JAL to shelve foreign capital tie-up talks, focus on turnaround plan+

TOKYO, Oct. 5 Kyodo -
Japan Airlines Corp. plans to temporarily shelve capital tie-up talks with two
of the world's largest air carriers -- Delta Air Lines Inc. and American
Airlines Inc. -- to focus on compiling its new turnaround plan, sources
familiar with the matter said Monday.
Japan's top airline decided to prioritize other restructuring measures like job
cuts and scrapping of unprofitable routes since it will take longer for a
capital alliance to bear fruit, the sources said.
JAL changed course after transport minister Seiji Maehara recently launched a
new task force of corporate turnaround experts who will evaluate the assets of
the cash-strapped airline and review the rehabilitation plan it submitted last
month.
The company hopes to resume negotiations with Delta and American Airlines after
it draws up a road map for turning around its operations, the sources said.
Under the guidance of the new task force, which replaced an expert panel set up
by the previous administration, JAL will hammer out an outline of its new
business improvement plan by around late October and finalize it around the end
of November.
JAL was earlier considering receiving capital investment from Delta, which is
part of SkyTeam, a global airline alliance, or from American Airlines, which
belongs to the rival ''oneworld'' grouping the Japanese carrier is also part
of.
Last month, JAL President Haruka Nishimatsu told reporters he hoped to conclude
the talks by the middle of this month, but the company's earlier plans were
thrown into disarray after Maehara was appointed minister under a new
government led by the Democratic Party of Japan.
People familiar with the negotiations said the Land, Infrastructure, Transport
and Tourism Ministry had been pushing JAL to form an alliance with Delta, which
had proposed investing about 30 billion yen.
Under the same grouping, the Air France-KLM Group and Korean Air were also
studying investment in JAL in a closely coordinated aid package with Delta.
To block JAL from leaving the ''oneworld'' alliance, American Airlines, a unit
of AMR Corp., British Airways Plc and Australia's Qantas Airways Ltd. also
jointly proposed capital investment of several tens of billions of yen and an
expansion of a code-sharing arrangement.
JAL will maintain its code-sharing arrangement with the ''oneworld'' members
even if it suspends the capital tie-up talks, the sources said.
Among its earlier restructuring measures, JAL had said it would reduce pension
fees, cut 6,800 jobs, or around 14 percent of its group workforce, and scrap a
total of 50 domestic and international routes over the three years through
March 2012.
==Kyodo