Japan agreed on Sunday to give a new lifeline to troubled Japan Airlines by doubling a state-funded loan for the carrier to 200 billion yen (2.2 billion dollars). The government decision comes after shares in Asia's largest carrier plunged to a record low last week when investors were spooked by reports that bankruptcy was a possible option for the beleaguered airline.
In November, the state-run Development Bank had set a credit line of 100 billion yen for Japan Airlines and has already paid out just over half of the total.
The extra funding was agreed at a meeting of cabinet ministers including Transport Minister Seiji Maehara and Vice Prime Minister Naoto Kan, the day before the stock market resumes trading after a New Year break.
"The ministers confirmed that we will have JAL rehabilitate itself while it keeps flying." Maehara told reporters. Kan said the amount of the loan "enables JAL to cope with every possible circumstance."
JAL, battered by the global recession and swine flu pandemic, is scrambling to slash costs and is seeking its fourth government bailout since 2001 in the face of mounting losses. But airline president Haruka Nishimatsu said in an interview with the Asahi Shimbun newspaper published on Sunday that he was opposed to any bankruptcy filing and also had no plans to halt international flights. "Legal liquidation gives an image that will affect us and reduce the number of our clients," he said.
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