Private Equity Takes To The Sky

Posted: November 11, 2009 at 6:08 am

airplaneAmerican Airlines (NYSE:AMR) is competing with Delta (NYSE:DAL) to form a close partnership with financially troubled Japan Air. Both US carriers would like ready access to JAL’s tremendous network of flights around Asia, where air travel is expected to rise rapidly over the next few years.

American got some help in its quest to be JAL’s preferred partner. US private equity firm TPG may be ready to put up several hundred million dollars that could shore up JAL’s faltering financial state.

American’s plan is to buy a piece of JAL in exchange for much-need cash. JAL lost as much as $1 billion in the first half of 2009 and there has been a great deal of conversation about liquidating the carrier. The Japanese government is faced with the difficult decision of whether to fund the airline, which could cost it billions of dollars or accept an outside investor.

The Japanese government is facing a huge deficit. Foreign capital is better than no capital at all, if JAL is going to stay a going concern

Douglas A. McIntyre

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