Sept. 18 (Bloomberg) -- American Airlines may lead other carriers in the Oneworld alliance in investing in money-losing Japan Airlines Corp., which joined the marketing group in 2007, two people familiar with the plan said.

American, the world’s second-largest airline, hired an investment bank as an adviser, said the people, who asked not to be identified because the talks aren’t public. Executives from American and Oneworld members including Qantas Airways Ltd. met with Japan Air two days ago, the people said.

Keeping Japan Air in the alliance would bolster American, which has had a tie-up with Asia’s biggest carrier since 1999, as well as Oneworld. Japan Air also has discussed possible stake sales to SkyTeam alliance members Delta Air Lines Inc. and Air France-KLM, people familiar with those talks have said.

“If both American and Delta came to JAL with equal deals, I would think they’d prefer to stay with American,” said Michael Derchin, an FTN Equity Capital Markets Corp. analyst. “American raised a bunch of cash, and it seems to be like they would want to pull in other partners in a syndicate.”

AMR Corp.’s American said yesterday it generated $2.9 billion in cash and financing, including an advance sale of frequent-flier miles and a sale-leaseback agreement for jets being added through 2011.

Charley Wilson, a spokesman for Fort Worth, Texas-based American, Japan Air spokesman Hisanori Iizuka and Qantas spokesman Simon Rushton all declined to comment about any Oneworld investment.

British Airways’ View

Oneworld member British Airways Plc is trying to persuade Japan Airlines to stay in the alliance and has no plans for a cash investment alongside American, a person familiar with the talks said. BA also isn’t in a position to provide debt guarantees, the person said.

Paul Marston, a London-based British Airways spokesman, declined to comment. Reuters reported earlier that Qantas and British Airways may revise the alliance agreement with Japan Airlines in an investment led by American.

Alliances let airlines expand their networks by pulling in more passengers and sharing revenue at lower costs. JAL’s domestic rival All Nippon Airways Co. is in Star Alliance along with UAL Corp.’s United Airlines and Deutsche Lufthansa AG.

Three Bailouts

Japan Air has received three government bailouts since 2001, the most recent in June, and is predicting its fourth annual loss in five years. The Tokyo-based airline, which is also known as JAL, receives about $500 million a year in revenue from Oneworld partners.

“It’s better for Japan Air to stay in the Oneworld group,” said Mitsushige Akino, who oversees $645 million in assets in Tokyo at Ichiyoshi Investment Management Co. “There would be lots of unseen costs involved in leaving.”

Japan Air and American began selling tickets on each other’s flights, a so-called code-sharing agreement, in May 1999. JAL joined Oneworld in April 2007.

Delta and SkyTeam have a “big motivation” in persuading Japan Air to switch, because the alliance lacks a Japanese partner, said Derchin, who is based in New York and recommends buying shares of AMR and Atlanta-based Delta.

Betsy Talton, a Delta spokeswoman, declined to comment.

AMR fell 15 cents, or 1.7 percent, to $8.65 at 4 p.m. in New York Stock Exchange composite trading, while Delta dropped 20 cents, or 2.2 percent, to $8.96. British Airways slid 4.2 pence, or 1.8 percent, to 235.7 pence in London. Japan Air jumped 2.4 percent to 171 yen in Tokyo.

‘Longstanding Relationship’

“We have a deep, longstanding relationship with Japan Airlines that today is producing hundreds of millions of dollars of value,” American Chief Executive Officer Gerard Arpey said yesterday on a conference call about the airline’s cash infusion. He declined to discuss specifics of any JAL talks.

Delta, the world’s biggest carrier, is seeking a $500 million term loan that matures in 2013, people familiar with the talks have said. It also is planning a private offering of $500 million in senior secured notes due in 2014. Proceeds from both transactions would repay other borrowing, Delta has said.

Japan Air posted a 99 billion yen ($1.1 billion) loss in the first quarter, the most in at least six years, as business and leisure travel plummeted during the country’s worst postwar recession.

The carrier, privatized by the government in 1987 and now Asia’s most-indebted airline, had a 25 percent drop in overseas passengers in June, the biggest decline since outbreaks of severe acute respiratory syndrome and bird flu in 2003. It gets more than half its airline business from international travel.

JAL may collapse unless it shrinks operations, reforms its high-cost structure and regains lenders’ confidence, Seiji Maehara, the country’s new transport minister, said yesterday.

Standard & Poor’s said today in a statement that it may reduce Japan Air’s B+ credit rating because of the global economic slowdown, “poor business performance” and questions about how much support the airline may get from Japan’s new government.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

Last Updated: September 18, 2009 16:11 EDT