The loss of Japan Airlines as an alliance partner would sting AMR Corp.'s American Airlines, but also push the U.S. carrier to open other doors, such as a link with a Chinese airline.
JAL, Asia's largest airline by revenues, has filed for bankruptcy as part of a restructuring crafted by a state-backed turnaround fund.
Some analysts think the bankruptcy filing would make it easy for JAL to abandon its deal with AMR in favor of membership in Delta Air Lines' SkyTeam alliance.
Against this backdrop, AMR and Delta have been wooing the Japanese carrier, which offers access to routes in growing Asian markets.
But there's more than one way to ensure growth for a U.S. airline in Asia, said U.S. airline consultant Michael Boyd.
"In the long term it might be even better for American (if JAL is lost as a partner) because it's going to force them to go across the Sea of Japan and cut a deal with a Chinese carrier, and that's where the real growth is going to be," Boyd said.
For American, which is trying to keep JAL in its Oneworld alliance, the stakes are high as it looks to improve its competitiveness against industry leader Delta and UAL Corp.'s United Airlines on Asian routes.
Earlier this month, American and its Oneworld partners sweetened their offer to keep JAL from defecting to Delta's SkyTeam alliance.
American boosted its offer by $300 million to $1.4 billion to counter Delta's $1 billion financial aid package.
Morningstar analyst Basili Alukos said bankruptcy might make it easier for JAL to wriggle out of its alliance with AMR.
"My hunch is that it will create an easier opportunity for JAL to break free from the old AMR contract," Alukos said.
In recent days, reports have suggested that Atlanta-based Delta, with its strong trans-Pacific route structure, could be irresistible for JAL.
A Japanese newspaper reported on Saturday that JAL has already agreed on a tie-up with Delta.
By switching to SkyTeam, JAL would see an annual revenue increase of $400 million, Delta has estimated. A JAL-Delta alliance would also control a greater share of the market between Japan and North America than the JAL-American link.
"Joining hands with Delta would leave more room for restructuring and boost revenues by channeling more passengers from the U.S. through JAL's route network in Asia," said Yasuhiro Matsumoto, senior credit analyst at Shinsei Securities.
But Matsumoto added that the state-backed Enterprise Turnaround Initiative Corp of Japan, the fund overseeing JAL's revival, "needs to make an exit in three years and switching alliances is a risk that could prove difficult to take."
The government does not have an official stance on who JAL should ally with. Some senior officials in the transport ministry are pushing for JAL to defect to SkyTeam, sources have told Reuters.
But other government officials have floated the idea of JAL pulling out of international operations altogether and transferring those routes to All Nippon Airways.
For its part, American has conceded that losing JAL would cut off Oneworld's access in Japan and force it to look elsewhere for a partner.
"We would have to undertake a complete re-evaluation of how we dealt with Asia," Will Ris, American's senior vice president for government affairs, told Reuters in a recent interview.
Ris said a substantial number of passengers that American carries in its JAL partnership go beyond Tokyo to other cities on JAL domestically or internationally.
"Our share of the market would diminish considerably and because there is no other carrier to partner with in Japan, we would have to look for opportunities outside Japan," Ris said.
Boyd, the consultant who is head of Colorado-based Boyd Group International, said losing JAL as a partner would cut off a lot of connecting access American has to Taipei, Manila, Bangkok and other major Asian cities.
"Those flows are increasingly important, particularly for American because American is flowing people from South America over to Asia, and South America-Asia is the biggest single growing market in the world," Boyd said.
But eventually, American could gain, if it reached for a new partner in China, considering carriers such as Hainan Airlines, Boyd added. That would position the carrier to capitalize years from now, as cities such as Shanghai grow.
"If American gets squeezed out, it's going to hurt in the near term," Boyd said. "But in the long term, they're going to find themselves not boxed into having a major operation in Tokyo."
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