American Airlines hints at more investment in JAL after meeting gov`t+

TOKYO, Dec. 16 Kyodo -
American Airlines Inc. Chief Executive Officer Gerard Arpey suggested Wednesday
that the U.S. carrier may beef up its investment in cash-strapped Japan
Airlines Corp., raising its stake in the battle to win over government support
for a deeper partnership.
The tug-of-war over JAL to tap into lucrative Asian routes has hit a new level
of intensity after Japan and the United States struck a landmark ''open skies''
accord to liberalize air traffic, which will pave the way for airline companies
in the two countries to work more closely together in scheduling and pricing.
''Time is of the essence,'' Arpey, also company chairman and president, said
after his meeting with transport minister Seiji Maehara. ''JAL must act quickly
or risk losing ground.''
American Airlines, a unit of AMR Corp., further sweetened its offer by
promising JAL that it would remain the exclusive partner in Northeast Asia and
added that other members in the global oneworld alliance -- including British
Airways Plc and Australia's Qantas Airways Ltd. -- were ''eager'' to deepen
their ties with Japan's biggest airline.
The U.S. carrier had earlier said it is prepared to invest up to $1.1 billion
with other oneworld members and U.S. private-equity firm TPG Inc. to block
JAL's defection to the rival SkyTeam grouping led by Delta Air Lines Inc. Delta
in turn has said it is ready to seek additional third-party funds to increase
its $1.02 billion financial package with SkyTeam.
''Conceivably there could be a bigger investment made by the oneworld, TPG and
American group depending on the circumstances that have to be worked out with
the government and with JAL,'' Arpey told a press conference in Tokyo.
But Arpey did not make a specific proposal on increased investment during his
meeting with Maehara earlier in the day, emphasizing the current proposal is
''superior in every way'' to Delta's promise of direct investment worth $500
million.
He also said he has proposed to JAL that American Airlines ''would provide it
exclusivity as our partner in this region, assuring a strong JAL and Tokyo hub
for the future'' in an apparent attack on SkyTeam, which also has Korean Air
under its wing.
Delta, which merged with Northwest Airlines, already has a strong foothold in
Japan, but American Airlines has long been excluded from the market as a result
of a bilateral aviation pact capping the entry of U.S. carriers to Japanese
airports.
The new accord reached last week would provide greater opportunities for
American Airlines to increase its market share in Japan if it is not deprived
of a critical partnership with JAL.
''The notion that the governments of the United States and Japan just opened
the skies and would allow the incumbent U.S. carrier to partner with the
largest carrier in Japan...would make a mockery of 'open skies','' Arpey said.
''We will object loudly and stridently,'' he said if Delta and JAL were granted
antitrust immunity, adding there is ''zero possibility'' the application would
be approved.
JAL hopes to select its U.S. partner soon, which will affect the decision by a
government-backed turnaround body whether to provide a bailout to the airline
that is teetering on the brink of bankruptcy.
Last week, Maehara, minister of land, infrastructure, transport and tourism,
also met with executives of Delta.
==Kyodo