JAL to stay with American, end Delta talks: report

 @ibtimes
on February 07 2010 2:56 PM

Japan Airlines Corp <9205.T> will keep its partnership with American Airlines in the Oneworld alliance and end talks with Delta Air Lines and the rival SkyTeam group, the Asahi newspaper reported.

The two U.S. carriers have been courting Japan Airlines for months with offers of financial aid and close cooperation on international routes, looking to gain access to its vast network in Asia and benefit from the expansion at Tokyo's Haneda Airport.

JAL had been leaning toward joining hands with Delta before filing for bankruptcy last month and bringing in new management under the auspices of a state-backed fund, the Enterprise Turnaround Initiative Corp of Japan (ETIC).

JAL's new chief executive officer, Kazuo Inamori, and officials of the ETIC have decided that switching alliances is too risky and could hinder their ability to turn around the airline quickly, the Asahi said on its website.

JAL will make an official announcement this week, the Asahi said. A JAL spokeswoman declined to comment. No one at the ETIC could be reached for a comment.

In addition to the burden of upgrading computer systems and other costs, the risk that JAL and Delta would not be able to receive regulatory approval for anti-trust immunity also played into the decision, the Asahi said.

Anti-trust immunity allows airlines to work closely on pricing, flight scheduling and in other areas to boost revenue and lower costs. This is now a possible under the open skies treaty recently agreed to by the United States and Japan.

American and its Oneworld partners have offered $1.4 billion in capital and Delta has offered about $1 billion in financial aid in an effort to woo JAL. However, the ETIC is not expected to invite another carrier to invest in JAL at this stage.

(Editing by Maureen Bavdek)

Share this article