JAL could lose 350 billion yen in financing if unions vote to strike over layoffs
Members of the JAL Flight Crew Union hand out fliers at Haneda Airport on Oct. 26 protesting layoffs at the airline. (Mainichi)
The state-backed body overseeing the restructuring of Japan Airlines (JAL) will freeze some 350 billion yen in financing for the struggling carrier if its labor unions decide they have the right to strike over major job cuts, it was learned Nov. 17.
Though the suspension of financing from the Enterprise Turnaround Initiative Corp. (ETIC) would deal a severe blow to the airline’s plans to emerge from bankruptcy protection, the labor unions cannot easily compromise on the deep cuts in staff involved in the restructuring plan. However, though the company and the unions appear on the verge of major strife, both sides are also keen to avoid a second trip into bankruptcy, setting the stage for a complex war of nerves between JAL workers and management.
On the afternoon of Nov. 16, the ETIC official in charge of financial support for JAL met with the leaders of the JAL Cabin Crew Union at Haneda Airport. The ETIC official had called the cabin crew union to negotiate, and to deliver a stern message: “The ETIC respects your right to strike, but if you do, the 350 billion yen in financing will not be forthcoming.”
On top of debt cancellations by JAL’s creditors and other measures, ETIC financing is absolutely indispensible to breathe life back into the airline, which plans to use the new investment to pull itself out of insolvency.
JAL has continued cushy treatment of its workers out of fear over a strike that would be lambasted in the Diet and elsewhere, says one former senior official with the Ministry of Land, Infrastructure, Transport and Tourism. This in turn raises fears the high-cost corporate structure that brought down the airline the first time will survive. The ETIC’s threat to pull financing now, the former official suggests, is meant to shake the unions out of the very comfortable conditions they enjoyed under the old regime.
“Even if we decide we have the right to strike, that doesn’t necessarily mean we will strike,” the chairman of the cabin crew union, which has some 860 members, told a Nov. 17 news conference, apparently unwilling to give up the right to strike as a weapon in the battle over layoffs.
The ETIC is inclined to go ahead with the 350 billion yen financing package if the unions waive their right to strike. However, one labor law expert at a Tokyo-area national university condemned the ETIC’s hard line, calling it “a mere threat.
“Creditors like banks can certainly decide not to provide financing if the unions decide they have the right to strike. However the ETIC, as the trustee responsible for overseeing restructuring, should not be making such careless statements.”
However, not all labor experts agree. A Tokyo-area attorney and specialist in labor issues told the Mainichi that the ETIC’s actions were valid, saying, “The ETIC is a corporation planning investment in the airline, and so is not the same as a trustee.”
While an end to ETIC financing could be fatal to JAL, the restructuring corporation must also wish to avoid a collapse of the airline, and the subsequent loss of all the loans the ETIC has provided so far. Meanwhile, most union officials are aware that there would be no public sympathy or support for a strike.
The deadline to vote on the right to strike at the cabin crew union is Nov. 22, and Nov. 26 for the flight crew union, and negotiations to avoid labor turmoil at the airline look likely to go down to the wire.