TPG-backed JAL offer takes a step forward

Japan Airlines and American Airlines have applied for antitrust immunity ahead of a potential business agreement, bringing a TPG-backed rescue deal one step closer to reality.

TPG and US airline operator American Airlines (AA) may finally have won over struggling national carrier Japan Airlines (JAL).

The two airlines have applied to the Ministry of Land, Infrastructure, Transport and Tourism of Japan and are seeking antitrust immunity that will enable them to enter into a joint business agreement, JAL said in a statement. 

The two airlines already submitted an application for antitrust immunity with the US Department of Transportation in February, the JAL statement noted. The application for antitrust immunity means that a deal between the parties involved could be imminent. TPG declined to comment. 
TPG and AA and its partners in the Oneworld Alliance of airlines have been pursuing JAL since the end of 2009. In December last year, they originally offered to invest $1.1 billion to restructure the Japanese airline. In January, the two parties made a revised offer which saw them increase their bid to $1.4 billion. 
As part of the agreement, the two members of the Oneworld Alliance would cooperate more closely on the operation of flights between North America and Asia, JAL said. Once approvals are obtained from regulators in both countries, the two airlines will operate as separate legal entities and work closely together to strengthen their service offerings. They will also be able to improve efficiency and lower operating costs.
The $1.4 billion offer made by TPG and AA in January was part of a $2 billion commercial benefit plan for JAL put together by AA, British Airways, Qantas Airways and Cathay Pacific Airways. The revised bid was made in an attempt to prevent JAL from joining hands with Oneworld rival Delta Airlines and defecting to the SkyTeam group of airlines, which offered the Japanese airline a $1 billion package that included buying $500 million worth of JAL shares. 
The Japanese airline has been nearing bankruptcy and on 19 January filed an application with the Enterprise Turnaround Initiative Corporation of Japan (ETIC) for support on the restructuring of its business. The company had debts of about ¥1.16 trillion (€10.5 billion; $12.9 billion) at the time, and a large pension deficit as well.