JAL secures quota of retiree approval for pension cuts

19:00, January 12, 2010      

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A spokesperson for Japan Airlines Corp. said on Tuesday that two-thirds of its retirees have agreed to the pension and benefits cut proposal laid out by the airline, an issue which was a major obstacle to be cleared before the cash-strapped carrier could receive an injection of public funds to keep the ailing carrier in the air.

Japan Airlines' planes are seen at Haneda airport in Tokyo January 3, 2010. The main lenders to Japan Airlines plan to accept a restructuring package that would require the carrier to file for bankruptcy, sources said. (Xinhua/AFP Photo)

A JAL official said the corporation had received notifications of agreement from 5,991 of the 8,936 retirees asked to comply with the pension cut proposal.

Effectively 67 percent of JAL's retirees have given their approval to have their pension provisions reduced by more than 30 percent, although sources close to the matter indicate that had JAL not received a two-third majority vote on the issue, the retirees may have ended up worse off, as a state-backed turnaround body was leaning towards liquidating the firm's pension funds entirely.

The airline can now address a pension shortfall estimated at being in the region of 331 billion yen (3.60 billion U.S. dollars),as the company moves towards a state-backed rehabilitation plan that will see the carrier filing for court-led bankruptcy as part of a broader rehabilitation plan, analysts indicate.

Japan's transport minister, Seiji Maehara, having obtained approval from JAL's main creditor banks for the rehabilitation plan, said Tuesday the government would make "all-out efforts" to achieve the rehabilitation of Japan and Asia's biggest airline, "without any interruption to its operations."

However, the transport minister declined to comment on whether the court-backed restructuring process would mean that JAL would be filing for bankruptcy protection.

JAL's potential bankruptcy would theoretically mark one of Japan's biggest ever corporate liquidation processes.

Source: Xinhua
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