American Airlines Future investment in Japan Airlines Corp.

American Airlines said preparations for an investment in Japan Airlines Corp. are at an advanced stage after Delta Air Lines Inc. announced a package of incentives to lure the Asian carrier into a new alliance.

Japan Air, as the airline is known, would face a regulatory risk in leaving American’s Oneworld group and joining Delta’s SkyTeam, Theo Panagiotoulias, American’s Pacific director, told reporters today in Tokyo.

Delta and AMR Corp.’s American, the world’s two biggest airlines, are vying for access to JAL’s routes in its home country and in China, Asia’s largest air-travel market. Atlanta- based Delta unveiled its $1 billion proposal yesterday, while American hasn’t detailed its plan to keep JAL in Oneworld.

“American has much at stake in maintaining an alliance with JAL,” Standard & Poor’s credit analysts Betsy Snyder and Philip Baggaley said today in a statement. “By itself, it does not have a large presence in the Pacific market. Therefore, if Oneworld cannot keep JAL in the alliance, it risks material loss of revenues in the Pacific.”

People familiar with the matter have said American and private-equity firm TPG Inc. may offer as much as 130 billion yen ($1.47 billion) to JAL, which is seeking a government rescue and new investors after losses in three of the last four years.

JAL probably will stay in Oneworld, Dow Jones reported, citing Vice President Shuta Saito. The Tokyo-based carrier will make a decision after agreeing on how to restructure itself with Japanese government aid, Dow Jones reported.

Sze Hunn Yap, a spokeswoman at Japan Air, declined to confirm or deny Saito’s comment. Charley Wilson, a spokesman for American, declined to comment in order to “respect the JAL restructuring process.”

Oneworld’s Response

American’s Oneworld partners are preparing their own proposals, which would be offered along with the plan from American and TPG, to help persuade JAL to stay. There is no schedule for making details public, Oneworld Managing Director John McCulloch said today in an interview from Vancouver.

“A lot of this is moving around, almost by the day,” he said. Other Oneworld airlines aren’t considering equity investments, and instead would help through strengthened alliances, McCulloch said.

Should JAL leave Oneworld in favor of Delta’s SkyTeam alliance, regulatory approval for antitrust immunity “could prove more challenging” because Delta already has the largest presence among U.S. carriers that serve Tokyo, S&P wrote today in a separate note.

The proposed investments by American and Delta wouldn’t affect either carrier’s debt ratings or outlook, S&P said.

Delta fell 17 cents, or 2.2 percent, to $7.59 at 4:15 p.m. in New York Stock Exchange composite trading, while AMR dropped 22 cents, or 3.8 percent, to $5.55. AMR and TPG are both based in Fort Worth, Texas.