JAL seeking 30% cut in retiree pension benefits for bailout

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TOKYO, Nov. 23 Kyodo -
Japan Airlines Corp. executives urged the company's retirees Monday to approve
a cut in pension benefits of approximately 30 percent as the cash-strapped
airline desperately seeks public funds to keep itself afloat.
JAL also proposed a cut of over 50 percent in the pension benefits of current
employees, unveiling numerical targets for the first time as it aims to resolve
the thorny pension issue by the end of January.
''With our current state, it will be difficult to turn around the company
without public funds,'' JAL President Haruka Nishimatsu said in his opening
speech at a meeting with retirees, adding that pension reforms are necessary to
secure public understanding for a government bailout.
''I want this company to survive whatever it takes,'' he said.
Nishimatsu offered an apology at the start of the meeting and admitted
management responsibility for the airline's dire condition, indicating that the
time is nearing when he will make a decision about stepping down.
''My biggest and last mission is to pass on the company, in its concrete form,
to the next generation,'' Nishimatsu told the meeting. ''I will make a decision
on my future in an appropriate manner and it will not take long.''
JAL, which is heading for its fourth annual loss in five years, is seeking
support from a government-backed corporate turnaround body, the Enterprise
Turnaround Initiative Corp. of Japan, for a broad financial package.
But the government has emphasized that the airline will not receive a bailout
using taxpayers' money unless it can fix its high-cost pension system.
To reform the pension system, JAL needs to obtain approval from more than
two-thirds of its retirees as well as its current employees.
If approval cannot be obtained, the government is considering a legislative
measure to enable a mandatory reduction in pension benefits, but the move would
raise questions about the violation of personal property rights.
While specific proposals have now been put on the table, the road ahead remains
uncertain with retirees at the meeting expressing frustration about the lack of
an adequate explanation by the company and anxiety about their postretirement
lives.
''To be honest, I'm still unsure,'' a 59-year-old former employee said after
the meeting. ''I understand the current situation the company is facing and
that our industry is only possible when it is frequently used by the general
public.''
''But pensions are the pillar of our lives after we reach 60 years old,'' he said.
Iwao Maruyama, a former JAL pilot, also lashed out at the proposed pension
cuts, saying, ''It's impossible for Japan Airlines to rebuild itself just by
lowering pensions in the absence of (other) turnaround measures.''
JAL plans to hold a similar meeting with retirees on Thursday and anticipates a
total of around 3,000 people will attend over the two days.
Nishimatsu said the company plans to notify the retirees of the exact level of
pension cuts in an official letter to be sent out after mid-December.
The current proposal will reduce pension payouts by lowering the yield from the
current 4.5 percent to about 1.5 percent, in line with the current yield on
10-year Japanese government bonds.
''I hope that (our retirees) will understand that if we are unable to get their
approval, a major question will arise regarding the continuation of the
company, including (the risk of) legal liquidation,'' Nishimatsu told reporters
after the meeting.
==Kyodo