JAL turnaround plan eyes move to Delta group: report

TOKYO Mon Jan 11, 2010 2:27pm EST

Employees of Japan Airlines (JAL) work in front of its logo at Haneda airport in Tokyo January 10, 2010. REUTERS/Toru Hanai

Employees of Japan Airlines (JAL) work in front of its logo at Haneda airport in Tokyo January 10, 2010.

Credit: Reuters/Toru Hanai

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TOKYO (Reuters) - A state-backed fund in charge of turning around Japan Airlines (JAL) 9205.T wants to see a tieup between JAL and Delta Air Lines (DAL.N), Kyodo news reported on Monday.

The Enterprise Turnaround Initiative Corp of Japan (ETIC) has proposed in its restructuring plan that JAL form a business tieup with Delta with no capital injected by the American carrier, Kyodo said, citing unidentified sources close to the matter.

The report said ETIC eyed a switch to the Delta-led global SkyTeam alliance in April 2011.

The fund has estimated that an alliance with Delta would give JAL an annual benefit of 17.2 billion yen ($186 million), three times more than what expanded ties with American Airlines AMR.N would offer.

JAL is currently a member of the Oneworld alliance with American.

JAL, Asia's largest airline by revenue, will likely file for bankruptcy this month as part of a state-led restructuring, sources have told Reuters.

As JAL appears headed for bankruptcy, Delta and American have been courting it with rival offers of financial aid, eager to gain access to its routes to fast-growing Asian markets and to get a stronger foothold in Japan.

JAL had been aiming to decide this month whether to keep ties with American in the Oneworld alliance or join hands with Delta and the rival SkyTeam group.

However, Transport Minister Seiji Maehara said on Friday a decision would likely be delayed.

(Reporting by Chris Gallagher; editing by Karen Foster)

($1 = 92.48 yen)

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