bring money from British Airways (BA) or Qantas, is aimed at thwarting Delta Air Lines — a member of a rival alliance that is also in talks to invest in JAL.
Executives from JAL’s Oneworld airline alliance partners American Airlines, BA and Qantas met with executives at the Japanese airline this week and told them of their plans to put together a joint offer, the people said.
The people spoke on condition of anonymity because the negotiations are not public and a JAL spokeswoman declined to comment.
Delta is a member of the rival SkyTeam alliance and wooing JAL away from Oneworld would leave that grouping without a Japanese carrier.
The American-led group will try to sell JAL on the idea that leaving the Oneworld alliance, which pools frequent flyer miles, integrates computer systems and feeds passengers between member airlines, would trigger a big loss of business for JAL bad credit personal loan lenders.
“Combined the Oneworld partnership today generates over half a billion dollars for JAL in revenues on an annual basis. JAL is very aware of this number,” said one of the people.
JAL lost about $1 billion last quarter and has been scrambling to put together a revival plan this month to submit to the Japanese transport ministry, which is supervising its restructuring after the state backed a 100 billion yen loan.
JAL is seeking another 250 billion yen in funding through a mixture of equity and debt.
Any investment from American or Delta is expected to account for a small portion of the total but would be key in drawing in other investors and encouraging the backing of JAL’s banks for its restructuring.
Shares of JAL were unchanged at 167 yen as of 0400 GMT. The benchmark Nikkei average fell 1 percent.
(Editing by Rodney Joyce)
Filed in: economics.