AMR CEO goes public in case to keep JAL deal

AP News
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Posted: Nov 09, 2009 6:00 PM

The CEO of American Airlines says Japan Airlines would be taking a risk and suffer financially if it breaks ties with American and joins an alliance with Delta Air Lines.

Gerard Arpey said Monday that American and its partner airlines "produce hundreds of millions of dollars of value for JAL" and want to strengthen their ties.

Arpey made the comments in Mexico City at a meeting of the oneworld alliance of global airlines, which includes American, British Airways and JAL. Delta belongs to another alliance, SkyTeam, and is trying to lure JAL away from oneworld.

American and Delta have battled over JAL for several weeks, largely in private. Arpey's remarks elevated the fight by marking the most detailed public comments by either CEO.

Delta declined comment.

Last month, Delta CEO Richard Anderson declined to answer questions about JAL. But he said Delta and SkyTeam partner Air France-KLM have shown an ability to develop successful alliances with their trans-Atlantic business.

The stakes in the JAL battle are high for American, a unit of AMR Corp. Arpey told his own executives last month that if JAL jumps to Delta's team, "that would certainly be very bad for us."

Both AMR and Delta are seeking a minority stake in JAL, which has been looking for an injection of capital and help from the Japanese government to avoid collapse.

Delta and American covet JAL because of its extensive routes in Japan and China. By having JAL as a partner since the mid-1990s, American has been able to sell those routes to its own customers and share in the revenue. American and JAL offer reciprocal frequent-flier privileges to each other's passengers.

Arpey has said the partnership with JAL allows American to win customers away from United and Delta's Northwest Airlines unit, both of which fly from the U.S. to Tokyo.

American officials claim that JAL would suffer up to $500 million in lost revenue over two years while it switches to Delta's SkyTeam alliance. And American argues that it could win regulatory approval for even closer ties _ antitrust immunity that would let American and JAL set prices and schedules on U.S.-Tokyo flights. American claims that Delta might not win regulatory approval because a Delta-Northwest-JAL team would control more than 60 percent of the U.S.-Tokyo market.