Japan Airlines proposes slashing pension benefits more than 40%

Posted 24/11/2009

Japan Airlines President Haruka Nishimatsu yesterday told former employees that the company's pension benefits must be cut significantly to enable it to become sustainable long-term.

Troubled JAL is attempting to enter into a government-backed restructuring and is negotiating with Delta Air Lines and American Airlines about one of those carriers potentially taking a stake (ATWOnline, Nov. 19). Its pension funding deficit, estimated to be more than ¥300 billion ($3.37 billion), is making both its creditors and the Japanese government wary about providing relief.

Nishimatsu yesterday addressed a large audience of retired JAL workers, personally apologizing for the weak state of the airline and proposing that retirees' benefits be slashed by 30% while current employees' pension benefits would be cut by 50% for a total collective reduction exceeding 40%.

"With our current state, it will be difficult to turn around the company without public funds," he told the group, according to Kyodo News. "I first want to explain the fact that pension reforms will be necessary to reconstruct our company through obtaining public funds in a way that can gain public acceptance."

Following the address, he told reporters that he is seeking current and former workers' "understanding" that it is necessary for pension benefits to be "largely slashed by over 40%." He added, "Without revising the pension plan, we cannot move forward" on a restructuring program.

Nishimatsu told the former workers that he and his management team bore some responsibility for the airline's fiscal troubles and indicated he may resign once a viable restructuring plan is in place. "My biggest and last mission is to pass on the company. . .to the next generation," he said, according to Kyodo. "I will make a decision on my future in an appropriate manner and it will not take long."

by Aaron Karp

Originally published 25 Nov 2009 at: http://feeds.atwonline.com/~r/AtwDailyNews/~3/ecEA-IDh-MY/story.html