JAL talks alliance with Air France-KLM

Asia’s biggest airline hopes to expand its businesses in Europe via the capital alliance with Air France-KLM, according to the Yomiuri newspaper, Japan’s top-selling daily. The report cited no sources and officials at the Japanese airline, known as JAL, could not be reached for comment Saturday.

JAL said Friday it was considering various tie-ups with a wide variety of potential partners but nothing had been decided.

JAL is in the midst of major restructuring as the airline incurred its biggest-ever quarterly net loss of ¥99 billion ($1 billion) in the three months to June. It has forecast a net loss of ¥63 billion for the current fiscal year to March 2010, and plans to cut the number of flights and slash costs by ¥53 billion during the current fiscal year and another ¥100 billion in the next fiscal year.

Apart from Air France-KLM, JAL is also seeking a bigger capital injection from Delta Air Lines, the Yomiuri said.

Delta — the world’s biggest airline operator — is considering making a cash infusion of a couple hundred million dollars to aid JAL, according to a person briefed on the talks Friday.

In exchange for the infusion, the person said Delta could get a stake in JAL, an expanded presence in Japan and coveted access to the closest airport to the Tokyo business center. The Yomiuri said Delta could become a top shareholder of JAL. But the talks between JAL and Delta were in their preliminary stage, and it was unclear what form a partnership between the two airlines might take, said the person, who asked not to be identified by name because of the sensitivity of the discussions.

Japan’s Nikkei business daily quoted a senior JAL official Saturday as saying the tie-up with Delta would be difficult due to the Japanese airline’s alliance with American Airlines.
JAL has a codeshare agreement with American Airlines as part of its participation in the oneworld alliance. Delta’s SkyTeam alliance currently doesn’t have a Japanese partner. Instead of Delta, JAL may seek a capital injection from American Airlines, the Nikkei said.