Airlines Fight Over JAL's Carcass

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Early predictions give Delta Air Lines the edge over American Airlines in the forthcoming tug of war over increased access to Asian routes now flown by Japan Airlines. JAL was scheduled to declare bankruptcy at 3 p.m. Tuesday and is a member of the Oneworld Alliance, an international codeshare group with airlines like American, Qantas and British Airways. However, rival SkyTeam Alliance, which includes Delta, KLM and Air France, is trying to lure JAL away so its members can capitalize on the extensive network of routes in Asia, one of fastest-growing areas for airline travel. Meanwhile, the JAL bankruptcy will become Japan's largest as the company walks away from $16.5 billion in debt.

The bankruptcy is expected to put a chill on investments in Japan because it had widely been assumed that JAL was simply too large to be allowed to fail and that the Japanese government would prop it up. However, the fortunes of Japan's flag carrier have sagged in recent years, with maintenance issues tarnishing its reputation and politically important but financially difficult domestic routes sucking revenue from the more profitable international flights. About 60 percent of shares are held by individuals and they are expected to lose everything if, as expected, the stock is delisted by the Japanese Stock Exchange.