Japan Airlines plans to put on hold tie-up talks it has been holding separately with Delta Air Lines and American Airlines, Japan's Kyodo news agency reported Monday.
Delta and a rival group led by American Airlines have been in talks to invest in JAL and form closer ties, eyeing expansion in Japan and the rest of Asia. JAL is Asia's largest airline in terms of annual revenue.
However, Kyodo said JAL has decided to focus first on putting together a restructuring plan with the government task force that is overseeing the airline's revival after the government backed a JPY100 billion yen USD$1.11 billion) loan.
JAL, weighed down by USD$15 billion in debt and headed for its second straight annual loss, could resume talks with American and Delta after it has put its restructuring on a solid track, Kyodo said.
JAL spokeswoman Sze Hunn Yap said she could not verify the report and declined to comment further.
"I'd be surprised if there was any kind of action this year, actually," said airline consultant Robert Mann.
"It removes the immediate issue of American's potentially losing JAL (from the Oneworld Alliance)," Mann said. "But it doesn't resolve the problem one way or the other."
The restructuring of JAL took a new turn in late August when the Democratic Party came to power in a landslide election victory, ending the rule of the Liberal Democratic Party, which had supported state help for the airline.
The Democrats have said JAL's restructuring plan, which includes cutting 6,800 jobs and eliminating 50 routes, did not go far enough and it assigned a task force to push through more drastic cost cuts.
JAL is seeking JPY250 billion in funding to carry it to the end of the financial year in March 2010 and it is widely expected that the state will have to give it a capital infusion to keep it afloat.
Both Delta and American have been courting JAL with the promise of an equity investment so they can gain access to promising routes in Asia, including those in Japan, where Tokyo's Haneda airport is undergoing a major expansion.
American teamed up with British Airways and Qantas Airways to keep JAL in the Oneworld Alliance grouping of airlines, sources said last month. They said that executives from all three carriers met JAL in September.
Delta has been wooing JAL to join the rival SkyTeam alliance, sources have said. The media has reported that fellow SkyTeam member Air France-KLM was a potential partner with Delta for an investment in JAL.
Delta has offered to invest about JPY30 billion (USD$334 million) in JAL, Kyodo said.
