Money Matters, Simplified.
JAL says goodbye to Delta, sticks with American Airlines
by Ishita Sood - February 9, 2010 - comments
JAL, which has $25 billion in debt, announced its decision to stick with American Airlines on Tuesday.
New York, February 9 -- Japan Airlines (JAL) on Tuesday said it would maintain its affiliation with American Airlines, thus refusing the overture from American Airlines' rival Delta Air Lines.
The Japanese carrier also said it would apply for anti-trust immunity with American Airlines for closer cooperation on transpacific routes under a newly signed “open skies” treaty between U.S. and Japan.
The decision, a major blow to Delta, was announced at a briefing at Japan’s Transport Ministry.
Delta was offering bankrupt carrier JAL $1 billion in financial aid after the latter filed for bankruptcy protection last month. JAL had $25 billion in debt.
“With recently announced plans to invest $1 billion in our product, Delta remains committed to providing a leading option for travel across the Pacific,” said Delta in a statement after JAL's announcement.
Why not Delta?
Tuesday’s news came as surprise to everyone because JAL had long been pushing for a tie-up with Delta. However, JAL officials said the decision to go with American Airlines was made to improve the restructuring at JAL.
“In terms of long-term growth prospects, an alliance with Delta would have offered lots of business opportunities as it has a wide network in Europe,” said Daiji Nagai, vice president of JAL's corporate planning division.
“But we decided to prioritize our immediate goal, which is to do whatever it takes to restructure this company in the first year; so we avoided the risk that migration posed of losing our current customers. Our president (Masaru) Onishi told Delta about our decision earlier in the day,” he added.
Meanwhile, SkyTeam, of which Delta is a member, gave its opinion on the new decision.
A spokeswoman from SkyTeam said, “The members of SkyTeam respect the decision made by Japan Airlines to remain in the oneworld alliance. We believe that cooperation with JAL would have brought good opportunities to all parties involved.”
American Airlines speak up
However, a source close to the matter said the decision to remain with American was largely due to the thinking of its new chairman, Kazuo Inamori.
But the news was big for American Airlines. Its chairman and CEO Gerard Arpey said, “We respect that this was an important decision for Japan Airlines and the government of Japan, and we believe they have made the right choice for JAL's many stakeholders, for Japan's national interests and for consumers traveling between Japan and the United States.”