Sky Team offers JAL $1bn

By Administrator |

Japan Airlines (JAL) is reported to have been offered a $1bn cash injection incentive by the Sky Team group of airlines on the condition that it leaves the ten-carrier member One World alliance, which includes

British Airways and American Airlines and joins up with the 11-member Sky Team, which includes Delta Airlines and Korean Air.

The news is not entirely unexpected considering that JAL has already said that this may be an option it will consider considering the horrendous debts it is currently carrying and its recent call for Japanese Government financial assistance.

The Sky Team is hoping that the offer will open up the Japanese market to its member airlines ahead of the planned liberalisation of air routes between the US and Japan.

According to reports, the Sky Team proposal includes the purchase of $500m-worth of JAL shares, plus an interim $300m compensation package to protect JAL from any losses it might incur from leaving One World, plus $200m in asset-backed financing, and $20m for any costs associated with the switch-over process.

As reported by TREND earlier this month, JAL currently has $15bn-worth of debts, a huge pension deficit and several unprofitable routes and only recently it applied for state assistance in reducing its debt – the fourth time since 2001. It is also operating under a dark cloud of doubt as to whether it actually remains a going concern in its current form.

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