* American, partners boost JAL offer by $300 mln to $1.4
* JAL may be delisted after expected bankruptcy
* Shares plunge 45 pct, lose nearly $900 mln in market
* Major banks OK govt-backed revival plan -transport
* JAL secures approval for pension payout cuts
(Adds comment by Transport Minister, lawyer on pension cuts)
By Mariko Katsumura and Chris Gallagher
TOKYO, Jan 12 American Airlines AMR.N and its
partners in the Oneworld alliance sweetened their offer to
Japan Airlines 9205.T to $1.4 billion to keep the struggling
national carrier from joining hands with rival Delta Air Lines
The announcement came as JAL shares plunged 45 percent to a
record low, wiping out nearly $900 million in market value, on
growing expectations the airline is headed for bankruptcy and a
delisting from the Tokyo exchange. [ID:nTOE60A04W]
The carrier, weighed down by $16 billion in debt and mired
in losses, said on Tuesday it had secured enough support from
retired workers for pension benefit cuts, which was required
for it to qualify for a much-needed injection of public funds.
The state-backed fund plans to put about 300 billion yen
($3.3 billion) in fresh capital into JAL, provided it files for
bankruptcy and its banks agree to waive about 350 billion yen
in debt, sources told Reuters last week. [ID:nTOE605013]
The fund, the Enterprise Turnaround Initiative Corp of
Japan (ETIC), is leaning toward delisting JAL after the
bankruptcy filing and is not planning to accept investment from
either either Delta or American until a new mangement is in
place, if ever, a source said. [ID:nTOE60A04W]
"With all the media reports there's a lot of talk going
around about JAL delisting or staying listed," said Toshihiko
Matsuno, a senior strategist at SMBC Friend Securities.
"Investors don't know what to think any more."
JAL shares closed at an all-time low of 37 yen, giving it a
market value of $1.1 billion, barely a fifth of what it was
worth four months ago. Although Asia's biggest airline by
revenues, JAL has fallen to No.16 by market value among major
airlines in the region, between Malaysia's AirAsia (AIRA.KL)
and India's Jet Airways (JET.BO), Thomson Reuters data shows.
For more stories on JAL, click: [ID:TOE603007]
For a Q+A on JAL, click [ID:nTOE60B063]
For a timeline on JAL shares, click
AMERICAN, ONEWORLD RAISE INVESTMENT OFFER
Japan's top three banks, Mitsubishi UFJ Financial Group
(8306.T), Mizuho Financial Group (8411.T) and Sumitomo Mitsui
Financial Group (8316.T), have basically agreed to the ETIC's
plan, Transport Minister Seiji Maehara said on Tuesday.
"I met with the heads of the three megabanks this morning
and explained to them about a public-led restructuring and
asked for their support. I got mostly positive responses,"
Even as JAL appears headed for a court-led restructuring,
American and Delta have been courting it with rival offers of
financial aid, eager to gain access to its routes to
fast-growing Asian markets and a stronger foothold in Japan.
American said on Tuesday that it, private equity firm TPG
and other Oneworld alliance members would invest up to $1.4
billion in JAL, $300 million above their previous offer, to
keep JAL from defecting to Delta and the SkyTeam group.
The offer is composed of $1.1 billion from TPG and $300
million in equity from Oneworld partners, which includes
British Airways BAY.L, Qantas Airways (QAN.AX) and Cathay
Pacific Airways (0293.HK).
"We believe our proposal is in the best interests of JAL
and its employees and customers, and the government and
taxpayers of Japan," American CFO Tom Horton told reporters in
"It provides JAL and the government with the greatest
long-term value with the lowest risk and most stability."
Horton said Oneworld would be happy to form a business
alliance without capital ties if that was what was sought by
JAL said on Tuesday it had secured support from two-thirds
of nearly 9,000 retirees for proposed pension cuts, paving the
way for it to slash its pension shortfall and avoiding having
its pension fund dissolved in bankruptcy court. [ID:nTKX006622]
The shortfall had ballooned to about $3.6 billion as of
March last year due to high interest rates promised on pension
reserves, a problem shared by many other companies in a country
where interest rates have been pegged near zero for years.
JAL's success could embolden other firms to seek cuts.
"In the past the thinking was that you could not cut the
claims of pension recipients, but with this that may have
changed," said Nobuhito Sawasaki, a lawyer at Anderson Mori &
"Today's decision by JAL will set an example and could be a
precedent for other companies with a similar problem," he said.
JAL had already won the support of current employees last
week for a halving of their payments but took until the Tuesday
deadline to secure the agreement of two-thirds of retired
workers, who had been asked to swallow a 30 percent cut.
The ETIC had planned to allow JAL's pension fund to be
dissolved if the airline was unable to get support for the cuts
on its own, which would have forced employees and retirees to
accept even larger cuts, a source with knowledge of the matter
The cuts are still expected to leave JAL with a pension
shortfall of around 100 billion yen. Dealing with the remaining
liability could increase the burden on creditors, adding to the
350 billion yen in debt relief, the source said.
(Additional reporting by Nathan Layne, Taiga Uranaka and
Chikafumi Hodo; Editing by Michael Watson, David Dolan and