JAL-Japan Airlines (Tokyo) is being pursued by both American Airlines and Delta Air Lines. Why do these two U.S. carriers need to buy in to a loss-making Japanese carrier? We would like to provide some of our insight.

JAL which received a $1.1 billion (U.S.) loan from the Japanese government and is under “strict” supervision by the government. The Japanese government has suggested either to have ANA (All Nippon Airways) (Tokyo-Haneda) take over JAL  (which has obviously fallen through) or team-up with Delta, now a large operator at Tokyo Narita after the Northwest acquisition.

JAL not only needs a cash injection, but wants to coordinate its Narita operations with Delta, thus enabling JAL to cut some money losing routes and also have one less big competitor as well. An official at JAL has been quoted as stating that membership in Oneworld Alliance “has not brought as many benefits as JAL had expected”.

However, on the other hand, conservatives within the airline still do not feel comfortable about a foreign investment in their “proud flag carrier” and also note that leaving Oneworld would cost more than the benefits of joining SkyTeam.

For American they are being out maneuvered (so far) by Delta and cannot afford to lose the Oneworld feed at Narita from JAL. However AA’s problem is they have a small presence at Narita compared to Delta.

Reuters also is providing some insight on this important question:

News link:

www.reuters.com/article/marketsNews/idINT11235420090914?rpc=44