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JAL eyes 30% cut in pensions
By Yoko Kubota |
November 23, 2009, Monday
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Print Edition
Print Edition
JAPAN Airlines is mulling to propose a plan to cut pension payments to its retirees by 30 percent on average, a reduction in cuts from its original plea of more than half, the Nikkei business daily said yesterday.
The plan by the struggling carrier, facing strong objection from its retirees, could be key to its restructuring as it awaits a decision on aid by a government-backed turnaround entity, expected to come in January.
JAL, choking on US$15 billion in debt and crippling pension costs, has applied for aid from a state-backed turnaround entity and could receive a big injection of public money if it secures creditors' backing and comes up with a viable restructuring plan.
That plan hinges on addressing its pension shortfall, which Asia's largest airline by revenue estimated at 330 billion yen (US$3.7 billion) in March.It remains, however, unclear whether the company can win necessary support from its retirees with its 30 percent reduction plan, Nikkei reported.
For its current employees, JAL plans to propose cutting pension payment by a weighted average of 50 percent, Nikkei said.
In May, JAL President Haruka Nishimatsu asked the company's pension fund for payments to be cut by more than half, triggering strong opposition from retirees and employees who under current laws can easily block any cuts to their benefits if just one-third of them vote against.
To get around this, the government has been considering legislation to push through reductions to pension payouts.
JAL aims to present its detailed plans on pension payment cuts before year-end, Nikkei reported, adding it will not mention specific pension reduction plans in meetings for its labor unions and its retirees, both set to take place today.
JAL was not immediately available for comment.
The plan by the struggling carrier, facing strong objection from its retirees, could be key to its restructuring as it awaits a decision on aid by a government-backed turnaround entity, expected to come in January.
JAL, choking on US$15 billion in debt and crippling pension costs, has applied for aid from a state-backed turnaround entity and could receive a big injection of public money if it secures creditors' backing and comes up with a viable restructuring plan.
That plan hinges on addressing its pension shortfall, which Asia's largest airline by revenue estimated at 330 billion yen (US$3.7 billion) in March.It remains, however, unclear whether the company can win necessary support from its retirees with its 30 percent reduction plan, Nikkei reported.
For its current employees, JAL plans to propose cutting pension payment by a weighted average of 50 percent, Nikkei said.
In May, JAL President Haruka Nishimatsu asked the company's pension fund for payments to be cut by more than half, triggering strong opposition from retirees and employees who under current laws can easily block any cuts to their benefits if just one-third of them vote against.
To get around this, the government has been considering legislation to push through reductions to pension payouts.
JAL aims to present its detailed plans on pension payment cuts before year-end, Nikkei reported, adding it will not mention specific pension reduction plans in meetings for its labor unions and its retirees, both set to take place today.
JAL was not immediately available for comment.
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