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JAL alliance talks heat up with Air France-KLM entry

JAL alliance talks heat up with Air France-KLM entry
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First Published: Tue, Sep 15 2009. 09 32 AM IST
Updated: Tue, Sep 15 2009. 09 32 AM IST
Tokyo/New York: Air France-KLM is in talks to inject hundreds of millions of dollars into Japan Airlines, a source familiar with the matter said, joining a list of suitors seeking a minority stake in the loss-making Japanese carrier to gain access to its route network. Delta Air Lines and American Airlines are in separate ‘early stage´ talks with Japan’s carrier.
Each airline is discussing an investment of $200 million to $300 million, in exchange for a minority stake and a code-sharing relationship with JAL, but talks are fluid and the numbers could change, the source said.
JAL’s shares dropped 1.1% to 174 yen by 0032 GM,T while the benchmark Nikkei 225 average advanced 0.8%.
Meanwhile, JAL plans to cut overseas flights and increase personnel cuts over the next three years in a bid to slash operating costs by 30%, Japanese media said on Tuesday.
JAL, Asia’s largest airline by revenue, will scrap some 20 of its international flights by March 2012, the Nikkei business daily said. That would mean a 20% drop in sales from overseas flights.
JAL is under pressure to raise money and slash costs after securing a 100 billion yen ($1.1 billion) government-backed credit line earlier this year.
Kyodo news agency said JAL hopes to raise around 100 billion yen from foreign carriers, and said that Korean Air is also in talks with JAL.
The struggling airline plans to increase the number of planned staff cuts by about 1,000 to a total of around 6,000, Kyodo said. It put the number of international routes to be terminated at 24, including flights connecting with China.
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First Published: Tue, Sep 15 2009. 09 32 AM IST