JAL Prefers Delta As Partner

From Asahi Shimbun (www.asahi.com) January 3, 2010

Haruka Nishimatsu, President of Japan Airlines, expressed his view against a solution by legal liquidation as expected by Enterprise Turnaround Initiative Corporation of Japan (ETIC), an private-public fund, to which JAL has requested for support. He also told that it would be more advantageous for JAL to change its alliance membership with consideration of new marketing strategy in Asian market with potential growth; he told his preference of Delta Airlines than Aemrican Airlines as a partner while he emphasized he has no plans for JAL to withdraw from international service.

Nishimatsu told in his interview with Asahi Shimbun that legal liquidation may lead to loss of customers for JAL as it may give wrong impression as bankruptcy. Pointing out ongoing self initiative actions of JAL such as reduction of its corporate pension payment as well as other management changes, Nishimatsu stressed JAL is already implementing almost the same solutions as legal liquidation.

JAL, assumed in a state of asset deficiency, has a high chance of being forced to legal liquidation unless ETIC supports it, consequently the decision of ETIC can determine the course of JAL's salvation.

JAL's international operations, a chief factor of its deteriorated business performance, will be shrunk, according to Nishimatsu, by abolishing of air routes and downsizing of aircraft but he threw out a possibility for JAL to terminate its international service. He believed JAL should strengthen its operations in Asian market in the future to face competition with other carriers such as ANA.

Based on that, Nishimatsu showed his view that there will be more advantageous for JAL to join Sky Team alliance that major Asian airlines such as Korean Air are members already and more Asian carries would join. JAL is currently a member of One World alliance led by American Airlines. Delta Airlines has proposed JAL to change its alliance membership while Delta has a plan to
acquire capital in JAL.

Nishimatsu reiterated his intention to resign; it is expected he will express his resignation formally before or right after a decision to support JAL by ETIC in middle or end of January.