American Airlines CEO says JAL hasn’t vetoed cash

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DALLAS (AP) — The CEO of American Airlines, which just raised its bid for an investment in Japan Airlines, says no one at the Japanese carrier has said they don’t want the money.

Gerard Arpey also said Monday that his company would willingly participate in a restructuring of Japan Airlines, even if JAL seeks protection from creditors in the Japanese equivalent of a bankruptcy filing.

American, a unit of Texas-based AMR Corp., last week offered JAL $1.4 billion for a stake in the company, according to sources familiar with the talks. American is hoping to preserve and expand its current alliance with JAL.

American and Delta Air Lines Inc. are fighting to build close ties to JAL, which has strong routes in Japan and China. Officials with both American and Delta say they would be willing to forge an alliance with JAL even if they didn’t get a stake in the company.

Published reports in Japan say that JAL, the country’s largest airline, is ready to cut 16,500 jobs — one-third of its work force — and reject offers of $1 billion or more from American and Delta. JAL would instead rely on a government-led turnaround.

Japan’s Kyodo News said a quasi-government body would inject $3.3 billion into JAL, and reports said JAL could file for protection from creditors as soon as next week.

Officials at JAL, Japan’s transport ministry and the turnaround group could not be reached for comment Monday, a national holiday in Japan.

American flies many passengers from the U.S. to connect with JAL flights in Tokyo, “and so it wouldn’t be good for our services not to have them as a partner,” Arpey said.

Delta, however, is seeking to supplant American as JAL’s U.S. partner. Delta has made a $1 billion offer, although only $500 million would be an equity investment in the carrier.

Arpey said neither JAL nor Japanese government officials have told American that JAL won’t accept a cash infusion from U.S. carriers.

American clearly sees its bid as superior to Delta’s. But even without the cash, Arpey insisted that American would be a better partner for JAL because it has a stronger U.S. network and a stronger global alliance through its partner airlines including British Airways and Qantas.

Delta officials disputed Arpey’s claims, saying their airline would feed more passengers to JAL than does American.

Delta claims to fly 3.7 million passengers across the Pacific each year compared with 700,000 by American and its partners, and it says its partners in Europe, chiefly Air France-KLM, would bring even more.

Trebor Banstetter, a spokesman for Atlanta-based Delta, said JAL would reap “hundreds of millions of dollars in additional annual revenue” by switching partners to Delta.

Banstetter said Delta didn’t view an investment in JAL to be a necessary part of any deal.


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