American Airlines said it and other members of the Oneworld airline alliance along with private equity fund TPG are willing to invest USD$1.1 billion in Japan Airlines to prevent it defecting to Delta Air Lines and the rival Skyteam group.
Delta has said that it and other SkyTeam members are ready to offer JAL a total financial aid package of about USD$1 billion, including a USD$500 million equity investment. Delta said on Thursday it may also team with a fund to sweeten its proposal.
Both US airlines are keen to gain access to Japan Airlines' network in Asia even as the former national carrier seeks a state bailout to avoid bankruptcy, hit by sliding demand and saddled with some USD$15 billion in debt.
"Our investment and our proposal would be part of an overall restructuring plan led by the government, which would restore Japan Airlines to financial health," Tom Horton, chief financial officer of American parent AMR, told a news conference in Tokyo.
American had said previously it could invest in JAL with TPG but had not unveiled an exact figure. It estimated the total benefit to JAL would be USD$1.8 billion when factoring in an estimated USD$700 million for the net present value of antitrust immunity over a period of 10 years.
Both US carriers have said they would apply for antitrust immunity with JAL under an "open skies" treaty to liberalise air travel between the United States and Japan. The accord is expected to be agreed by the two governments later this month.
American has argued that JAL and Delta would have difficulty clearing regulatory hurdles if they sought antitrust immunity under open skies, as it would give SkyTeam control of the bulk of air traffic between the United States and Japan.
Delta says it is confident it and JAL would be granted antitrust immunity, a status that allows airlines to work more closely on pricing, scheduling and marketing in an effort to increase revenues and lower costs.
The choice of staying with American or switching to Delta is still overshadowed by the much larger problems facing Asia's largest airline by revenue.
According to a previous government task force estimate, JAL needs JPY300 billion in capital, or three times the offer from Oneworld and six times the offer from SkyTeam.
JAL also faces the risk of bankruptcy if it cannot get the support of a state turnaround fund, which is now studying JAL's assets and is expected to make a decision next month on whether to prop it up with public funds.