American Airlines To Partner With TPG To Invest In JAL (JALSY, AMR, DAL)

AMR Corp (NYSE: AMR) has reported that they could partner with private equity group TPG on a minority investment into Japanese Airlines (OTC: JALSY) . Japanese Airlines has received three bailout loans from the Japanese government and is seeking its fourth. To add to its woes, Japanese Airlines is $15 billion in debt, a huge deficit on their pension, and unprofitable routes.

The Japanese government has pledged to find a State Bank that will extend the troubled airline bridge loans to make sure that they have enough cash for operations. Furthermore, The Japanese Government is working to introduce legislation that will cut into their pension short fall of $3.7 billion.

According to Thomas Horton, Chief Financial Officer for AMR Corp., TPG will be working with them to invest into JAL and hopefully be part of long term recovery plan. Horton adds that "They have been active in the airline space over the years."

Japanese Airlines is the largest carrier in terms of revenues in Asia and as such both Delta Airlines (NYSE: DAL) and American Airlines have been wooing Japanese Airlines to get a better foothold in Japan and their other networks. American Airlines is in talks with Japanese Airlines to form a joint venture to cooperate closely on scheduling, marketing and pricing. In order for this joint venture to take place, an “open skies” policy between the US and Japan must be hammered out first.

Some of the banks that have already loaned funds to Japanese Airlines include Development Bank of Japan, Mitsubishi UFJ Financial Group (NYSE: MTU), and Sumitomo Mitsui Financial Group (OTC: SMFJY).