American ready to top up JAL offer

Arpey in Tokyo talks

Gerard Arpey

American Airlines (AA) is ready to top up its £1.1bn investment offer to Japan Airlines (JAL), its chairman and ceo Gerard Arpey said.

The increased offer to the struggling Japanese carrier was made during talks between Mr Arpey and Japan's transport secretary Seiji Maehara and later with JAL executives.

JAL also said during Mr Arpey's visit that its pensioners had indicated they would take a significant cut in their payments which the airline had requested to ease it through its cash crisis, Reuters reported.

Mr Arpey was quoted by the news agency as saying: "There could be a bigger investment made by the group depending on the circumstances that have to be worked out with the government and with JAL."

AA's offer was made in conjunction with private equity company TPG Capital in its efforts to stop JAL quitting the oneworld alliance and joining rival group SkyTeam.

Delta Air Lines, a leading member of SkyTeam, has also made an offer, smaller than AA's, to invest in the Japanese carrier.

JAL is also subject to a new restructuring plan, backed by its government and due to be overseen by the country's Enterprise Turnaround Initiative Corporation.

The news that 75% of its former workers have agreed to take a 30% cuts in pension payments has given the airline a boost as re-structuring takes place.                                                                                                                                                                                              

Mr Arpey said the AA/TPG investment would be "part of the overall restructuring that will involve JAL, the government, us and TPG. So I think it all has to happen in concert."

He said his offer was "far superior" to Delta's and gives "JAL the best and most achievable path to success. It will create the best outcome."

He warned that switching from oneworld to SkyTeam "would cost JAL hundreds of millions of dollars per year."

Mr Arpey also promised that AA would apply to the US Department of Transportation for anti-trust immunity with JAL under the terms of the newly signed US-Japan open skies agreement.

But he said his airline would "move aggressively" to block any attempt by Delta and JAL to form such an alliance, Reuters said.

"I think there is zero possibility that application would be approved," he said.

Arpey also assured JAL that AA's partnership with it would be exclusive.

"We don't intend to try to connect traffic in an immunized way with any other partner in this part of the world," he said.

AA has said that joint venture with JAL could add $100m to the Asian carrier's revenue on top of the £500m it already gets from being a oneworld member.

Leading SkyTeam member Delta Air Lines has offered JAL a $1bn package to join the rival alliance.

The offer included $500m in capital, $320m in revenue guarantees and transition costs and $200m is asset -backed financing.

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