Brainstorm on JAL, Cabinet told

Prime Minister Yukio Hatoyama has instructed Cabinet ministers to make further efforts to resolve how to rescue Japan Airlines Corp., government officials said.

Latest word: Transport minister Seiji Maehara faces reporters after emerging from a meeting with Prime Minister Yukio Hatoyama on Sunday at the Prime Minister's Official Residence. KYODO PHOTO

Speaking to reporters after meeting with Hatoyama and other ministers Sunday night, transport minister Seiji Maehara indicated that the government will aim to unveil a JAL rescue package by Friday, the same day the airline is scheduled to report its earnings results for the April-September first half of the business year.

"With the release of JAL's interim earnings results approaching, we will further discuss (the rescue package) on the premise we will not create a situation in which airplanes do not fly," Maehara said.

State minister for national policy Naoto Kan, Finance Minister Hirohisa Fujii and administrative reform Minister Yoshito Sengoku also participated in the meeting, the officials said.

JAL has applied for support from the government-backed corporate rescue body the Enterprise Turnaround Initiative Corp. of Japan, and the government is seeking to compile a comprehensive rescue package for Japan's largest airline, which may run out of cash by the end of this month.

The package is expected to center on special legislation to enable a mandatory reduction in JAL's high corporate pension benefits in exchange for the injection of public funds. It is also expected to include a reduction in landing fees and aviation fuel taxes.

The government's plan is considered key to persuading JAL's major creditor banks to provide the airline with bridge loans to keep it afloat until it can get financial help through the turnaround body.

Meanwhile, JAL officials revealed Sunday the airline will skip monthly pay for all executives, including President Haruka Nishimatsu, for December.

It is the first time since JAL merged with Japan Air System in 2002 that the carrier has skipped executives' monthly pay. About 70 top executives will be subject to the plan.

Last week, Nishimatsu notified the company's unions of a plan to forgo winter bonuses, the first move of its kind since the airline was fully privatized in 1987.

It is widely expected that JAL will report a large group net loss for the first half on a sharp decline in sales because its international flight operations have been hit hard by the prolonged global recession as well as the swine flu outbreak.