JAL scraps bonuses as govt asks banks for bridge loans | india | Hindustan Times
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JAL scraps bonuses as govt asks banks for bridge loans

india Updated: Nov 07, 2009 12:38 IST

Japan Airlines Corp decided not to pay winter bonuses to its employees, while the government asked the company's main creditor banks to provide bridge loans to keep the struggling airline afloat, sources familiar with the matter said.

President Haruka Nishimatsu notified the company's labor unions of the plan to skip winter bonus payments on Friday, the first move of its kind since Japan's top airline was fully privatized in 1987.

JAL's main banks -- including the state-backed Development Bank of Japan -- gave no immediate response to the request by the government team aiding the airline's reconstruction as they are seeking to have state guarantees attached to the bridge loans, the sources said.

JAL faces the risk of a cash shortage as early as the end of this month, but a viable measure to reduce its high corporate pension benefits is likely to be a prerequisite for the government to attach the guarantees to prevent the use of taxpayers' money to fund the high-cost system.

The company recently sought support from a government-backed corporate turnaround body, Enterprise Turnaround Initiative Corp of Japan, but the airline urgently needs about 180 billion yen in short-term financing to support operations until the entity formally decides on a rescue package, the sources said.