American ups JAL ante to keep Delta at bay

American Airlines Inc. on Thursday upped the ante in a fierce scramble over struggling Japan Airlines Corp., warning of "enormous risks" if JAL switches to the rival SkyTeam alliance.

A day after Delta Air Lines Inc. unveiled a lucrative financial package for JAL, American Airlines, a unit of AMR Corp., struck back as it is readying what sources say could be an even sweeter proposal totaling around ¥130 billion with TPG Inc., a major U.S. investment firm.

Speaking to reporters in Tokyo, an American Airlines executive urged cash-strapped JAL to remain in the current oneworld grouping, saying the alliance is providing $500 million in annual revenue to JAL and will add $100 million more if the two companies can obtain antitrust immunity following the conclusion of open skies talks between Japan and the U.S.

"There is a very minimal risk in staying with oneworld as opposed to joining the SkyTeam, which delivers enormous risks," Theo Panagiotoulias, American Airlines vice president for Asia and the Pacific.

JAL, currently seeking a turnaround under state supervision, is faced with having to decide, possibly by year's end, between Delta, the top U.S. carrier, and American Airlines, the second-largest U.S. carrier, in receiving badly needed capital as it heads for its fourth annual loss in five years.

"This is not a war between two carriers over JAL," Panagiotoulias said. "This is the right choice for JAL's future."

Panagiotoulias declined to disclose the numerical details of a financial package until JAL finalizes a deal with a government-backed corporate turnaround body, but sources have said the airline is preparing to invest about ¥30 billion, while TPG is eyeing an offer of around ¥100 billion.

He said American Airlines is ready to make "a significant investment" in JAL together with TPG once it receives a request from both JAL and the Japanese government.

"We want to be here and ready to support our partner in any way we can when the time is right," he said.