18 Nov 2009 Delta offers US$1b lifeline to JAL

[Watchman]

Delta offers US$1b to JAL

The Singapore Straits Times
Nov 18, 2009
Delta said on Wednesday the deal was aimed at drawing JAL to its SkyTeam alliance. JAL is Asia's largest airline but its business is struggling. -- PHOTO:


TOKYO - JAPAN Airlines was offered a US$1 billion (S$1.39 billion) financial lifeline on Wednesday from Delta Air Lines and its SkyTeam alliance partners, as Tokyo refused to rule out allowing the carrier going bankrupt.

Delta said the rescue package on the table included a $500 million equity injection, a revenue guarantee worth $300 million and $200 million in asset-backed funding.

The US carrier is seeking to lure JAL away from the rival Oneworld airline grouping and American Airlines, which is also seeking a tie-up with JAL, eyeing its lucrative Asian landing slots. Japan Airlines spokeswoman Sze Hunn Yap declined to comment on the offer.

JAL president Haruka Nishimatsu said last week the company aimed to conclude an alliance agreement with a foreign carrier by the end of the year. He said it 'seems natural' to maintain ties with American Airlines, which has said it might team up with US private equity firm TPG to invest in JAL.

Delta's announcement came as shares in JAL plunged to an all-time low after the Japanese government said that bankruptcy was still a possibility for the airline, which lost $1.5 billion in the six months to September.

'I have never said the government would not allow bankruptcy protection' for JAL, Transport Minister Seiji Maehara told a parliamentary panel, adding that the government wanted to ensure it did not 'collapse and disappear.' -- AFP