Examiner Bio JAL in separate business talks with Delta and American Airlines

Japan Airlines (JAL) is in separate business talks with Delta and American Airlines. The separate negotiations have come as JAL looks to restructure and find new financial support after major business profit losses. They also come as the U.S. and Japan look to make an “Open Skies” agreement.

Delta vs. American

On September 11th, JAL was reported to have had preliminary talks in Tokyo with heads from Delta Air Lines about receiving $300 to $550 million dollars in investments in return for stakes in the company, one of Japan’s two largest national carriers. The deal would also reportedly include possible investments from Delta’s European partner Air France-KLM, as well as have JAL change to become a member of the SkyTeam alliance.

JAL is currently part of the OneWorld alliance, which includes American Airlines. According to reports on September 13th, JAL has begun separate talks with American about investment options since the talks with Delta. If the “Open Skies” agreement between Japan and America goes through as planned, which ever company wins JAL’s partnership will be in a strong position for expanding routes in the Japanese and East Asian markets.

U.S.-Japan Open Skies Agreement

According the U.S. Department of the State, the “Open Skies” agreements work to expand international travel, trade, and commerce by “eliminating government interference in the commercial decisions of air carriers about routes, capacity, and pricing.” With the agreement, companies can gain unlimited access to all flying points within either country, which provides “maximum operational flexibility.” While American has had access to Japan through JAL in the past, Delta’s closest regional partner to Japan is Korean Air.

JAL’s money problems

JAL has been fighting to recover from around a reported $8 billion dollars of debt. They have been restructuring over the past few years by trimming unprofitable national routes and cutting jobs. JAL reported large quarterly losses earlier this year, but were able to receive extra funding from current investors after the Japanese government guaranteed additional governmental support. However, that support has also increased pressure on JAL to fix their money problems quickly.

Posted in: Business-Economic,World News