Tuesday November 24, 6:23 PM
Japan govt urges JAL to slash pension payouts
Japan's transport minister Tuesday urged struggling Japan Airlines to slash its pension payouts before seeking a public bailout as investors dumped JAL stock, sending its share price skidding.
Asia's biggest carrier has been hovering on the brink of bankruptcy in a crisis blamed on its huge pension costs, mismanagement and the wider aviation industry downturn caused by the worldwide economic slump.
"In the eyes of the public, it would be hard to understand if public funds were injected to protect the airline's pension payouts," said Transport Minister Seiji Maehara. "The carrier, including its retired workers, should show first that they can help themselves and clarify their pension policy."
He added: "I still believe JAL can definitely rebuild itself if it carries out drastic restructuring, reviews its routes, replaces ageing aircraft and resolved the pension issue."
JAL shares hit a record low of 85 yen Tuesday before closing at 87 yen, down 8.4 percent, following news that trading house Mitsui & Co. earlier this year sold its entire stake, worth 0.43 percent of JAL.
JAL said later Tuesday it had signed an agreement with the state-owned Development Bank of Japan to receive emergency bridge loans, but it did not disclose their amounts or when they would be made.
"The loan agreement regarding funds necessary for continuance of our flight operations was duly executed by and between Development Bank of Japan and us today," JAL said in a statement.
"We can't disclose the amount of the loan due to the provisions of our deal," JAL spokesman Kojiro Waki told AFP, adding that the airline was also seeking loans from other major banks.
Delta Air Lines and American Airlines have both sought to buy stakes in JAL, which is seeking to restructure under the supervision of the state-backed Enterprise Turnaround Initiative Corp. of Japan.
The carrier proposed a revised pension plan on Monday, which would see an average cut in corporate pension benefits of more than 40 percent -- by 30 percent for retired workers and 50 percent for current employees.
Many retirees reacted angrily to the proposal.
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