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American sweetens JAL assistance package

American Airlines and private equity firm TPG have increased an offer to assist financially troubled carrier Japan Airlines (JAL), as American ropes in Oneworld carriers to give more financial benefits to the struggling airline.

"American/Oneworld and TPG, one of the world's leading private investment firms, are prepared to invest up to $1.4 billion as part of a comprehensive plan," says American.

"This is a $300 million increase from the previous proposal," it says.

American also says it "is willing to provide JAL support and cooperation in areas such as fleet planning, network analysis, financial forecasting, revenue management and maintenance operations."

The US carrier is keen to have JAL remain a Oneworld member and fend off SkyTeam Alliance carrier Delta Air Lines which is trying to woo JAL.

American says JAL's continuing commercial relationship with American, British Airways and Qantas Airways - under the auspices of Oneworld - would deliver to the Japanese carrier "approximately $2 billion in commitments and benefits over three years."

This "includes $1.5 billion of continuation of the ongoing revenue that JAL realizes from Oneworld today, $300 million in incremental revenue guarantees from American and approximately $200 million in enhancements from BA."

American wants to work with JAL to launch more international services to Japan and beyond under a 'open skies agreement' that the USA and Japan reached in December.

American says it has "proposed to JAL to apply for anti-trust immunity between the USA and Japan on the basis that American, with its strong network and ability to obtain anti-trust immunity, is the best choice for JAL."

BA says it too wants to work with JAL to launch new services to Japan. "As part of a joint business venture, BA will support and facilitate a new service between London Heathrow and Tokyo's Haneda International Airport," it says.

Qantas Airways, meanwhile, says it is offering to assist JAL - if it wishes - to establish a low-cost carrier as part of a two brand strategy.

"Qantas Group's two flying brands strategy has provided Qantas with unique strengths in terms of scale, network and customer reach," it says.

American's move to spearhead a foreign assistance package for JAL comes as the Japanese Government grapples with whether to restructure the flag carrier out-of-court or via the bankruptcy courts.

Japan's state-backed Enterprise Turnaround Initiative Corporation is reportedly looking to lend JAL ¥300 billion ($3.3 billion) on the condition that it enters bankruptcy.

Bankruptcy concerns have led JAL shareholders to try and sell the stock. But reports in Japan today say sale of JAL shares have halted as there are no buyers.

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