Hatoyama, ministers meet to discuss JAL rescue plan

Prime Minister Yukio Hatoyama met with ministers at his official residence Sunday evening on the pressing issue of how to rescue ailing Japan Airlines Corp., government officials said.

The government is seeking to compile a comprehensive rescue package for Japan's largest airline, which is facing the risk of a cash shortage as early as the end of this month.

Hatoyama was expected to discuss a proposed rescue package centering on special legislation to enable a mandatory reduction in JAL's high corporate pension benefits with state minister for national policy Naoto Kan, Finance Minister Hirohisa Fujii, Administrative Reform Minister Yoshito Sengoku, and Land, Infrastructure and Transport Minister Seiji Maehara.

Maehara is aiming to announce the rescue package, which would also include a reduction in landing fees and aviation fuel taxes, by Friday, the same day the airline is scheduled to report its earnings results for the April-September first half of the current fiscal year.

It is widely expected that the company will report a large group net loss on a sharp decline in sales from a year earlier. Industry analysts say JAL's international flight operations have been hard hit by the prolonged global recession as well as the outbreak of the new influenza.

Setting the government's turnaround plan is seen as key to convincing JAL's major creditor banks to provide the airline with bridge loans to keep it afloat until it can get financial help through a government-backed corporate turnaround body, the Enterprise Turnaround Initiative Corp. of Japan.

To make the bridge loans possible, the ministers are also believed to have in mind special legislation to attach government guarantees to such loans.

Meanwhile, JAL officials revealed Sunday that the airline has decided to skip monthly pay for all of its executives, including President Haruka Nishimatsu, for December.

Given poor business results, the company has decided to skip executives' monthly pay for the first time since its merger with Japan Air System in 2002. About 70 top executives will be subject to the plan.

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

JAL is apparently hoping that the plan to skip executives' pay will make it easier to obtain consent from the unions regarding the decision on winter bonuses.