American says could top up $1.1 bln offer to JAL

* American Airlines says could increase offer to JAL

* JAL shares jump 3 pct on progress on pension cut support (Recasts after news conference with American Airlines)

TOKYO, Dec 16 - American Airlines said that it, private equity firm TPG and Oneworld alliance partners could increase their $1.1 billion investment offer to Japan Airlines (9205.T), depending on the struggling carrier's restructuring plan.

Conceivably there could be a bigger investment made by the Oneworld/TPG/American group depending on the circumstances that have to be worked out with the government and with JAL, American Airlines CEO Gerard Arpey told a news conference in Tokyo.

JAL is weighing rival financial aid packages from American and Delta Air Lines (DAL.N) as part of a revival effort that hinges upon a capital injection from a turnaround fund backed by the Japanese government and debt forgiveness from its banks.

Asia's largest carrier by revenue appeared to increase the possibility it would get a state bailout with an announcement on Tuesday that most of its retirees were willing to accept cuts to their pension payouts. [ID:nTOE5BE080] [ID:nT199640]

Shares of JAL, which have lost more than half their value this year, jumped 3 percent on the news.

Reducing its $3.7 billion pension shortfall is a prerequisite to receiving a bailout from the Enterprise Turnaround Initiative Corporation of Japan (ETIC), the state-backed fund set to decide on whether to support the airline as early as next month.

Aprey, who is also CEO of American's parent AMR Corp (AMR.N), said its investment into JAL would have to be coordinated with the support of the government. He did not answer directly a question on whether American Airlines and its partners would be willing to invest before the ETIC makes its decision.

If the ETIC decides not to support JAL the airline would likely be restructured in bankruptcy court.

It is part of the overall restructuring that will involve JAL, the government, us and TPG. So I think it all has to happen in concert, Aprey said, following a meeting with Transport Minister Seiji Maehara.

Executives at Delta, which along with SkyTeam alliance members has offered a $1 billion financial aid package to JAL including a $500 million equity investment, met with Maehara last week to press their case for wooing JAL away from Oneworld.

PENSION CUTS

Both U.S. airlines are keen to gain access to JAL's network across fast-growing Asian markets and to gain a stronger foothold in Japan following the expansion of Tokyo's Haneda airport in 2010.

They have also said they would seek anti-trust immunity under the open skies treaty signed last week. A so-called immunised partnership would allow airlines to work closely on pricing and scheduling to boost revenues and cut costs. [ID:nN11142884]

American Airlines has argued that Delta and JAL would not be able to get antitrust immunity because SkyTeam would control the bulk of travel between the two countries, while also saying JAL risked losing revenue by leaving Oneworld.

Delta has said it believes it could receive regulatory approval for anti-trust immunity while highlighting its larger network, which it estimates would bring more revenue to JAL over the long term.

Aprey said American would object to an antitrust immunity application by Delta and JAL and would look at all possibilities in an effort to block such a move.

The talks with American and Delta remain one small component of JAL's restructuring efforts.

JAL still needs two-thirds of 8,800 retirees and of 17,000 employees to agree to pension reductions to get a state bailout.

JAL said on Tuesday that 5,700 retirees had said in a company survey they were willing to accept proposed cuts to pension payouts, and it could get the two-thirds support it needs if some of the 1,200 retirees who did not respond eventually agree.

I was surprised to see the survey result as I didn't expect this many retirees would indicate their willingness (to accept cuts), said Ryouta Himeno, an analyst at Mitsubishi UFJ Securities. It looks like JAL could secure formal approval from its retirees, which could really help in its turnaround.

The airline will ask retirees and employees to give their formal consent to an average 40 percent cut to their pension payouts by the end of January.

JAL also said that 90 percent of its employees had responded in the survey that they understood the need for pension cuts.

If JAL and its employees and retirees cannot come to an agreement, the government has said it would consider crafting legislation to forcibly implement cuts. [ID:nT188821] (Editing by Joseph Radford and Rupert Winchester)