Delta Tries to Woo JAL Away From AA

By MALCOLM FOSTER

Updated 7:40 AM CDT, Thu, Dec 3, 2009

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Delta Air Lines President Ed Bastian said Thursday the billion-dollar offer to get Japan Airlines to join its alliance is still going forward despite the dollar's recent weakness, and he expressed confidence the deal will get clearance from regulators.

Delta and its partners have been trying to lure money-losing Japan Airlines, Japan's top carrier, into dropping its alliance with rival American Airlines to join Delta and its SkyTeam partners.

"The offer was stated in dollars," Bastian told reporters at a Tokyo hotel. "That's not enough to change our offer," he said in acknowledging the dollar's recent weakness. It fell to a 14-year low against the yen last week.

American has been working aggressively to try to keep Japan Airlines in its oneworld alliance. American's chief financial officer is scheduled to speak to reporters here later in the day.

American, a unit of Fort Worth-based AMR Corp., has said that if JAL switches from the oneworld alliance, it will cost the Japanese carrier up to $500 million in lost revenue in the first two years after the changeover.

JAL President Haruka Nishimatsu has said he will make a decision by the end of the year.

American officials have argued that if JAL sticks with them they could both apply for antitrust immunity from U.S. and Japanese regulators and bring in up to $100 million a year in additional revenue.

Such a tie-up would depend on U.S. and Japanese governments striking a so-called open skies agreement that would reduce barriers to airlines from one country operating in the other.

Delta's lawyer said if JAL decides to join the SkyTeam alliance they could also win antitrust immunity.

"A JAL-Delta alliance would pose no threat to competition," said Jeffrey Shane, a partner at Hogan & Hartson, who appeared with Bastian at the news conference.

"It's my view that JAL and Delta have an excellent case for ATI," or antitrust immunity, said Shane, who has 26 years experience at the Department of Transportation and now serves as Delta's adviser.

Japan Airlines has been teetering for years, hammered by surging fuel prices, global competition and an image problem caused by a series of safety lapses.

It had been losing Japanese customers to its local rival All Nippon Airways. It has obtained government loans in recent weeks to avoid grounding flights.