New stimulus package in Japan not to include JAL loans

The government of Japan said Friday it is not going to provide guarantees on loans for Japan Airlines (JAL) in a stimulus package to run through to the end of the fiscal year in March.

The JAL has struggled to stay afloat in the economic downturn and is looking for government assistance to guarantee its survival.

Using public money to ensure the survival of JAL has proved an unpopular move with the public, and local media have reported that because of this, the government allocated no money in its stimulus package.

Transport Minister Seiji Maehara said Friday that the Enterprise Turnaround Initiative Corp., a government-backed body to assist struggling companies, will reach a decision on what to do about the JAL by January.

Both American Airlines and Delta have expressed an interest in assisting the JAL with more than 1 billion dollars, but the companies need to gain the approval of the government and the airline before any agreement is reached.

The JAL posted a 130 billion yen (1.5 billion dollar) loss for the first half of the year, and has looked to cut its worker's pensions in order to stay afloat.

The government of the Democratic Party of Japan (DPJ) held talks with the United States on Friday in an attempt to reach an "open skies" agreement, which would see more landing slots opened up for U.S. carriers in exchange for support for the JAL.

The JAL has scrapped its profit forecast for the year, saying that the next few months were too uncertain for the company to make any predictions.

Maehara has said that the future of the airline is essential for Japan's economy as it connects a number of rural areas with urban centers.

Source:Xinhua