BA Too Poor To Shell Out For JAL - Needs Sugar Daddy Fast

British Airways needs all the friends it can get these days. So while it has been so far left out of the global realignment of the airline industry. Is this the right time? Is this even possible given their rather weak balance sheet these days? What are the issues and risks associated - read on if you want to see if BA can support JAL's survival fight.

BA has a rather large issue in its balance sheet that is not addressed other than in the footnotes - that is their rather large Pension Fund deficit. For a large cash deal required to solve JAL's issues that makes it very difficult for BA to raise cheap cash to handle or even contemplate any such deal.

Add the fall of the pound against the Euro making the deal with Iberia even less of an easy and BA ascendant arrangement. Also the fall of the pound against the dollar makes a deal with AA less attractive even though no equity has been discussed as far as we can tell.

So that leaves an interesting question. If BA wants to do this - where could they get the money?

Well let's do this by process of elimination.

Pension funds NOPE

Government NOPE

OneWorld Partners - lets see:

American Airlines - Unlikely

Qantas - Not now

Cathay Pacific - No

LAN Chile - Possibly but their ability to raise cash would be somewhat limited

Finnair or anyone else - nope...

So who does that leave?

Banks maybe?  its a risky proposition as any cash that they get could be diverted to solving the pension issue.

So junk bonds and that market is moribund. The only possibility seems to be a consortium. But that creates fractious situations and not necessarily good partners. JAL is sick and multiple sick carriers together is not a recipe for success.

So BA really does need a sugar daddy. Trouble is finding one is going to be pretty hard. All the usual suspects are well under cover. If one was to emerge - it would be from an unusual quarter.

Timothy O'Neil-Dunne consults with leading institutions through GLG