Source: Reuters Author: Chikafumi Hodo 12/31/2009
Subject Concerned: Government Airlines
The Development Bank of Japan (DBJ) has agreed to increase the amount of its unsecured loans to Japan Airlines (JAL) from 100 billion yen (US$1.08 billion) at present, Jiji news agency reported on Dec. 31.
Executives of the state-owned DBJ, Transport Minister Seiji Maehara and National Strategy Minister Naoto Kan met on Dec. 31 to agree to raise the amount of loans as JAL has already used 55 billion yen of a 100 billion yen credit line recently extended by DBJ, Jiji said.
The increase in the loan amount will be finalized on Jan. 3 after a discussion between key cabinet ministers, and an announcement will be made, Jiji said.
DBJ was not immediately available for comment.
JAL's share price dropped to a record low on Dec. 30 due to growing expectations that the cash-strapped carrier was headed for bankruptcy under a state restructuring plan.
The chances of bankruptcy appeared to increase last week when Finance Minister Hirohisa Fujii said the government would not back any more loans to JAL. Private banks are unlikely to extend loans without guarantees against future losses.