Japan Airlines gets offer of $1.1 billion from American

FORT WORTH, Texas — American Airlines and its Fort Worth equity partner, TPG, have offered to invest $1.1 billion in the struggling Japan Airlines.

The Fort Worth-based carrier said its investment proposal, which was formally made to JAL and Japanese government officials this week, is "far superior" to a $1 billion offer made by Delta Air Lines and its SkyTeam partners.

Speaking in Tokyo on Thursday afternoon, American Airlines Chief Financial Officer Tom Horton said JAL also could gain an additional $700 million in new revenues over the next 10 years if it stayed with American's Oneworld alliance and applied for an anti-trust immunity joint venture with American.

"American and Oneworld have a lot invested in JAL's success, and we are prepared to do more to ensure a successful partnership for the long-term," Horton said.

However, Horton declined to reveal any details of the $1.1 billion "direct capital investment" and would not say how much of the funds would be provided by American, its Oneworld partners or by TPG. Horton did say that American and TPG would only seek board or management positions in a restructured JAL if it was invited to do so by the Japanese government.

JAL has lost hundreds of millions of dollars this year and is seeking government loans as it cuts routes and tries to restructure the airline.

Horton emphasized that JAL already receives about $500 million in revenues each year from its relationships in Oneworld. He added that a Delta-JAL anti-immunity application would likely be rejected by government regulators as a JAL-SkyTeam alliance would have 62 percent of the Japan-US travel market.

The U.S. and Japanese governments are currently negotiating a treaty that would give carriers more freedom to open routes and schedule flights between Japan and the U.S. If an "open-skies" treaty is reached, American could create a joint venture with JAL, similar to the agreement it has with British Airways that is being reviewed by government regulators for an antitrust exemption.

Atlanta-based Delta Air Lines also argued its case publicly in Japan on Thursday, saying that an anti-trust immunity application between Delta and JAL would succeed.

"A Delta/JAL alliance would deliver all of the customer and industry benefits recognized by (the Department of Transportation) in other joint venture alliances that it has immunized — and the DOT has consistently approved them without onerous conditions, even on important nonstop overlap routes," stated a Delta presentation.

Delta has offered JAL a billion dollars which includes a $500 million capital investment, $300 million in short-term revenue guarantees and $200 million in asset-backed financing for the airline. The SkyTeam alliance has also offered to cover the $20 million cost of switching from oneworld to SkyTeam.

Via McClatchy-Tribune News Service.