American Airlines ups the ante in battle with Delta over JAL+

TOKYO, Nov. 19 Kyodo - Two of the world's largest airlines on Thursday upped the ante in a fierce scramble over struggling Japan Airlines Corp., with American Airlines Inc. warning of ''enormous risks'' if JAL switches to the rival SkyTeam alliance.

A day after Delta Air Lines Inc. unveiled a lucrative financial package for
JAL, American Airlines, a unit of AMR Corp., struck back as it is readying what
sources say could be an even sweeter proposal totaling around 130 billion yen
with TPG Inc., a major U.S. investment firm.
Speaking to reporters in Tokyo, an American Airlines executive urged
cash-strapped JAL to remain in the current oneworld grouping, saying the
alliance is providing $500 million in annual revenue to JAL and will add $100
million more if the two companies can obtain antitrust immunity following the
conclusion of open skies talks between Japan and the United States.
''There is very minimal risk in staying with oneworld as opposed to joining the
SkyTeam, which delivers enormous risks,'' Theo Panagiotoulias, American
Airlines vice president for Asia and the Pacific, told reporters in Tokyo.
JAL, currently seeking a turnaround under state supervision, is faced with
having to decide, possibly by year-end, between Delta, the top U.S. carrier,
and American Airlines, the second-largest U.S. carrier, in receiving badly
needed capital as it heads for its fourth annual loss in five years.
''This is not a war between two carriers over JAL,'' Panagiotoulias said.
''This is the right choice for JAL's future.''
Panagiotoulias declined to disclose the numerical details of a financial
package until JAL finalizes a deal with a government-backed corporate
turnaround body for broad support measures, but sources familiar with the
matter have said the airline is preparing to invest about 30 billion yen, while
TPG is eyeing an offer of around 100 billion yen.
He said American Airlines is ready to make ''a significant investment'' in JAL
together with TPG once it receives a request from both JAL and the Japanese
government.
''We want to be here and ready to support our partner in any way we can when
the time is right,'' he said.
The remarks came after Delta said Wednesday the company and its global alliance
partners are ready to offer a financial package totaling $1.02 billion (about
92 billion yen) for JAL, including $500 million in nonvoting equity capital and
$300 million in revenue guarantees.
Delta President Edward Bastian also said the Japanese carrier could expect an
increase of $400 million in annual revenue through a boost in passenger numbers
by joining SkyTeam.
But American Airlines' Panagiotoulias said a defection to SkyTeam would pose
regulatory risks, with Delta and JAL accounting for over 60 percent of the
U.S.-Japan market. Joining SkyTeam could also jeopardize Tokyo's position as an
international hub in the Asia-Pacific region as the alliance also includes
Korean Air, he added.
''Japan Airlines needs to focus on quality revenue not quantity revenue,'' he
said. ''Our overall value proposition is far superior to anything that Delta
has put on the table.''
The global battle over JAL has intensified even as the government has refused
to rule out the possibility of liquidating the airline, which has already
received three bailouts in less than a decade.
Separately, JAL officials said the company will suspend employee promotions,
regularly carried out in December, to save costs by curtailing salary
increases.
==Kyodo
2009-11-20 00:32:10