JAL asks staff to take 40% cut in pensions

Airline "set to ask government for loan"

Japan Airlines (JAL) has asked employees and former staff to take a 40% cut in their pensions.

The 17,000 staff and 9,000 pensioners were told by the airline management that it faced bankruptcy if payments were not cut.

The airline's pension fund currently has a deficit of €2.49bn (JPY330bn).

JAL President Haruka Nishimatsu had made a plea back in May to the company's pension fund for payments to be reduced by more than half, Reuters reported.

The demand comes amid a report in Tokyo that JAL is about to ask the Japanese government for a €760.5bn (JPY100bn) bridging loan from the Development Bank of Japan.

Previous reports have suggested the struggling carrier will run out of cash by the end of this month.

Reuters said the demand was being strongly opposed by those affected.

The agency said they could "easily oppose" them under the law which requires two thirds of the pensioners to approve the changes.

JAL is awaiting a new re-structuring plan now being drawn up by the government's Enterprise Turnaround Initiative Corporation of Japan.

Ministers indicated the plan would be announced earlier this month ahead of the airline's revelation of an H1 loss of €975m (JPY131.2bn)

Previous rescue plans, which were rejected, involved substantial job losses, the axing of routes and a freeze on pay and pensions.

SkyTeam has also offered the airline, currently a member of rival oneworld, a $1bn package to join it.

The offer includes $500m in capital, $320m in revenue guarantees and transition costs and $200m is asset -backed financing.

American Airlines (AA), a leading member of oneworld with BA, is also understood to be putting together a rescue package but has not so far announced details.

Both AA and Delta Air Lines, a leading carrier in SkyTeam, have been in talks with JAL since the Asian carrier's financial woes surfaced.

Besides the government rescue plan, JAL also needs to deal with creditors which include the state-owned Development Bank of Japan, the Mizuho Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation.

The airline is said to need a loan of €1.34bn (180bn yen).

There has also been speculation that when the immediate crisis is solved, the current airline president Haruka Nishimatsu will stand down.

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