Delta to Offer $1 Billion to Japan Airlines

Delta and its SkyTeam Alliance will offer Japan Airlines (JAL) $1 Billion to lure it away from American Airlines’ Oneworld Alliance.Delta-offered-package-JAL

JAL has asked the japanese government for financial aids for the fourth time since 2001. The airline has posted its third loss in four years. Japan’s transport minister already said that a court-led bankruptcy is still possible for the airline but Tokyo still refused to let that happen. JAL already cut jobs and routes to ease up its debt problems.

The financial lifeline offered by Delta consists of $500 million equity injection, a revenue guarantee worth 300 million dollars and 200 million dollars in asset-backed funding. A $20 million transition cost for changing alliances is also included.

American Airline is not putting this down without a fight. It has partnered with private equity group TPG to make a counter-proposal.

A transfer of alliance will cause a short-term disruption in US traffic air flows as the major hubs of American Airlines is in Chicago and Dallas while Delta is in Atlanta and Detroit.