JAL To Stay With Oneworld, End Delta Talks - Report

February 7, 2010

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Japan Airlines will keep its partnership with American Airlines in the Oneworld alliance and end talks with Delta Air Lines and the rival SkyTeam group, the Asahi newspaper reported.

The two US carriers have been courting Japan Airlines for months with offers of financial aid and close cooperation on international routes, looking to gain access to its large network in Asia and benefit from the expansion at Tokyo's Haneda Airport.

JAL had been leaning toward joining hands with Delta before filing for bankruptcy last month and bringing in new management under the auspices of a state-backed fund.

JAL's new chief executive, Kazuo Inamori, and officials of the Enterprise Turnaround Initiative Corporation (ETIC) have decided that switching alliances is too risky and could hinder their ability to turn around the airline quickly, the Asahi said on its website.

JAL will make an official announcement this week, the Asahi said. A JAL spokeswoman declined to comment.

In addition to the burden of upgrading computer systems and other costs, the risk that JAL and Delta would not be able to receive regulatory approval for anti-trust immunity also influenced the decision, the Asahi said.

Anti-trust immunity allows airlines to work closely on pricing, flight scheduling and in other areas to boost revenue and lower costs. This is now a possible under the "open skies" treaty recently agreed by the United States and Japan.

American and its Oneworld partners have offered USD$1.4 billion in capital and Delta has offered about USD$1 billion in financial aid in an effort to woo JAL. However, the ETIC is not expected to invite another carrier to invest in JAL at this stage.