JAL bankruptcy proposed as option; largest labour unions to accept pension benefit cuts
Enterprise Turnaround Initiative Corp of Japan (ETIC) has reportedly submitted plans to the Development Bank of Japan and Japan Airlines' main creditor banks (Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group), including a proposal that JAL file for protection from creditors under the Corporate Rehabilitation Law, with the ETIC to then become a potential sponsor of the airline (Nikkei Business Daily, 27-Dec-2009). Under the plans, lenders are reportedly expected to be requested to waive debt and JAL's pension obligations will likely be reduced. Other points under discussion reportedly include providing fresh loans and investments for the carrier, and restructuring outside of the bankruptcy court.
Meanwhile, JAL’s three largest unions, which represent approximately 65% of employee, reportedly support a proposal to reduce pensions, as part of plans to keep the struggling carrier operational (Asahi Shimbun, 29-Dec-2009). The airline requires the support of two-thirds of retirees and employees to back the reduction, part of wider cost-cutting plans designed to return the company to profit. Japan Airlines’ largest union (with 9,500 members), JAL Friendship & Improvement Organisation, has stated it would accept the proposal, noting it is a “necessary step”, in the recovery of the airline (Kyodo, 29-Dec-2009).