Two months ago, the unprofitable carrier sent the former cabin attendant a letter asking his permission to cut his pension by more than 50 percent.
“The shock was huge,” said Fukushima, 67, who contributed 35 years of loyal service to JAL since he joined the carrier in 1966.
“In the beginning, JAL even didn’t want to hold meetings to explain it.”
Fukushima joined with other retirees to oppose the pension cuts, which need approval by two-thirds of the pensioners to be enacted.
The Tokyo-based carrier has already factored in a one- time gain of 88 billion yen from reducing the pensions into its annual forecast and failure to cut the payouts may double the airlines annual losses.
“Without the gain from a revision of the pension fund JAL will have a loss of more than 150 billion yen,” said Yashuhiro Matsumoto, an analyst in Tokyo at Shinsei Securities Co. “It has little room for further cost cutting.
”According to a website run by JAL’s pensioners, 2,940 retirees out of approximately 9,000 ex- employees have said they are against Japan Air’s proposed pension cuts.
A total of 3,000 objections from pensioners would be enough to completely scuttle the plan.The carrier is currently focused on getting the necessary two-thirds support, said spokeswoman Sze Hun Yap.
She declined to comment on the impact of a failure to gain approval for the pension cuts on the company’s earnings.
JAL was cut to “sell” from “neutral” today by Goldman Sachs Group Inc, which cited weaker earnings expectations at the carrier.
The carrier had 95 billion yen in accrued pension and severance cost liabilities outstanding at the end of March, according to JAL financial results.
JAL’s President Haruka Nishimatsu has slashed more than 5,500 jobs from the company since taking over as head in 2006 by offering early retirement and selling stakes in subsidiaries.
The reductions exceed the 4,300 jobs targeted in the carrier’s mid-term plan announced in February 2007.
“The retirees need to stomach a cut in pensions,” said Shinya Izumi, a member of the Japanese parliament and chairman of the Liberal Democratic Party’s aviation panel. “Nishimatsu has done a good job managing JAL.
”The airline is predicting a loss of 63 billion yen this fiscal year as sales continue to nosedive as a result of the current global recession.
JAL has announced plans to slash operating costs by 195 billion yen, even so the cost cuts aren’t enough to make up for the airlines predicted 203 billion yen drop in revenue.