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Wednesday, Nov. 11, 2009
JAL rehab plan revealed, includes DBJ bridge loan
The government revealed on Tuesday a set of measures to keep Japan Airlines Corp. afloat, including a bridge loan by a government-linked bank and possibly a special law to reduce pension benefits for retired workers of Japan's top airline.
The government will ask the Development Bank of Japan to provide the bridge loan to JAL if the company requests it for operating money, transport minister Seiji Maehara said.
"I believe that JAL is expected to face financial trouble this month and will make such a request," Maehara told a news conference at the transport ministry.
Maehara did not comment on how big the loans would be. To avoid a disruption of JAL's operations, a ¥180 billion bridge loan is reportedly needed before the end of this month.
Maehara said the government will not provide a government guarantee to the DBJ's loan at first, but will allocate the necessary funds or enact a law to do so later if necessary.
The measures were announced by five key ministers, including Maehara and Finance Minister Hirohisa Fujii.
The Cabinet members also said it will keep studying what legal measures will be needed to reduce pension benefits, including a special law to forcibly cut payments to retirees.
Maehara stressed that it would be "preferable" to cut pension benefits based on the agreement of current and former JAL workers, not through a special law.
Under current laws, pension benefits are not to be forcibly cut without the agreement of more than two-thirds of JAL's retirees.
The pensions are considered too heavy a burden for the financially strapped airline, and Maehara admitted that the reserve fund for the pension is far short of its pension liabilities.
"Senior vice ministers on the government's JAL rehab team are discussing some possible laws (to reduce the pension)" if the retirees do not agree, Maehara said.
A statement signed and released by the five ministers said public funds should not be used to cover pension benefits for JAL retirees.
The airline posted a record group net loss of ¥99.04 billion for the April-June quarter this business year.