07 January 2010

AA Tries Belatedly To Up The Ante For JAL

After its lackluster effort promising exclusivity to JAL, AA has put its hand in its pocket (or probably more correctly into TPG's pocket) and pulled out a further $300 million. Which takes the total to $1.4Bn it is prepared to offer to invest in JAL and retain JAL in the OneWorld fold. And in a tip of the hat to reality it has offered to add this to the pie irrespective of a Chapter 11 style filing and subsequent reorg.

Will this change the stakes? Is it too late? It certainly does tip the balance more to AA's favour who is by now realizing the cost of losing JAL would be significant.

With a Court Protected Reorg now an almost certainty for JAL - the decision is slipping out of the hands of the management and into ETIC's remit. With the Government now the largest creditor for JAL - this all plays nicely to the traditional way of solving Japanese issues.

JAL needs a major reorg and it needs it now. There is very little time left to effect this without losing some of the good wood as well as cutting the bad.

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