Airlines eye Asian growth through JAL
AIR FRANCE -KLM is understood to be in talks to invest in Japan Airlines, joining a list of suitors seeking a stake in the loss-making carrier to access its route network.
Delta Air Lines and American Airlines are also believed to be in separate talks with JAL, Asia’s biggest carrier by revenue. Each airline is thought to be discussing an investment of $200-$300m (£121.1-£181.9m) in exchange for a minority stake and a code-sharing relationship with the Japanese carrier, but talks are fluid and the numbers could yet change .
Analysts said JAL would have a difficult choice ahead and JAL is expected to be weighing those advantages carefully against the significant cost of leaving Oneworld, an alliance which includes American Airlines.
Each airline is seeking access to JAL to help expand in Asia via code-sharing agreements.
Japan’s main domestic airport Haneda is the world’s third busiest by passenger numbers and is adding international flights. Tokyo’s international airport, Narita, also plans to expand airline slots.
JAL, which is undergoing state-supervised restructuring, is understood to prefer American Airlines because of the Oneworld alliance. But the Japanese government prefers Delta or Air France-KLM, which it sees as financially healthier than American.
JAL lost about $1bn last quarter and is under growing pressure to raise money and slash costs after securing a 100bn yen (£665m) government-backed credit line earlier this year. The airline has forecast a net loss of 63bn yen for the year to end-March.
It plans to cut overseas flights and increase personnel cuts over the next three years in a bid to reduce operating costs by 30 per cent, Japanese media said.