The expansion of USD 2.2 billion (200 billion yen) credit line was finalized by the state-owned Development Bank of Japan last week over speculation that the Japan Airlines was heading for bankruptcy proceedings.
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.
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.