JAL likely to select US partner by end-January

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Japan Airlines is likely to select an American partner by end-January, with media reports in the country speculating that the carrier is leaning towards a switch from American Airlines and the Oneworld alliance to Delta Air Lines and SkyTeam.

The ailing carrier posted a fiscal second quarter net loss of ¥32.1 billion ($348 million) and has applied to the government-backed Enterprise Turnaround Initiative Corporation of Japan (ETIC) for a bail-out. The government, in turn, has asked JAL to undertake massive reforms to cut its costs and streamline its operations.

Both JAL and ETIC are in negotiations with American and Delta on a potential partnership, and a JAL spokeswoman says that these are ongoing. "There are many factors to consider and we have not set a deadline. We have not made a decision either and those news reports are untrue," she adds.

Industry sources, however, say that the ETIC and JAL are close to making a decision after the negotiations continued over the New Year. This would allow the carrier to begin restructuring its operations as soon as possible, something that the Japanese government is demanding in return for offering financial aid to JAL.

Delta and members of SkyTeam have offered a $1 billion financing package to JAL to persuade it to switch alliances. American and its partner TPG have countered with a $1.1 billion offer to convince the carrier to stay on in Oneworld.

Japan has said that the open skies agreement that it reached with the USA in December is contingent on JAL and All Nippon Airways (ANA) securing anti-trust approval with their respective US partners. JAL plans to apply for this with either American or Delta once it selects its partner. By gaining anti-trust immunity, the partners will be able to jointly manage scheduling, pricing and sales on trans-pacific routes.