JAL to shelve foreign capital tieup talks, focus on rehab

Kyodo News

Japan Airlines is planning to temporarily shelve capital tieup talks with Delta Air Lines and American Airlines to focus on compiling its new turnaround plan, sources said Monday.

Japan’s top airline decided to prioritize other restructuring measures like job cuts and scrapping unprofitable routes because a capital alliance would take longer to bear fruit, the sources said.

JAL changed course after transport minister Seiji Maehara recently launched a new task force of corporate turnaround experts who will evaluate the assets of the cash-strapped airline and review the rehabilitation plan it submitted last month.

The company hopes to resume negotiations with Delta and American after it draws up a road map for turning around its operations, the sources said.

Under the guidance of the new task force, which replaced an expert panel set up by the previous administration, JAL will hammer out an outline of its new business improvement plan by around late October and finalize it around the end of November.

The company was considering receiving capital investment from Delta, which is part of the SkyTeam global airline alliance, or from American Airlines, which belongs to the oneworld grouping that JAL is also part of.

Last month, JAL President Haruka Nishimatsu said he hoped to conclude the talks by the middle of this month, but that plan was thrown into disarray after Maehara was appointed minister in the new government led by the Democratic Party of Japan.

People familiar with the negotiations said the Land, Infrastructure, Transport and Tourism Ministry had been pushing JAL to form an alliance with Delta, which had proposed investing about ¥30 billion.