Despite financial woes, Japan Airlines remains a desirable partner
American’s chief financial officer, Tom Horton, told reporters that the offer is “far superior” to the $1 billion rival proposal from Delta Air Lines and its SkyTeam partners.
He refused to describe the composition of the offer, or say how much of the money would come from American. But he said the proposal by American, its oneworld partners and private equity firm TPG Inc. is part of a larger restructuring plan to get JAL back on solid footing.
Horton and his team asserted that if JAL enhances its links with American, over a 10-year period it would gain additional revenues of some $700 million.
Delta, meanwhile, is trying to lure JAL away from its partnership with American.
Aviation consultant Mark Kiefer of CRA International in Boston said the battle is far from over.
“It does sound like it has the potential to drag on further,” Kiefer said. “There’s a lot at stake here, especially given the importance of the Japanese market and the Asian market to all of these carriers.”
Demand for air travel has been under intense pressure from the global economic slowdown, but U.S. carriers that compete internationally know it will be important to have a strong presence overseas when things rebound. Airlines can reap a premium for long-haul seats, particularly business and first class.
Japan Airlines has been teetering for years, hammered by surging fuel prices, global competition and an image problem caused by a series of safety lapses. It lost $1.5 billion in the first half ended September and has obtained approval for government loans in recent weeks to avoid grounding flights. The airline remains attractive as a partner because of its extensive routes in Japan and other important markets in Asia. – read more at JapanToday.com…
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