5-Jan-2010 9:52 AM

JAL still in talks with Delta and American Airlines; majority of employees accept pension cuts

Japan Airlines (JAL) and the Japan Government reported the following developments on 04-Jan-2010:

  • International partners: American Airlines stated it is still in talks with JAL on a possible equity infusion to keep the carrier in the oneworld alliance, with American stating that media reports that JAL had decided to join Delta Air Lines/SkyTeam are “inaccurate and misleading” (Bloomberg, 04-Jan-2010). JAL has also denied the reports, stating it remains in talks with both Delta and American (Associated Press, 04-Jan-2010);
  • Pension reductions: JAL stated that more than two-thirds of its current employees have agreed to accept the company's proposal to substantially reduce pension benefits (Kyodo, 05-Jan-2010). Approximately 67% of the carrier’s approximately 16,000 employees had responded positively to JAL's proposal as of 04-Jan-2010, according to the carrier, although it remains unclear as to whether the airline’s retirees would also accept the reductions. A deadline has been set for 12-Jan-2010 for retirees and current workers to respond to the proposal, with only one third responding to-date;
  • Bankruptcy option: JAL could reportedly remain listed if it does file for bankruptcy in a restructuring plan under consideration by state-backed Enterprise Turnaround Initiative Corp (ETIC) (Reuters, 04-Jan-2010). JAL’s top private lenders/banks are reportedly against the prepackaged legal bankruptcy proposed by ETIC, with major shareholder, Mizuho Corporate Bank,  reportedly the most vocal in its opposition (Nikkei, 05-Jan-2010);
  • Share price: Started 2010 with a 31% surge on 04-Jan-2010, following news that state-owned Development Bank of Japan would double the airline’s credit line to USD2.2 billion. The carrier’s shares slumped 30.9% last week to end the year at a record low, following concerns the carrier was facing financial difficulties and could be facing bankruptcy.

American Airlines: "American Airlines at present continues to negotiate with Japan Airlines. American Airlines remains convinced, as it has been until now, that for Japan and the Japanese people, oneworld and American Airlines are the best partners for Japan Airlines," Company Statement. Source: Associated Press, 04-Jan-2010.

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