Japan Airlines, often referred to as JAL, find themselves in a hole, after they reported a record Y99bn ($1.1 billion) loss in the second quarter for 2009. As the carrier struggles to survive, many of you may be aware that JAL is likely to receive financial aid, likely in the form of investment, from outside-Japan carriers. Among the carrier that have expressed interest, Delta Airlines, American Airlines, and now Air France-KLM have expressed interest in helping out JAP – but who is likely to get the piece of the pie?
JAL’s Situation:
JAL is in a point of time when they badly need cash to overhaul their aging fleet. Additionally, it’s unknown what the incoming liberal Democratic party thinks about JAL. The past few years have not been good to JAL, and I’m sure this has raised eyebrows, as it is the flag-carrier of Japan. Policies remain unclear, and as the Financial Times pointed out, the DPJ president / incoming Prime Minister, Yukio Hatoyama, has yet to pick his cabinet; leaving the policies toward JAL very unclear.
Today, a meeting will be conducted by the ministry of transportation, which will consist of lawyers and academics, who’ll offer up suggestions on how to improve JAL’s management structure. Additionally, the Japanese government seems to be worried that state money used to invest in JAL may never get returned, however an international carrier could put an end to the concern.
The Players / Airlines:
For all the players, teaming up with JAL offers a chance to lock alliances. Note that JAL is Asia’s largest carrier by revenue, and the wide-variety of routes that the JAL network offer can significantly benefit any carrier. It looks as though the number is $200-$300 million in investments, giving the investing carrier a minority stake in JAL.
Delta. Yes, the new largest carrier on the planet wishes to expand their horizon a tad further than before. An investment by Delta certainly brings about the thought of JAL leaving the OneWorld alliance, and heading over to SkyTeam – the alliance Delta is on. As Dan Webb mentioned, Delta gave away rights for flights from Phoenix to Tokyo. With that said, it looks as though the two carriers have already been on-track to buddy-up.
As for JAL’s OneWorld friend American Airlines, it’s unclear when American came into the game. A number of sources speculate that American is only jumping in to keep Delta and Air France-KLM from taking JAL. However, things do not look good for American, as the Japanese government reportedly said that they’d prefer Delta or Air France-KLM, rather than American, as both Delta and AF-KLM have better financial health. On the bright side, it’s also said that JAL prefers American – but who knows.
As for Air France-KLM, the story is fairly the same. They would simply like the chance to get their chance at acquiring a minority stake in JAL – primarily for the same reasons as the other. Remember, AF-KLM is a Sky-Team member – so it’s 2 SkyTeam members against a OneWorld carrier.
Conclusion:
“JAL is looking at a number of measures to improve our business, not excluding tie-ups with other airlines,” said JAL. “Nothing has been decided.” We’ll just have to wait and see – it’ll be very interesting to watch.
