The government is considering extending credit guarantees worth up to ¥700 billion on loans and investments from financial institutions to struggling Japan Airlines Corp. to shield the carrier from a possible cash shortage, sources said Saturday.
The government is planning to include the measure in the extra budget for fiscal 2009, they said.
Specifically, it will likely guarantee 80 percent of loans to JAL, they added.
With the guarantees, 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 in loans.
But a state-backed corporate turnaround body from which JAL is seeking support for rehabilitation has yet to decide on its rescue package.
The planned credit guarantee scheme faces a rough ride, as strong criticism remains over the use of taxpayers' money to rescue the air carrier.