American Airlines offers $1.1 bln to support JAL

American Airlines on Thursday offered with its partners to invest up to 1.1 billion U.S. dollars in Japan Airlines (JAL) to help keep the struggling company afloat.

Rival Delta Airlines also announced that it is looking to third parties to provide additional funds to help improve its bid for involvement with JAL.

American is working with partners in its global one world alliance and equity firm TPH Inc. to help to improve its bid for involvement in JAL.

Meanwhile, Delta President Edward Bastian has also said that he would like to work with private firms to help increase its current1-billion-dollar support offer and try to lure JAL into its Sky Team alliance of airliners.

American Airlines President Tom Horton is also currently in Tokyo attempting to convince Japan to opt for a partnership with his company and its partners.

Horton argued that if JAL teams up with his company, then it will stand to make an additional 700 million dollars over a 10-year period.

JAL reported losses of 130 billion yen (1.5 billion dollars) in the first half of the fiscal year, and is currently looking for government assistance to help it out of trouble. Last month, JAL also asked its workers to accept cuts to its pensions in order to ensure the airline's survival.

Both U.S. carriers must try to gain not only the support of JAL, but also the backing of the government-backed Enterprise Turnaround Initiative Corporation, set up by the Democratic Party of Japan (DPJ), if either of them are to get a stake in the company.

The U.S. carriers want to work with JAL as the Japanese company has access to lucrative routes in Asia that are likely to provide long-term profit.

Any deal with a U.S. company has been complicated by the strengthening of the yen. A billion dollars is worth a lot less in Japan now than it was a month ago.

The proposal from American Airlines is likely to be looked upon more favorably than one by Delta, as that company last year acquired Northwest Airlines and thus already has a stake in the Japanese market.

JAL has struggled since the start of the economic downturn to turn itself around, and many of its domestic routes are failing to make a profit.

The DPJ says it sees the survival of the airline as essential to maintaining the tentative economic recovery currently underway in Japan.

Source: Xinhua