UPDATE: JAL To Stick With American Airlines To Speed Revival
TOKYO (Dow Jones)--Japan Airlines Corp. (9205.TO) Tuesday said it will maintain its existing alliance with AMR Corp.'s (AMR) American Airlines, spurning overtures from American's U.S. rival Delta Air Lines Inc. (DAL) and dealing a blow to the latter's hopes for expansion in the lucrative Asian air travel market.
The decision, announced at a briefing at Japan's Transport Ministry, is the culmination of a months-long battle between the two leading airlines in the U.S. over Japan's ailing national carrier, which filed for bankruptcy protection last month with $25 billion in debt.
JAL officials attending the briefing said the decision to stick with American Airlines and its oneworld global alliance of partner carriers was taken to speed restructuring at JAL, keeping the burden of doing so at a minimum.
For months, Japan's transport ministry had been pushing for a tie-up between JAL and Delta, as the latter has a larger trans-Pacific flight network than its rival.
"In terms of long-term growth prospects, an alliance with Delta would have offered lots of business opportunities as it has a wide network in Europe," said Daiji Nagai, vice president of JAL's corporate planning division. "But we decided to prioritize our immediate goal, which is to do whatever it takes to restructure this company in the first year; so we avoided the risk that migration posed of losing our current customers."
"Our president (Masaru) Onishi told Delta about our decision earlier in the day," Nagai added.
The decision to remain with American was largely due to the thinking of its new chairman, Kazuo Inamori, according to a person familiar with the matter. Inamori, the founder of ceramic maker Kyocera Corp. and who has become a management guru, started at JAL on Feb 1.
"We respect that this was an important decision for Japan Airlines and the government of Japan, and we believe they have made the right choice for JAL's many stakeholders, for Japan's national interests and for consumers traveling between Japan and the United States," said Gerard Arpey, American's Chairman and CEO.
Backed by their respective carrier group partners, both American and Delta had also offered more than $1 billion in capital and incentives to JAL. But the Japanese government, which has already pumped money into JAL, appeared to rule out any such investment, at least for now.
For Delta, the decision means it will be without a Japanese partner--a liability as the U.S. and Japan have reached an "open skies" accord that opens new opportunities for airlines to offer services as partners.
"The members of SkyTeam respect the decision made by Japan Airlines to remain in the oneworld alliance," said a spokeswoman for SkyTeam, of which Delta is a member. "We believe that cooperation with JAL would have brought good opportunities to all parties involved."
JAL-American will now apply for "anti-trust immunity," enabling them to schedule flights as a single entity. When granted, Nagai said the alliance will yield billions of yen in annual sales.
"We will apply for anti-trust immunity as early as this weekend," he said
