“Turbulent” wouldn’t properly describe the recent flight path of national flag carrier Japan Airlines, in a spiralling game of chicken with its retirees and unions over a $3.7 billion pension shortfall.

President Haruka Nishimatsu, who needs a pension deal to get bridge loans and bailout money from the state,  is asking for an average 40 percent cut from retirees and current employees.

“If we can’t, risks to our survival will increase, including the possibility of a court-led reorganisation,” he said on Monday to a gathering of unions and retirees.

The merits for the 17,000 current staff and some 9,000 retirees, who can block any pension cut if more than one-third object, are not compelling to everyone.

“I feel an attachment to the company, but on the other hand I have my own life. I have been banking on that corporate pension to make ends meet,” said a 59-year-old male retiree.

The government, which first raised the prospect of court-protected bankruptcy and in so doing helped send JAL shares tumbling, has played equal hardball with its staff, saying it may try to revise the law to forcibly implement pension cuts, which would most likely put the whole issue in a legal circling pattern.

Would a nation with a growing number of pensioners be supportive of such a move, which may then become a blueprint for their own weaker returns? I wouldn’t put money on it. But for a carrier with more than $15 billion in debt as well as shares at record lows and falling, someone needs to blink — and soon.

Photo credit: REUTERS/Issei Kato

Source: Daniel Sloan