American boosts investment offer for JAL to $1.4B

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DALLAS (AP) — American Airlines has dug deeper to save its relationship with Japan Airlines, raising the amount it is willing to invest in the ailing airline to $1.4 billion.

American upped its previous offer by $300 million in a bid to fend off Delta Air Lines Inc. Delta wants to create its own partnership with the Japanese carrier that would operate across the Pacific and throughout Asia.

Delta and its SkyTeam partners have offered JAL $1 billion.

American executives told Japan Airlines, or JAL, of its new offer on Thursday, according to two people close to the situation in Tokyo, who spoke on condition of anonymity because the talks were confidential.

JAL is expected to select a new partner as soon as next week. Reports in the Japanese press suggest JAL is leaning toward jettisoning American, a company it has worked with for a decade.

American and JAL officials have denied those reports.

Delta’s offer would include a $500 million equity investment, $200 million in financing, and $300 million to offset revenue JAL might lose in the transition from American to Delta.

American officials believe their offer is superior because it includes a larger direct equity investment. They also say U.S. regulators would block closer ties between Delta and JAL because the two would dominate U.S.-Japan traffic. If regulators balked, it could limit the revenue that JAL might gain in a deal with Delta.

Delta officials did not return repeated phone calls and e-mails Thursday.

Delta president Ed Bastian suggested during a news conference in Tokyo that his company, the world’s largest airline operator, could raise its bid.

JAL is losing money — $1.5 billion over six months through September — and is attempting to restructure outside of bankruptcy protection. A state-owned Japanese development bank doubled its credit line for JAL this week to $2.2 billion to keep the carrier flying.

Delta, based in Atlanta, and American are fighting over JAL because of its strong routes in the fast-growing Asian market, especially China.

American, a unit of AMR Corp. in Texas, got a small boost Thursday when a group representing corporate travelers backed its bid. Kevin Mitchell, president of the Business Travel Coalition, said a JAL-Delta tie-up would create a monopoly on trans-Pacific routes.

American shares rose 16 cents, or 2 percent, to $8.27. Shares of Delta rose 54 cents, or 4.5 percent, to $12.65.


AP Airlines writer Harry R. Weber in Atlanta contributed to this report.