JAL talks with rivals

February 1, 2010
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, TOKYO, Feb 1 – Japan Airlines\’ new management team said Monday it was starting from scratch in its talks with foreign rivals about a possible tie-up, part of efforts to revive the stricken carrier.

American Airlines and Delta Air Lines are competing to take a stake in JAL despite its bankruptcy filing last month with 26 billion dollars of debt — one of Japan\’s biggest ever corporate failures.

Both US carriers are offering financial assistance to JAL — which is slashing more than 15,600 jobs and axing unprofitable routes — in return for cooperation in areas such as joint flight operations through code-sharing.

Delta, the world\’s largest carrier, had appeared to be gaining the upper hand with an invitation for JAL to join the SkyTeam airline network, which currently has no Japanese partner.

But JAL\’s president and chief operating officer Masaru Onishi said the group\’s new management, which took over Monday, had a "neutral position" on which carrier would be the best partner.

"We are continuing discussions, considering it from scratch, without being influenced by the previous talks," he told a news conference.

Delta and its partners have offered JAL a package worth 1.0 billion dollars — a 500-million-dollar equity injection, a revenue guarantee worth 300 million dollars and 200 million dollars in asset-backed funding.

Seeking to trump that, American Airlines and its partners have offered the Japanese carrier an investment of 1.4 billion dollars if it stays in the Oneworld alliance, which also groups British Airways and Qantas.

Kazuo Inamori, a management guru and Buddhist monk who took over as JAL\’s new chairman this week, said the group was "earnestly considering" teaming up with an overseas carrier.

"We would like to reach a conclusion as quickly as possible," he said.

Inamori, 78, was parachuted in to JAL\’s cockpit by the government to replace Haruka Nishimatsu, who stepped down as head of Asia\’s biggest carrier after it filed for bankruptcy protection on January 19.

"It is fully possible to achieve a revival," Inamori said. "We want to revitalise JAL swiftly," Inamori told the same news conference.

He dismissed speculation that JAL might retreat from overseas to become a purely domestic carrier.

"We can\’t imagine JAL without international flights. I would like to develop both domestic and international flights," he said.

JAL, a once-proud flag carrier, has reassured passengers its flights will not be interrupted during the bankruptcy, which is similar to the process used to revive US auto giant General Motors.

The airline, which carries more than 50 million passengers every year, will slash 30 percent of its workforce and receive almost 10 billion dollars of public funds and emergency loans under a three-year turnaround plan.

The stock will be delisted from the Tokyo Stock Exchange on February 20 or earlier, a move expected to wipe out shareholders\’ investments.

Its share price Monday stood at just two yen (two US cents), having plunged 98 percent over the past three months.

Inamori is one of Japan\’s most respected business executives and management gurus, having founded electronics maker Kyocera and a company that later became part of KDDI, now Japan\’s number two telecoms firm.

He is a champion of deregulation, a philanthropist and Japan\’s 28th richest person with an estimated wealth of about 920 million dollars, according to Forbes Rich List.

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