Global Biz

Japan seeks approval for JAL bankruptcy

(Xinhua)
Updated: 2010-01-12 13:40

An aircraft of Japan's largest airline Japan Airlines Corp (JAL) taxis along the runway at Haneda airport in Tokyo in this January 17, 2009 file photo. [Agencies]

TOKYO: Japan's Minister of Land, Infrastructure, Transport and Tourism, Seiji Maehara, met with Japan Airline Corporation's major creditor banks on Tuesday to seek approval for a court-led rehabilitation plan for Asia's largest carrier, that will involve the filing for bankruptcy protection.

The government is expected to issue a statement later today to confirm its stance on the matter and to allay public concerns about the carrier's operating potential, an issue JAL's president and CEO, Haruka Nishimatsu, who has vocally opposed the idea of bankruptcy, believes will negatively impact customer sentiment towards Japan's oldest and largest carrier, sources said.

JAL's biggest lender, the Development Bank of Japan, has already approved bankruptcy measures as being the most prudent step forward for the cash-strapped carrier and Tuesday's meeting saw the government implore commercial creditor banks, Mitsubishi UFJ and Sumitomo Mitsui Banking Corp., to continue their financial support for the carrier, ahead of the state-backed Enterprise Turnaround Initiative Corp. of Japan pursuing a court-led restructuring process.

JAL's bankruptcy would mark one of the biggest liquidations of a Japanese firm in history.

Meanwhile Prime Minister Yukio Hatoyama on Tuesday also called for JAL's retirees understanding of the carrier's predicament and to assume some of the responsibility.

"I understand that they are worried about their livelihoods if the pensions, which I assume they have long expected to receive once they got old, are cut back significantly," Hatoyama told reporters in front of his official residence Tuesday morning.

"But if we talk about who is responsible for the current bleak situation of JAL, I believe all of them should take responsibility," he said.

JAL's employees have enjoyed lavish retirement packages over the years, which for many current and former employees was the lure of the company.

JAL must receive a two-third majority approval from its 9,000 retirees to accept pension and benefit cuts of more than 30 percent by Tuesday, but many retirees are opposed to the cuts and are being urged by a minority to accept the burden as part of their ongoing their loyalty to the company.

The state-backed Enterprise Turnaround Initiative Corp. of Japan plans to dissolve JAL's corporate pension fund if the airline fails to implement the cuts, which would potentially leave the pensioners in a more detrimental situation.

The retirees will vote on the matter later on Tuesday.