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No Losers in JAL Battle

DALLAS ( TheStreet) -- Nearly everybody won in the battle for a partnership with floundering Japan Air Lines.

Bankrupt JAL said Tuesday it will retain its partnership with American (AMR). The announcement ended months of negotiation with Delta (DAL - Get Report), which had sought to take over as the U.S. partner to the best positioned carrier at Tokyo Narita, the most important airport in Asia.
Japan Airlines

In the end, JAL decided it could not afford to switch partners at the start of an estimated three-year restructuring process. "If we don't survive the first two years, there will be no future for JAL after the third year of restructuring," Daiji Nagai, senior vice president of corporate planning, told reporters, The Associated Press reported. "We decided that we can minimize risk by staying with American," he said.

For American and the struggling Oneworld alliance, the benefit is obvious. The pair needed to retain a competitive position in Asia, especially because they have for so long been disadvantaged in Europe. There, rivals Delta and United (UAUA) have antitrust immunity with their principal partners, but regulators continue to dawdle over whether to allow American and British Airways to make the exact same arrangement.

American CEO Gerard Arpey deserves credit. Particularly after the Japanese declared they did not need U.S. investment in their flag carrier, American made a strong case that regulators would never approve a JAL/Delta bid for antitrust immunity across the Pacific. Was that case realistic? Probably, although in every airline merger and ATI application in history, experts and lawyers on both sides have offered assurances that their cases are certain to predominate.
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