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A tug of war is unfolding for struggling carrier Japan Airlines Corp. (9205.TO) between alliances Oneworld and SkyTeam, the latest move in airline rationalization following Air China Ltd's (0753.HK) expanded stake in Cathay Pacific Airways Ltd. (0293.HK) and the tie-up between British Airways PLC (BAY.LN) And Spain's Iberia Lineas Aereas de Espana SA (IBLA.MC).

But Oneworld - the smallest of the big three global airline groupings - appears to be in a lose-lose situation.

Keeping Japan Airlines (JAL) on board risks straining the balance sheet of AMR Corp.'s (AMR) American Airlines, Oneworld's biggest member by enterprise value, if it takes an equity stake in JAL.

Losing JAL would spare American's finances, but potentially at the cost of losing Oneworld's second biggest revenue generator and leaving a big hole in Oneworld's Asia coverage - the fastest growing region for air travel.

Sure, with $2.8 billion in cash and short-term investments at hand as of end-June 2009 American could pony up the Y30-50 billion JAL is believed to be panhandling for.

But American Airlines' long-term solvency position is arguably even worse than JAL's. Total debt to total capital at American is 203% and 142% at the parent AMR Corp. level, the highest for the big carriers operating under the Oneworld flag. And American doesn't have much of a liquidity buffer: it drew down its entire $255 million revolver back in September 2008 and burnt through $2.2 billion worth of cash and short-term investments on its balance sheet in the last 12 months.

At Delta Air Lines Inc. (DAL), JAL's other potential investor, total debt to total capital, although not fantastic, is considerably lower at 94%. Delta also had $4.9 billion of cash and short-term investments to tap at June-end, an undrawn $500 million revolver (although due to be renegotiated some time in 2010), and no pressing bond refinancing until 2012.

If fellow SkyTeam member Air France-KLM (AF.FR) were to pitch in with a joint offer then Delta's burden is defrayed further.

Given the circumstances, American would probably prefer not to chuck $300-$500 million at JAL. However, the risk is a Y50 billion placement at current market rates would give Delta an 11.2% stake in the Japanese airline and turn the screws on it to jump ship and join Skyteam.

To be sure, a SkyTeam outfit taking a JAL stake doesn't preclude it from remaining in the Oneworld camp. Air China has just shy of 30% of Cathay, yet it is a member of Star Alliance while Cathay sits with Oneworld.

But Tokyo's bureaucrats have been squawking about the wisdom of a Delta tie-up since August and have now been joined by politicians. Given the carrier's quasi-public status that may cause concerning among Oneworlders.

A defection by JAL, which joined Oneworld in April 2007, would disembowel the coalition of its second largest revenue generator. Oneworld estimates that two-thirds of revenue in its decade of existence would not have been generated had the organization not existed (http://www.oneworld.com/ow/news/details?objectID=16588).

Alas, Oneworld also has the patchiest footing in the Far East. Bar JAL, the clan can only claim Cathay, and - at a stretch - Qantas Airways Ltd. (QAN.AU) as Asian carriers.

SkyTeam has China Southern Airlines Co. (1055.HK) and Korean Air Co. (003490.SE), and Northwest Airlines Corp. (NWA), which is to be folded into Delta, already uses Tokyo's Narita airport as a de facto Asia hub.

Star Alliance has Singapore Airlines Ltd. (C6L.SH), All Nippon Airways Co. (9202.TO), Asiana Airlines Inc. (020560.KQ) and Thai Airways International PCL (THAI.TH) among others.

China Eastern Airlines Corp. (0670.HK) is being courted by both Oneworld and SkyTeam.

Both camps and their advisers may want to turn up the charm offensive for one of the few remaining Asian carriers that sits outside a global airline coalition.

Given what's at stake for American and Oneworld they need all the charm and money they may have.

(Jamie Miyazaki is a columnist for Dow Jones Newswires covering Asia. He can be reached at +852 2832 2320 or by email: jamie.miyazaki@dowjones.com. Dow Jones Newswires is enhancing its news, commentary and analysis for the investment banking community, and is providing it on this service temporarily. To ensure continued access to the best of Dow Jones news and opinion on companies, sectors and deals for bankers and research analysts, please contact investmentbanker@dowjones.com.)