American Airlines and its alliance partners have boosted their offer of support to Japan Airlines (JAL) to keep the money-losing airline with the oneworld family.
American, British Airways, Qantas Airways and Cathay Pacific Airways said yesterday they are ready to inject US$1.4 billion cash into Japan’s flagship carrier, up from US$1.1 billion. In addition, they will guarantee US$2 billion in revenue over the next three years if JAL stays in the oneworld alliance.
Sources familiar with talks between the carriers said American made the new cash offer to JAL last week.
The announcements by JAL’s oneworld partners came as the Japanese government finalizes the details of a turnaround plan for the country’s flagship carrier, which is deeply in debt and suffering heavy losses. The plan will include a bankruptcy filing, cutting about a third of its work force and canceling almost US$4 billion in debt, media reports said.
The news didn’t help JAL shares, which plummeted by 45 percent yesterday — the maximum decline allowed — or ¥30 (US$0.33) from Friday’s close to ¥37 amid fears of bankruptcy and removal from the stock exchange. Japan’s financial markets were closed on Monday for a public holiday. In the morning, trading in JAL shares was paralyzed because of a glut of sell orders.
JAL is still Asia’s biggest airline and its access to the region is a prized asset for other airlines. Executives from oneworld alliance members American, British Airways, Qantas Airways and Cathay Pacific Airways told reporters at a press conference yesterday in Tokyo that their plan would help the Japanese carrier through its recovery.
“It bring stability and certainty to Japan Airlines at a time when it is most needed, as it faces turbulent times over the coming weeks and months,” said Thomas Horton, chief financial officer for American’s parent AMR Corp.
Rival Delta Air Lines and its SkyTeam partners have offered US$1 billion, including US$500 million in cash. However, a government turnaround body is set to decline all cash offers, as it fears giving foreign carriers a stake in JAL would complicate the restructuring, according to media reports.
Earlier yesterday, Japanese Transport Minister Seiji Maehara held talks with the heads of JAL’s three main banks. Public broadcaster NHK said Maehara explained JAL’s bankruptcy plan to the banks.
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