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American Airlines talking with JAL

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  • #2
    JAL has also extended it's hands to AF/KLM as well as Delta:

    Discuss anything aviation related, such as airline news, specific aviation questions, etc.


    As for this, I hope that they are able to raise profits and not rely on mergers/corporate buyouts. I understand the move, but I think that they might be courting AF/KLM/DL in an attempt to drum up support from AA and/or BA and/or CX (hoping to get funding from fellow OneWorld Members). If they are successfull in getting funding from AF/KLM and/or DL, we may more than likely see the departure of JAL from OneWorld (which would be a hard loss for the Alliance, but a great gain for SkyTeam). As a OneWorld member, here's to that not happening!
    Whatever is necessary, is never unwise.

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    • #3
      They did get 1 billion in govt. backed loan back in June...



      It's a smart move for them to intice fellow OneWorld members to come in and help out, most likely AA/BA will be the ones. I can't see them depart from OneWorld as SkyTeam, with the NWA/DL merger, already have a nice hub in RJAA, but what a blow that'll be if they did leave.
      what ever happens......happens

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      • #4
        i'm quite far from being an expert or even knowing much about finance on this level, but it does strike me as pretty hilarious that two of our legacy carriers that are posting huge losses pretty consistently, are in talks with a foreign carrier in even deeper doo doo.

        i suppose when it all falls apart, they will go running back to washington with hands outstretched seeking my money...

        God I love this country!

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        • #5
          Originally posted by TeeVee View Post
          i'm quite far from being an expert or even knowing much about finance on this level, but it does strike me as pretty hilarious that two of our legacy carriers that are posting huge losses pretty consistently, are in talks with a foreign carrier in even deeper doo doo.
          Exactly what I was thinking. I assumed that with the NW acquisition, the last thing that DL would have plentiful amounts of would be cash, but then again, I could be wrong. As for AA, while we have seen profitability return (at times) it has been only slightly and really only a victory on paper (considering the massive losses of the past years).

          I have been following the JAL talks with AF/KLM more closely in the past day and it seems that the Japanese Government is cautioning JAL of getting too seriously involved with AA and DL (citing their economic stabilities compared to AF/KLM). Also, Reuters India discussed today that Korean Airlines was also in talks with JAL (further strengthening the proposed move to SkyTeam). Sadly, it seems, that a strong economic background may be the deciding factor (as it should be), and we may well see AF/KLM gain a minority share (with decision making capabilities in the airline) and the move from OneWorld to SkyTeam may be imminent. It would be a hard blow for OneWorld, but there may be a silver lining in there somewhere...

          What surprised me was that AA's proposed commitment to JAL was not supported by bids from BA and CX. I understand that BA is dealing with massive losses in their own right, and CX is downsizing International services, but between BA/AA/CX could not a counter bid be proposed that would be attractive enough to rival a AF/KLM bid (and/or an AF/KLM/DL match)?
          Whatever is necessary, is never unwise.

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          • #6
            American carriers are still interested in expanding overseas, where the yields are still better. As for cash, most US carriers have plenty of cash - it's profitability and low domestic yields which have been the problem. Admittedly, they may not have enough cash or access to cash resources for a decent investment in JAL, but mutual equity stakes or share swaps can always be employed to some extent. That said, I think it would be tougher for Delta right now than American.

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            • #7
              Originally posted by HalcyonDays View Post
              ...As for cash, most US carriers have plenty of cash - it's profitability and low domestic yields which have been the problem.
              To add to this : American Airlines has just announced deals to boost cash resources by $3bn or so, comprising $1bn from selling its frequent-flyer program and nearly $2bn from aircraft sale and leaseback operations, mainly on 737s.

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              • #8
                Adding to the mix...

                In hopes of not having JAL leave OneWorld, BA and QF have joined AA's bid to support JAL.

                To prevent Japan Airlines from leaving their OneWorld Alliance to join the Delta-led SkyTeam, American Airlines together with British Airways and Qantas have reportedly made a joint financial assistance offer to their sole Japanese ally, in a move to pre-empt Delta's tie-up bid.

                Executives of American Airlines, British Airways and Qantas Airways paid a sudden visit to Japan Airlines headquarters in Tokyo to present their joint offer on Wednesday. To persuade JAL not to team up with Delta, the three Western air carriers proposed to introduce JAL to possible lenders and to provide debt guarantees to help JAL seek financing. The allies also agreed to support JAL's restructuring by offering consulting services, merging some of their offices; and adjusting the numbers of their transpacific routes, Nikkei News evening edition reported Friday.

                American Airlines is considering buying a stake in JAL worth several tens of billions of yen, Nikkei added, citing sources familiar with the matter.

                http://www.forbes.com/2009/09/18/jal...ed=rss_markets
                The article is an interesting read, but it does not highlight the fact that BA and QF seem (at the moment) to be hemmoraging money on their own right. Recently QF cancelled 787 option and BA has recently been battling issues (including a very public issue with their new Terminal at LHR). I understand that long-term financial sittutations do not necessarily mirror the present, but it would be hard sell before shareholders, no?
                Whatever is necessary, is never unwise.

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                • #9
                  i'm beginning to think that airlines are just mirrors of the rest of the world: completely out of whack. lemme explain.

                  boeing needs to make more to pay its employees more (yes and the fat cats too). exxon mobil needs to make more to pay its employees, fat cats, and shreholders more. basically, everyone needs to make more to pay more...in theory!

                  truth is, salaries don't go up as much as the cost of living does lately. it seems that in the past twenty years, a huge disconnect has formed. cost of everything goes up, but salaries stay relatively the same, or at least they don't go up proportionately.

                  hence, no one can really afford to pay higher airfares necessary for the airlines to maintain.

                  some like to blame US carries' woes on unions and out of whack labor contracts. horse-puckey! look at all the foreign carriers that are not "saddled" with those contracts now--they too are failing.

                  i have friends that are FA's for AA and they have their own set of gripes. chief of which is that AA never gave back what it took from them to avoid bankruptcy several years ago. now AA has the cojones to consider bailing out JAL?!?! holy crap! maybe it's time for a small work action...

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