In an effort to lure financially strapped Japan Airlines away from current partners American Airlines and the OneWorld alliance, Delta Air Lines and its SkyTeam partners have offered a $1.02 billion package that would stabilize JAL and make it a SkyTeam member.
The proposal from SkyTeam included $500 million in equity, $300 million in revenue guarantees from Delta, $200 million in asset-backed funding and another $20 for costs association with the transition into its alliance of carriers. The other SkyTeam members are Aeroflot, AeroMexico, Air France, KLM, Alitalia, China Southern, Czech, Korean Air, Air Europa and Kenya Airways.
American Airlines has offered to broker a deal for the OneWorld carriers in invest JAL but no details have been released. American also claims that JAL would lose $500 million in annual revenue by switching alliances. JAL recently reported a $357 million loss from July through September of 2009 and has a debt-load of $15 billion. It has requested another government bailout, its fourth this decade.
JAL is viewed as a crucial partner in the Pacific region by both OneWorld and SkyTeam as it can deliver a major presence in Asia.
Comments
Will we get to the point where all the airlines will combine into one?
Here go the fares. They've got to get that money somewhere.
Ouch- that could be all bad- debt creates a need for more money, Billie has it right!
Thanks for the info and the updates.
There's just no way Delta should be allowed to bid for JAL. It's totally anticompetitive because Delta already has a ton of access at Tokyo Narita through its purchase of Northwest. Adding JAL to the mix would give it too much dominance.
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