Japan Airlines (JAL) is unlikely to form a capital tie-up with a US carrier but will instead limit the partnership to a business tie-up for now, an economic daily reported yesterday.
JAL has been offered financial assistance by both American Airlines and Delta Air Lines, which are competing to take a stake in the Japanese company and increase their share of the lucrative Asian market.
Debt-ridden JAL has studied a possible capital tie-up with either one of the US airlines as it would curb the amount of taxpayer money needed for an out-of-court rehabilitation.
But the Japanese airline is now expected to file for bankruptcy with a guarantee of public support next week under a rescue plan mapped out by the state-backed Enterprise Turnaround Initiative Corp (ETIC), local media reported.
The ETIC, which oversees JAL’s restructuring, has therefore concluded that a capital tie-up with a US carrier would complicate the government-led rehabilitation process while also narrowing options for new management soon to be selected, the Nikkei Shimbun said, citing unnamed sources.
The ETIC, which originally planned to pick a foreign partner by the end of this month, is now expected to make the final decision no earlier than next month, it said.
Since autumn, both Delta and American have been in talks with JAL in hopes of securing a capital and business alliance, showing the willingness to inject about ¥100 billion (US$1.08 billion) in loans and investments.
Media reports have suggested JAL was leaning towards forging a capital tie-up with Delta and join the SkyTeam global alliance, leaving the OneWorld group, which includes American Airlines.
American Airlines reported last week it had increased its investment offer by US$300 million to US$1.4 billion, raising the stakes in the bidding war.
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