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JAL and Malaysia Airlines aim to form 'joint venture'

Carriers to share income and gain Southeast Asian and North American passengers

TOKYO -- Japan Airlines and Malaysia Airlines are entering a flight-sharing and marketing tie-up, as the Japanese carrier takes another step to expand its Asian alliances since it was freed from government restrictions in 2017.

The restrictions were imposed after the airline in 2010 was bailed out under the Corporate Rehabilitation Law. The tie-up with Malaysia Airlines is expected to strengthen its network of international flights.

The carriers are calling their collaboration a "joint venture." In the aviation industry, the wording carries specific meaning -- tie-ups that allow partners to share income like a single company as well as adjust flight and fare schedules.

The joint venture allows for more than code-sharing operations and enables passengers to more easily make connections.

The Japanese and Malaysian governments must grant the partnership antitrust immunity. The airlines applied for waivers from their countries' aviation authorities in April, and their joint venture will remain in limbo until the approvals come in.

The joint venture is aimed at attracting passengers flying to and from Japan and Malaysia as well as passengers flying between Southeast Asia and North America via Japan.

Malaysia Airlines has seen its earnings deteriorate since 2014, when one of its jetliners disappeared while en route from Kuala Lumpur to Beijing and another was shot down while flying over Ukraine. The airline is also battling with the cut-rate AirAsia Group. Malaysia-based AirAsia in 2017 ranked 31st in the world in terms of passenger numbers, while Malaysia Airlines finished in 76th place, according to data from the International Air Transport Association.

Like JAL, Malaysia Airlines has also needed a government-sponsored bailout. State fund Khazanah Nasional promoted a restructuring that has nevertheless left the carrier with a number of problems. The airline is weighing whether it should discontinue operations or put itself up for sale.

While entering into the joint venture, JAL will not acquire a stake in Malaysia Airlines.

JAL had been restricted from making investments and flying new routes, conditions placed on its bailout in consideration for All Nippon Airways, now Japan's largest carrier. Since the restrictions were lifted in the spring of 2017, JAL has partnered with China Eastern Airlines, Hawaiian Airlines and Garuda Indonesia. These partnerships could expand into joint ventures.

Japan Airlines and Malaysia Airlines are members of the Oneworld alliance.

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