TOKYO - JAPAN'S government plans to introduce legislation early next year to forcibly cut pension payouts for Japan Airlines Corp retirees and make the cuts a condition for a state bailout of the troubled carrier, the Nikkei business daily said.

Ministers will negotiate details and announce plans to submit the legislation to the regular session of parliament as early as next week, the newspaper said. The next ordinary parliament session starts in January.

JAL said last week it would apply for aid from a state-backed turnaround fund, setting the stage for an injection of public funds into the airline, providing it can secure the backing of creditors and craft a viable restructuring plan.

Cutting its pension shortfall - estimated at 330 billion yen (S$5.15 billion) as of March - is seen as a key prerequisite for receiving public money and to stave off bankruptcy.

The government is scrambling to find a solution for the pension issue and secure short-term financing before JAL announces its first-half results on Nov 13. JAL has been unable to push through pension cuts on its own because of resistance from retirees and employees, who under current laws can easily block such a move, making it necessary for new legislation.

The issue has also made creditors, which include the state-owned Development Bank of Japan and the country's top three lenders, wary of agreeing to a bridge loan seen as necessary this month to prevent the airline from running out of cash. -- THOMSON REUTERS