American, Delta Mull Stake in JAL

American Airlines parent AMR Corp. is negotiating for closer ties and possibly an investment in financially troubled Japan Airlines Corp., according to a person familiar with the talks.

American would like to form a joint business venture with JAL in which the two carriers would seek antitrust immunity to work closely in setting schedules and prices for service around the world, according to the person, who spoke Saturday on condition of anonymity because of the sensitive nature of the talks.

The negotiations, which grew more intense over the past four weeks and included meetings in Texas and Tokyo, raised the specter of a bidding war for a piece of JAL.

Delta Air Lines Inc., the world’s biggest airline operator, also is in preliminary discussions about buying a stake in JAL for about $300 million. Delta could become a leading shareholder in JAL and get coveted access to Haneda Airport, which is close Tokyo’s business district, according to a person briefed on the Delta situation.

A spokesman for Fort Worth, Texas-based AMR, Roger Frizzell, said, “We are in discussions at the senior executive level in Japan with JAL.” He declined to comment further.

The person familiar with AMR’s negotiations said that while AMR might invest in JAL, the two sides had not settled on an amount or the nature of the investment. AMR could buy a stake in JAL or invest in senior debt that could be converted to stock, the person said.

A cash infusion would help JAL, which reported a $1 billion loss in its most recent quarter.

American and JAL already have a so-called code-sharing agreement in which they sell seats on each other’s flights. If they won immunity from antitrust laws, they could cooperate in setting prices and schedules. For example, instead of each operating a Chicago-to-Tokyo flight around the same time, they could stagger the flights to maximize traffic while splitting the revenue.

Delta, which declined to comment, doesn’t have a Japanese partner. A Delta-JAL hookup would raise doubts about JAL’s ability to remain in oneworld, an alliance of airlines that includes American and British Airways. Delta is in another alliance, called SkyTeam, which also includes Air France-KLM.

A Japanese newspaper reported Saturday that JAL has entered talks with Air France-KLM. Yomiuri, Japan’s top-selling daily, said JAL hoped to expand its business in Europe with through Air France-KLM.

JAL officials said Friday that they were considering various tie-ups with a wide variety of potential partners, but nothing had been decided.

JAL is in the midst of major restructuring. The airline posted its biggest-ever quarterly loss of 99 billion yen ($1 billion) in the April-to-June period. It has forecast a net loss of 63 billion yen for the current fiscal year, which ends next March, and plans to cut the number of flights and slash costs by 53 billion yen during this fiscal year and another 100 billion yen in the next year.

9/12/2009 8:11 PM DAVID KOENIG, AP Airlines Writer DALLAS