AA loses JAL
 

Looks like pretty much a done deal

From today's Daily Yomiuri (Japanese Newspaper).

JAL, Delta seen forming business ties
The Yomiuri Shimbun

Japan Airlines and a state-backed corporate turnaround body likely will decide that the struggling airline company will form a business and capital tie-up with Delta Air Lines, the world's largest airline, a move that would significantly reduce JAL's international route operations, sources said Monday.

With the move, JAL, which now belongs to the Oneworld alliance, will become part of the rival SkyTeam group. The tie-up is likely to make a certain measure of headway in solving JAL's financial woes under the supervision of the Enterprise Turnaround Initiative Corporation of Japan since cuts in international route operations are likely to be accelerated through an expansion of a code-sharing arrangement in the Asia-Pacific region, the sources said.

American Airlines, the world's second-largest carrier, which also was seeking a tie-up with JAL, has already begun the necessary procedures to end the negotiations. With the end of its close decadelong relationship with JAL, American is expected to be forced to downsize international business operations involving Japan.

Delta had already offered JAL a 1.02 billion dollars financial package with global SkyTeam alliance members, including a 500 million dollars investment and a 300 million dollars guarantee to cover any short-term drop in sales caused by JAL transferring to SkyTeam.

The U.S. airline also is set to cover costs JAL will incur when changing computer systems for the alliance transfer and to take over JAL's mileage program that enables customers to change air mile points with airline tickets.

Delta holds 32 percent of the market share of the Pacific route linking Japan and the United States, American 8 percent and JAL 22 percent.

With the expected tie-up, JAL can boost its long-term earning capacity through the abolition or rationalization of its own international route operations, while expanding the code-sharing agreement with Delta.

In December, Japan and the United States agreed to liberalize air traffic rules under a so-called open skies agreement, allowing Japanese and U.S. carriers to freely decide on the routes and numbers of flights between the countries.

Based on the open skies agreement, JAL and Delta are expected to apply to the U.S. authorities for antitrust immunity by the end of February.

Once they obtain the immunity, they will be able to enjoy benefits close to that of a merger, including profit sharing, by better coordinating the timetable and airfare rates of their transpacific operations.

American had said it was prepared to invest 1.1 billion dollars in JAL along with U.S. private-equity firm TPG Inc., but the tie-up between American and JAL, both Oneworld members, was seen as unlikely to produce benefits matching the investment, while JAL and the state-owned entity became increasingly reluctant to accept the investment by the private-equity firm.

(Jan. 5, 2010)

Good job Arpey...

JAL was looking to leave OneWold. If not; this whole drawn out bidding war would not have happened. They would have just partnered with American. SkyTeam brings a huge revenue stream and a much larger worlwide route structure and codesharing opportunities with SkyTeam's 9 airline partners.

Why would JAL go with KMart when Saks Fifth Avenue is knocking at the door?

I'm proud enough of DAL, but I don't think there is any such comparison to be made in terms of brand or product. AMR is a good airline.

Unless you mean in terms of network size. In which case your comparison is backwards. JAL would rather have more customers. DAL would rather have HND access. In effect, DAL is the Walmart, and JAL offers prime store locations.

Inside "joke". Don't read anything of actual value into the post. Believe me - there was nothing of actual value in its original context.

PIPE

I wonder if AMR will be shopping to work with another asian carrier.

They might go after Korean...

DAL's backup plan was to go shopping, so I am sure AMR's is too!

Agreed...also maybe a large Chinese carrier. Air China??? China Eastern???

Heyas,

AMR is a dangerous competitor and #1 in the highest yielding region in the world (AKA South America).

Expect them to extract revenge where ever they can, especially DAL's weak spots (cough - west coast feed - cough).

Nu

I was thinking something along the lines of Korean. I hopped over to check what the stock was doing, I was expecting a knee jerk sell and wanted to pick up some shares, but for some reason they're all up today. Except mesa.

So how does this effect DAL for the need for pilots. Hiring maybe;) BTW my guess is DAL buys AK. You heard here first:cool:

Dude....I've been hearing that for the last 5 years!

Been hearing that AA will go on the prowl for a carrier with a big Asian presence ala UAL.

DOJ probably would never allow that but might let 1/3rd go to AA and 2/3rd's to CAL?

Don't shoot the messenger its just speculation and rumor at best.

That is unfortunately a real possibility....I feel bad for the UAL heritage that has been demolished by Tilton et al.....

You guys have fun with those SLI's!!!

Interesting that has just popped up on our unions message board by a few of our members.

At least this industry is not boring.:cool:

AA

If we're talking about an Asian carrier... I don't know which.

I had earlier suggested that KAL would be a secondary carrier for Skyteam in Asia with JAL in the mix, but then again, recent comments by JAL and DAL suggest it's good to have a strong Asian network, with another strong partner.

Put another way, if JAL might prefer an alliance with DAL because there is more feed to be had, wouldn't the same logic apply to KAL? I understand the fear that AMR was trying to instill about "syphoning off" revenue, but you're not syphoning anything in a profit-sharing alliance with ATI.

Put even differently, if you're adding the largest airline in Asia to try to lock in a market, and cooperate, why would you exit this alliance. I know there are cultural differences between Japanese and Koreans that might make egos flare up a bit, but the financing backinp up our airlines values only the color of money.

If we're talking about an arrangement with CAL and UAL... that makes a lot more sense. I see CAL and UAL having very few incentives to share with AMR, except for cold hard cash, and perhaps deals that consolidate certain geographic areas, similar to what we are doing in LGA and DCA with LCC. Maybe someone becomes stronger in ORD (UAL), and in turn that someone becomes weaker yet in New York. I think the future involves mergers where it makes sense, AND consensual deals that allow airlines to consolidate geographically, without the headaches of mergers.

Never thought I'd see AMR reduced to an ineffective second tier airline.

Crandall must be sick to his stomach when he sees what has been done to the carrier he left behind.

I don't work for AMR but I think anyone in this industry would be stupid to count them out.

AMR-NRT,LAX,IAD,1/2 of ORD.
CAL-Everything else.

Agree 100%.......

Interesting times a com'en

AA loses JAL
 

First,they need to call the 2000 of us on furlough,negotiate a contract and
then I will believe in them.

That actually made me laugh.....dream on.

Been hearing the rumor that American is looking at taking Cal's guam operation, and United taking Cal's east coast operation.

Don't shoot the messenger, it's just speculation and rumor at best.

Funny. At Delta, we have been hearing rumors of a Guam base for months now.

Next member of oneworld? Air China.

Cathay and Air China already codeshare, and they own stakes in each others companies (17%?). Air China also covers the China/NE Asia geography like a fly on doo-doo. It is important to keep Cathay happy, since they are the last man standing in Asia for oneworld.

Hey,

At least my rumor was feasible.

Perhaps you should lay off the sour grapes?

Agreed...and the reference is noted! ;) Perhaps they've been demoted from "Nordstrom" to "Nordstrom Rack."

X

Perfect.:)

They are BOTH feasible.....we will lay off the sour grapes if you stop drinking the Kool-Aid - deal? :rolleyes:

Then the Death Star Alliance would lose it's founding US carrier. The Motherland (Luftansa) would never let that happen, not that it would anyway. More than likely, CAL will continue to be integrated into the Death Star - your gates in Chicago are already in United's terminal, and your Denver gates will be in the B concouse soon. Yes, it looks like a good ol' fashioned merger alright. Who knows, in 5 years the name "Continental" may go the way of "Northwest" as a has been. Maybe some regional will crop up and buy the name ala Piedmont. Or, maybe not....who knows.

AH (sigh).......
Can see it now......One Big "HAPPY"" Family!!

So it's really true......Misery honestly love's company????
Thanks for the affirmation's.:cool:

Did someone say something about AA in this thread????:rolleyes:

Misery? don't know where your getting that from, brutha. Just throwing in my 2 cents. 757 Driver speculated, and I did the same. I will say this, back in the failed UA/AAA merger talks, there was a deal to send UA 757 pilots along with some jets to AMR to appease the DOJ/DOT. You had to be 757 qualified and agree to go to AMR permanently not knowing where you would end up on their seniority list. Never happened, of course, but it does sound kinda like 757 Driver's senario.

I agree with you on one point, if we merge, the United name will stick around. I posted a rumor and of course all you UAL types get defensive. I have no desire to merge with your company and I truly hope we can both stay independent.

Ask any CAL Pilot about a merge and you will hear a resounding NO. Just from my experience, asking my UAL buddy's if they want to merge and every single one of them has said YES.

Wonder why?

For the record I don't want to merge with CAL unless its the only way to get rid of Tilton. This mirrors those that do want to merge with CAL.

However, the majority of those I fly with want nothing to do with CAL. UAL has all the pieces going at it alone that could be realized in a merger. We only need to utilize the available resources (ie parked jets and unused routes).

The ONLY reason there's even talk of a merger is to enrich a few senior management carpet-baggers. Thats it!

That Sir, is the absolute truth.

I heard UAL was taking CAL's east coast and South America operations.:D