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January 11, 2010

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Report: JAL seeks cooperation not cash

TROUBLED Japan Airlines Corp and the state-backed corporate turnaround body responsible for the money-losing airline's restructuring will decline cash offers from Delta and American Airlines, a report said yesterday.

Instead, they will only seek a greater business cooperation with either Delta Air Lines Inc or American Airlines, the business daily Nikkei said, citing no sources.

The turnaround body will pick one of the United States carriers as JAL's partner after February, the newspaper said.

Delta - the world's biggest airline operator - and its rival American are vying for a stake in JAL as they seek to expand their Asian networks.

Delta and its SkyTeam partners have offered US$1 billion to JAL, while American, which partners with JAL in the Oneworld alliance, has countered with a US$1.4 billion.

But the state-backed Enterprise Turnaround Initiative Corp of Japan fears that giving foreign carriers a stake in the struggling airline could only complicate its restructuring efforts, the Nikkei said.

JAL could file for bankruptcy as early as January 19, Nikkei said on Saturday. After the filing, JAL President Haruka Nishimatsu plans to resign.

The Nikkei said yesterday the government and the turnaround body have asked Kazuo Inamori, founder of electronic component maker Kyocera Corp, to head JAL during the restructuring process. Inamori is to reply to the government by the end of the week.

Officials at JAL, the transport ministry and the turnaround body were not available for comment yesterday.

Amid bankruptcy fears, shares in JAL continued to tumble, with their closing price falling nearly 12 percent on Friday to 67 yen (72 US cents).


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