JAL Seen Likely to Choose American Over Delta

Japan Airlines is very likely to maintain its business relationship with American Airlines, rejecting a rival offer from Delta Air Lines, Japanese media reports said, in an apparent flip-flop because of the recent change in leadership.

The biggest air carrier in Asia is expected to make a final decision on the matter this week, possibly within the next couple of days, reports said, citing unidentified sources.

The reports also said that JAL and AA are expected to file with the U.S. Department of Transportation for antitrust immunity for jointly operating trans-Pacific services by mid-February.

JAL belongs to the Oneworld global airline alliance, led by AA, the second-largest U.S. carrier. If JAL were to choose Delta as its new business partner, it would switch to the rival SkyTeam global airline alliance, led by the largest U.S. carrier.

JAL filed for bankruptcy protection on Jan.19, marking one of the biggest corporate failures in Japanese history, and is in the process of rehabilitating itself under a state-backed plan.

Immediately after JAL filed for bankruptcy protection, the government-backed Enterprise Turnaround Initiative Corp. announced a decision to aid JAL’s reconstruction, formally placing the debt-ridden Japanese flag carrier under state control. As a court-appointed administrator, the fund aims to complete the process of turning around the airline within three years.

JAL’s former top management and Enterprise Turnaround Initiative were leaning toward choosing Delta over AA as its new business partner. But JAL’s new top management team favors maintaining and strengthening the relationship with AA, citing confusion resulting from a switch from the Oneworld to the SkyTeam global airline alliance and also an anticipated temporary drop in operating revenue, the reports said.

JAL’s new top management team includes Chairman and CEO Kazuo Inamori and President and COO Masaru Onishi, who both took office on Feb.1. JAL’s former president and CEO, Haruka Nishimatsu, stepped down on Jan.19 to take responsibility for the company’s failure.

The Nikkei, Japan’s biggest business daily, reported in its Monday evening edition that although there are still strong opinions within the Japanese airline in favor of choosing Delta over AA, Enterprise Turnaround Initiative is expected to respect Inamori’s opinion.