Gov't arranging JAL rescue package with forced pension cuts+

TOKYO, Nov. 6 Kyodo -
The government is making arrangements to compile a comprehensive rescue package
for struggling Japan Airlines Corp., including special legislation to enable a
mandatory reduction in high corporate pension benefits, sources familiar with
the matter said Friday.

Transport minister Seiji Maehara is ironing out the details with related
ministries involving finance and labor so that the government can announce
financial support measures before JAL reports its earnings results for the
April to September period on Nov. 13, the sources said.
Meanwhile, JAL President Haruka Nishimatsu notified the company's labor unions
of a plan to forgo winter bonus payments as the airline seeks to turn itself
around using funds from a state-backed corporate turnaround body. It would be
the first withdrawal of the bonus payments since Japan's top airline was fully
privatized in 1987.
The government team aiding JAL's reconstruction is also considering other broad
aid measures such as a reduction in landing fees and aviation fuel taxes.
It is also considering special legislation to attach government guarantees on
bridge loans to the cash-strapped airline in order to obtain the consent of
creditor banks, the sources said.
The government had earlier hoped to attach the guarantees to loans provided by
the state-backed Development Bank of Japan under an emergency program to prop
up companies hit hard by the financial crisis.
But the plan fell apart amid opposition to applying the program to the airline,
which has already received three bailouts in less than a decade and is headed
towards its fourth annual net loss in five years as a result of management
failure and a high-cost structure.
The new government team is now working on a new proposal to seek 100 billion
yen in loans from the DBJ without the state guarantees and will later switch to
guaranteed loans once the new legislation is enacted, the sources said.
Earlier in the day, the team asked the company's main creditor banks to provide
bridge loans to keep the airline afloat, but the banks did not give an
immediate response since they have repeatedly called for the government
guarantees before furnishing more funds.
JAL is facing the risk of a cash shortage as early as the end of this month,
but a viable measure to reduce its high corporate pension benefits had been a
prerequisite for the government to attach the guarantees to prevent taxpayers'
money being used to fund the high-cost system.
The company recently sought support from the government-backed corporate
turnaround body, the Enterprise Turnaround Initiative Corp. of Japan, but the
airline urgently needs about 180 billion yen in short-term financing to support
operations until the entity formally decides on a rescue package, the sources
said.
Maehara, minister of land, infrastructure, transport and tourism, had also
called on JAL retirees to understand the company's dire situation after they
reiterated their opposition to having their pension benefits reduced.
''I ask that retirees make a comprehensive decision in view of the fact that
the company's survival is at stake without a reduction in legacy costs
including the pension benefits,'' Maehara told reporters after a Cabinet
meeting in the morning.
Separately, JAL said Friday that it will continue to impose fuel surcharges on
international flights for tickets issued between January and March due to high
fuel prices.
==Kyodo
2009-11-07 00:34:18