Rehab team eyes legislation to cut JAL pensions

by

The government formed a team Friday to discuss measures for financially troubled Japan Airlines Corp., including a bridge loan JAL is expected to need for survival as early as next month and proposed legislation to cut the carrier’s pension benefits.

Following turnaround proposals from the transport ministry’s task force Thursday, JAL has asked for a government bailout through the Tokyo-based Enterprise Turnaround Initiative Corp., which was jointly set up by the government and about 130 private-sector financial institutions to rehabilitate debt-ridden companies.

The new team consists of transport minister Seiji Maehara and eight senior vice ministers from ministries related to JAL’s reconstruction, including the welfare, Finance, internal affairs and trade ministries.

“(JAL’s reconstruction process) has moved to a new stage,” Maehara said Friday morning after the Cabinet meeting.

Measures the team will discuss include a ¥180 billion bridge loan to avoid a disruption of JAL’s operations, even during the reconstruction, and legislation to reduce corporate pension benefits, he said.

The pensions are considered too heavy a burden for the financially strapped airline, and the government reportedly may push for a special law to forcibly reduce these benefits to save Japan’s top air carrier.

But such legislation may be legally difficult because it could violate citizens’ property right protections under the Constitution, expert said.

“I understand there are various opinions on the pensions. We need to look at this issue from the viewpoint of the general public, but this is also a corporate pension system that involves property rights,” said Maehara, adding he will seek a solution that engages all the parties involved.