Gov`t eyes giving up to 700 bil. yen in credit guarantees to JAL

TOKYO, Dec. 5 Kyodo -
The government is considering extending credit guarantees worth up to 700
billion yen on loans and investments from financial institutions to struggling
Japan Airlines Corp. to shield the air carrier from a possible cash shortage,
sources close to the matter said Saturday.
The government is planning to include the measure in the extra budget for
fiscal 2009, they said.
With the scheme, the government will aim to ensure smooth financing for JAL
from the state-owned Development Bank of Japan and major creditor banks, the
sources said.
The government announced a rescue package for JAL in November and the airline
clinched a deal with the DBJ for up to around 100 billion yen in loans.
But a state-backed corporate turnaround body, from which JAL is seeking support
for rehabilitation, has yet to decide on its rescue scheme.
Specifically, the government will likely guarantee 80 percent of loans to JAL,
according to the sources.
However, a tough road lies ahead for the planned credit guarantee scheme as
criticism remains strong over the use of taxpayers' money to rescue the air
carrier due partly to its high corporate pension benefits.
JAL held meetings in Chiba the same day to seek approval from retirees for
planned sharp cuts in their pension benefits.
==Kyodo