Business

Published: Wednesday November 18, 2009 MYT 2:57:00 PM

Delta offers US$1bil to JAL to lure it away from AA


TOKYO: Delta Air Lines and its alliance partners said Wednesday they are making a billion-dollar offer intended to lure loss-making Japan Airlines from its current affiliation with American Airlines.

Delta is "by far the strongest partner for Japan Airlines," company president Edward Bastian told reporters in Tokyo.

The offer from Delta and the SkyTeam alliance includes a $500 million capital investment, $300 million in revenue guarantees, and $200 million in asset-backed financing for JAL.

The airline, Asia's largest, is seen as a valuable partner because of its routes in China and Japan but its business is struggling.

The carrier said last week it booked $1.5 billion in losses for the first half of the current fiscal year and was seeking government help in dealing with its creditors.

Its interest-bearing debt totals nearly $10 billion.

Hit by a collapse in travel brought on by the tepid global economy and the swine flu outbreak, the company has been approved for a government-run turnaround.

It is mulling large job cuts after already lowering its staff mainly through attrition as well as taking other measures such as cutting unprofitable routes.

Bastian said JAL's current partnership in North America as part of the oneworld alliance has hurt the airline, with flights between the region and Japan decreasing in recent years.

The Japanese company has been American's partner since the mid-1990s.

They sell tickets for each others' routes as well as sharing revenue and customer frequent-flier bonuses. - AP


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