AMR to JAL: Better Off With Us

DALLAS (TheStreet) -- American(AMR Quote) CEO Gerard Arpey has strongly urged Japan Air Lines to continue its partnership with the carrier, saying JAL could "end up as a junior partner and a feeder carrier" if it goes elsewhere.

"Elsewhere" is a euphemism for a Delta and the Skyteam global alliance, which would replace an existing relationship with American and the Oneworld alliance. As JAL restructures, it has spoken with both U.S. carriers about a potential investment and a global partnership.

American has been a JAL partner for a decade and relies on the partnership for access to many Asian markets, while Delta already operates its own hub at Tokyo's Narita Airport.

On earnings conference calls Wednesday and Thursday, the top executives of the world's three biggest airlines all responded to questions about the ongoing discussions involving JAL.

Arpey said membership in Oneworld and a code-share agreement with American annually produce hundreds of millions of dollars of value for JAL. He said no other arrangement would be as beneficial for JAL, while "an alliance switch would be burdened by excessive financial and execution risk during the critical initial phase of its restructuring." Code-shares allow carriers to write tickets on one another's flights.

Additionally, if Japan and the U.S. reach an open skies agreement, "JAL is more likely to realize the benefits of an immunized relationship" if it remains an American partner," Arpey said.

Arpey never mentioned Delta by name, but his comments on the benefit of continuing the AMR/JAL relationship were the strongest and most detailed he has made publicly. In response, although they declined to discuss JAL specifically on an earnings conference call on Thursday, Delta executives spoke of the advantages they would bring to a deal and their intent to continue to expand in Asia.