American Airlines may lead other members of the Oneworld alliance in an investment in Japan Airlines Corp to help an ally predicting a fourth loss in five years, two people familiar with the plan said.
American, the world’s second-largest carrier, has hired an investment bank to advise on an undecided financial investment in Japan Air, its partner in the Oneworld marketing group, the sources said, asking not to be identified because the discussions aren’t public.
Executives from American, Qantas Airways Ltd and British Airways Plc met with Japan Air officials two days ago, the sources said.
Japan Air, which has received three government bailouts since 2001, the most recent in June, has also been in talks on possible stake sales to Delta Air Lines Inc and Air France-KLM, both members of the Skyteam Alliance, people familiar with those negotiations have said.
Japan Air’s Oneworld partners provide about US$500 million a year in revenue to it through tie-ups, the officials said.
“It’s better for Japan Air to stay in the Oneworld group,” said Mitsushige Akino, who oversees US$645 million in assets in Tokyo at Ichiyoshi Investment Management Co.
“There would be lots of unseen costs involved in leaving the group,” he said.
JAL, as the carrier is known, posted a ¥99 billion (US$1.1 billion) loss in the first quarter, the most in at least six years, as business and leisure travel plummeted during the country’s worst postwar recession.
The carrier, privatized by the government in 1987, had a 25 percent drop in overseas passengers in June, the biggest decline since outbreaks of SARS and bird flu in 2003.
The company gets more than half its airline business from international travel.
JAL, which is the region’s most indebted carrier, may collapse unless it shrinks operations, reforms its high-cost structure and regains lenders’ confidence, Seiji Maehara, the country’s new transport minister said on Thursday.
The carrier, which predicts a loss of ¥63 billion in the year ending March, received a ¥100 billion loan from the state-owned Development Bank of Japan and other local lenders in June.
JAL plans to cut 6,800 jobs by the end of 2011, and aims to eliminate the most routes in its history, president Haruka Nishimatsu said earlier this week.
The carrier had 47,526 employees at the end of March.
“JAL is speeding up its restructuring,” Akino said. “Accepting an investment from a foreign carrier may actually help it push through job cuts.”
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