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American raises bid for JAL deal

American and Delta both want to be Japan Airlines’s partner. JAL lost $1.5 billion over the six months through September American and Delta both want to be Japan Airlines’s partner. JAL lost $1.5 billion over the six months through September (Issei Kato/Reuters)
Associated Press / January 8, 2010

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DALLAS - To save its relationship with Japan Airlines, American Airlines has raised the amount it is willing to invest in the ailing airline to $1.4 billion.

American increased its previous offer by $300 million in a bid to fend off Delta Air Lines Inc., which wants its own partnership with the Japanese carrier. Delta and its SkyTeam partners have offered JAL $1 billion.

American’s executives told Japan Airlines of the new offer yesterday, said two people close to the situation in Tokyo.

JAL is expected to decide on a partner as soon as next week. Japanese press reports suggest JAL is leaning toward jettisoning American, which it has worked with for a decade. American and JAL have denied those reports.

Delta’s offer would include a $500 million equity investment, $200 million in financing, and $300 million to offset revenue JAL might lose in the transition from American to Delta.

American says its offer is superior because it includes a larger direct equity investment. The airline says US regulators would block closer ties between Delta and JAL because the two would dominate US-Japan traffic.

Delta officials did not return phone calls or e-mails yesterday.

Delta president Ed Bastian suggested during a news conference that his company could raise its bid.