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Friday October 30, 09:00 AM
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Japan govt forms new JAL team, mulls bridging loan
TOKYO (Reuters) - Japan's government will set up a new team of ministry officials to work on a bailout for Japan Airlines Corp, including bridging loans, Transport Minister Seiji Maehara said.
Japan Airlines said on Thursday it would apply for assistance from a state-backed corporate turnaround body, setting the stage for an injection of public funds into the troubled airline.
But sources have said the airline, Asia's largest by revenue, could run out of cash by next month and is in need of a bridge loan of about 180 billion yen to keep it operating.
"The government team will do its best to take steps to ensure safe and stable operations of the airline," Maehara said on Friday when asked about the government's stance on whether to provide a bridging loan on the carrier.
Maehara said the new team would meet later on Friday.
Finance Minister Hirohisa Fujii said on Friday that the state-backed body, the Enterprise Turnaround Initiative Corp would study bridge loans to JAL.
The ETIC, which can draw on up to 1.6 trillion yen in state-guaranteed funding, will decide whether it can help JAL after studying its assets and its prospects for recovery -- a process that could take 1 to 3 months.
Shares of JAL gained 1.7 percent to 117 yen. The benchmark Nikkei average rose 1.2 percent. JAL's stock is still down 45 percent this year.
(Reporting by Yoko Nishikawa; Writing by Chris Gallagher; Editing by Edwina Gibbs)
