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American Air CEO Touts Alliance Gains For JAL

By Ann Keeton, Of DOW JONES NEWSWIRES

The head of American Airlines claimed Monday that its Oneworld alliance was the best partner for Japan Airlines "by a wide margin," as rival Delta seeks to lure the Asian carrier into its own SkyTeam grouping.

Gerard Arpey, Chairman and Chief Executive of American parent AMR Corp. (AMR), also used a speech in Mexico City to raise the specter of any Delta-JAL alliance being targeted by antitrust authorities.

American is trying to keep Japan Airlines Corp. (JALSY, 9205.TO) in Oneworld, pledging to expand cooperation and inject funds into the loss-making carrier, which is seeking aid from the Japanese government.

"We are convinced that we can deliver the most meaningful alliance value to JAL--by a wide margin--and without any of the regulatory risk a change in alliance strategy would mean for them, not to mention the financial costs JAL would incur if it changed alliances at such a critical phase in its restructuring," said Arpey.

His remarks came in the text of a speech delivered to mark the entry of Mexicana to Oneworld, the second Latin American partner after Lan Airlines (LAN- SG).

JAL, which is expected to report a large fiscal first-half loss Friday, is cutting routes and jobs to counter an inefficient network and the burden of its debt load and pension deficit.

However, both U.S. carriers view it as a valuable prize with access to congested Tokyo airports and traffic connecting to other points in Asia. Star, the third global alliance, is allied with All Nippon Airways Inc. (9202.TO).

Delta Air Lines Inc. (DAL) has remained relatively silent amid the increasing rhetoric from American, but has pledged to provide a capital injection of its own to aid JAL's transition.

Both Delta and American--and members of Star--hope that a new aviation treaty being negotiated between the U.S. and Japan will provide more opportunities to expand alliance cooperation.

Arpey said in Mexico City that JAL is "more likely to realize the benefits of an immunized relationship under a Japan-U.S. open skies agreement" with Oneworld.

While he cited potential regulatory problems for a JAL-Delta deal, American is awaiting word from regulators on its own application for antitrust immunity with British Airways PLC (BAIRY, BAY.LN, TD-BAB) and other Oneworld partners.

Critics contend that proposal raises similar questions over market concentration at London Heathrow as Arpey suggested could arise in Tokyo.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120; ann.keeton@dowjones.com

(Doug Cameron contributed to this article.)

  (END) Dow Jones Newswires
  11-09-091738ET
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