3RD LD: Credit line for Japan Airlines to be doubled to 200 bil. yen+

TOKYO, Jan. 3 Kyodo - The Japanese government said Sunday the state-owned Development Bank of Japan will double its credit line for Japan Airlines Corp. to 200 billion yen as a stopgap measure to keep the cash-strapped carrier afloat by the time its state-backed bailout is worked out later this month.

In its negotiations with other airlines for receiving capital injection, JAL is
also considering Delta Airlines Inc. as a potential partner rather than its
current marketing alliance partner American Airlines Inc., sources familiar
with the matter said.
The expansion of the credit line was finalized before the Tokyo Stock Exchange
resumes business Monday after the New Year's holidays following a plunge in the
airline's stock price over speculation that it was heading for bankruptcy
proceedings.
Deputy Prime Minister Naoto Kan, transport minister Seiji Maehara and other
ministers in charge of a bailout for the nation's largest carrier came up with
the sum during a meeting at the prime minister's office on Sunday afternoon.
But the government said it will provide no guarantees for the envisaged DBJ
bridge loans to support JAL until the state-backed Enterprise Turnaround
Initiative Corp. of Japan decides on a financial package for the carrier by the
end of this month.
The government also requested the turnaround body to decide on aid measures for
JAL at an early date.
It is uncertain whether the expanded credit line offer would help ease concern
about JAL's creditworthiness. Critics say an expanded credit line would only
have a limited impact on the money-losing airline's finances.
After Sunday's consultations, transport minister Maehara told reporters that if
anxiety about the airline's credit standing grows, JAL may be forced to settle
in cash for fuel and other transactions.
With the latest measure announced by the government, ''I believe there probably
will not be any funding problems even if various forms of credit uneasiness
spread,'' Maehara said.
JAL is leaning on switching alliance partners to Delta because ''it can expect
expanded profit opportunities over the mid- to long-term'' given that Delta
outnumbers AA in transpacific services, for instance, said a JAL executive.
But government officials are also considering an option of transferring JAL's
international services to rival airline All Nippon Airways in order to rescue
JAL over a short period of time, the sources said.
In late November, JAL signed a contract to receive up to 100 billion yen from
DBJ in loans and already used around 55 billion yen.
Media reports in late December that ETIC had proposed bankruptcy proceedings as
the sole option for bailing out the airline have aroused concerns about the
airline's future, sending its stock plunging to an all-time low of 60 yen
during Wednesday's trading on the Tokyo Stock Exchange.
The government is said to be split over how to rescue the carrier. Kan, who
oversees ETIC, and some other Cabinet ministers favor court-backed bankruptcy
proceedings, while Maehara opposes it for fear such a move would hinder JAL's
operations.
Having difficulty operating amid a decline in travelers in the recession, JAL
booked a consolidated net loss of 131.2 billion yen in the half-year period
through September.
While seeking support from ETIC, the airline is considering such restructuring
efforts as scrapping 45 of its domestic and international routes and cutting
9,000 from its workforce.
In an attempt key for it to win ETIC support, it is also soliciting its pension
recipients to accept proposed cuts in their benefits, with the deadline due
Jan. 12.
==Kyodo