Delta Air Lines and its Skyteam partners are willing to pump $700 million of capital into Japan Airlines, which the transport minister now says might be allowed to go bankrupt and forced into a court-directed reorganization.

The offer from Skyteam, aimed at luring the Japanese carrier away from oneworld, comprises $500 million in non-voting equity capital and $200 million in loans secured against Japan Airlines’ assets, said Delta President Edward Bastian.

Delta would also cover up to $300 million in short-term revenue losses resulting from the alliance switch and would separately pay for the direct cost of the change.

Japan Airlines’ annual revenue would rise by $400 million if it moved to Skyteam, said Bastian, although the airline’s main U.S. partner in oneworld, American, said revenue would fall.

American and private equity group TPG are willing to invest up to ¥100 billion (US$1.1 billion), the Nikkei newspaper said in an unconfirmed report.

Japan Airlines President Haruka Nishimatsu has said he wants to finalize capital arrangements with foreign airlines by the end of this year.

Transport Minister Seiji Maehara said he has ruled out liquidation of Japan Airlines but not a bankruptcy, in which a court would oversee the restructuring of the business.

Investment from foreign carriers is an important side issue in JAL’s crisis. The main game for the carrier is getting government capital in turning around its business. It has applied to the government’s Enterprise Turnaround Initiative Corp. for help.

Photo: Japan Airlines