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Delta throws JAL $1bn lifeline

Delta throws JAL $1bn lifeline

Delta Airlines has offered struggling Japan Airlines a $1bn incentive to leave the Oneworld Alliance.

The US carrier is leading the SkyTeam group of airlines in a bid to rescue the struggling Japanese carrier – on the condition it leaves the rival alliance.

Two days ago JAL revealed a $1.5 billion first-half loss and has approached the Japanese government for a bail-out for the fourth time since 2001.

Delta is keen to secure a Japanese airline to join SkyTeam as part of its plans to expand routes to Japan.

Forming a closer alliance with JAL would enable it to do this ahead of the liberalisation of air routes between the US and Japan.

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SkyTeam’s Far East alliance partners include Korean Air and China southern, but no Japanese airline.

The SkyTeam offer includes a proposal to buy $500m in JAL shares and $300m of guarantees to cover any short-term loss in sales caused by it leaving the Oneworld.

It also includes $200m in asset-backed financing and a further $20m to cover JAL’s costs for switching alliances.

JAL is refusing to comment on the offer.

The airline has scrapped forecasts for the rest of the year due to uncertainty surrounding its turnaround efforts, which require a government bailout and are expected to involve thousands of job cuts and major route reductions.

The company is seeking loans of 125 billion yen ($1.4bn) to maintain operations having posted a 32.1 billion yen ($356.7m) loss for the second quarter through September, bringing its losses for the fiscal first half to 131.2 billion yen ($1.5bn).

JAL is struggling with $15bn of debts and a big pension deficit as well as falling passenger numbers.