oneworld alliance presents USD2 billion offer in enhanced commercial benefits for JAL
American Airlines, along with fellow oneworld founding members, British Airways, Qantas and Cathay Pacific, outlined (12-Jan-2010) a programme of USD2 billion in commercial benefits to Japan Airlines (JAL) over three years, with the carriers commenting that the enhanced oneworld proposal would provide JAL the "best path to future success while minimizing risk for the Japanese government and taxpayers and maximising the benefits for air travelers". The proposal also includes a pledge - "if welcomed" - to offer JAL guidance and expertise from partners that have "successfully executed airline restructurings". Details include:
- Part I: Enhanced USD2 billion commercial benefits over 3 years: The offer would provide for a "vastly enhanced commercial relationships between JAL and American, BA and Qantas". Includes USD1.5 billion in ongoing revenue that JAL realises from oneworld today, USD300 million in incremental revenue guarantees from American Airlines, and approximately USD200 million in enhancements from BA:
- American Airlines: Has already proposed to JAL to apply for anti-trust immunity between the US and Japan, enabling JAL to realise an estimated USD100 million annually in revenue benefits. As part of this enhanced offer, American is guaranteeing the USD100 million in new annual revenue for the first three years of the proposed venture;
- BA: Has proposed a series of enhancements to its business relationships with JAL that will result in USD200 million in new revenue to JAL over three years, including an offer to create a joint business agreement with JAL so that, from Apr-2011 (and subject to regulatory approval), the two carriers can enjoy greater revenue sharing opportunities. It includes plans for BA to support and facilitate a new service between London Heathrow and Tokyo Haneda. From Apr-2010, BA will also more than double the European points on which it codeshares with JAL, and, from Nov-2010, BA will move operations at Tokyo Narita International Airport from Terminal 1 to Terminal 2, to improve passenger connections for flights beyond Narita;
- Qantas: Reinforced its support for JAL, with plans to share its expertise in relation to its two-brand and LCC business strategy;
- Part 2: Expertise/guidance on turning around an airline through restructuring: American and TPG stated they are willing to provide JAL support and cooperation in areas such as fleet planning, network analysis, financial forecasting, revenue management, and maintenance operations, if desired. Additionally, American Airlines/oneworld and TPG are prepared to invest up to USD1.4 billion as part of a comprehensive plan to return JAL to financial vitality. This is a USD300 million increase from the previous proposal;
- Part 3: Cathay Pacific, Qantas and JAL offer "unique cornerstone hubs" in the Asian marketplace: Cathay, with its Hong Kong hub, believes keeping JAL as a member of oneworld is a key to maintaining a strong presence in the strategically important and fast-growing Asian marketplace. [more]
American Airlines: "This proposal demonstrates oneworld's extraordinary commitment to JAL. It brings stability and certainty to Japan Airlines at a time when it is most needed, as it faces turbulent times over the coming weeks and months...Our proposal also brings another crucial value to JAL. And that is the expertise of partners who can assist JAL, if invited, in a complicated restructuring...We believe the oneworld proposal will minimize burdens on Japanese taxpayers, improve air travel services and competition, and will allow Japan Airlines to prosper as a world-class global airline for the long term," Tom Horton, Executive VP Finance and Planning and CFO. Source: Company Statement, 12-Jan-2010.
British Airways: "We are committed to playing a full part in supporting the recovery of Japan Airlines within the oneworld alliance. London remains the premier destination in Europe and needs to be central to JAL's European plans. This change will provide more convenient connections and an improved customer experience for Japan Airlines passengers arriving at Heathrow and connecting to flights operated by British Airways," Roger Maynard, Director of Investments. Source: Company Statement, 12-Jan-2010.
Qantas: "Qantas has offered to share expertise in relation to its two-brand and low-cost carrier business strategy. The Qantas Group's two flying brands strategy has provided Qantas with unique strength in terms of scale, network and customer reach and has enabled us to meet the challenges of the global economic downturn. This model has already proved successful for the Qantas Group on services between Australia and Japan. Given our long-standing partnership with Japan Airlines and the oneworld alliance, Qantas is committed to working with Japan Airlines to ensure its long term viability and success," Rob Gurney, Group Executive Commercial. Source: Company Statement, 12-Jan-2010.
Cathay Pacific: "The corporate business traveler wants access to the world's most prestigious markets and JAL's Tokyo hub and Haneda facilities are vitally important to link flyers to the major business centers of Japan, Hong Kong and Australia," Simon Large, President of Cathay Pacific-Japan. Source: Company Statement, 12-Jan-2010.