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- Dubai 05:24 06:42 12:10 15:09 17:32 18:50
JAL stock soared 24 yen, or 35.8 per cent, to 91 by the lunch break as investors welcomed Tokyo's decision at the weekend to double a state-backed loan to Asia's largest carrier to 200 billion yen ($2.2 billion).
"There was talk about the company's operating funds drying up unless it secured a bigger credit line by January. I suppose that worry eased," said Makoto Sengoku, a market analyst at Tokai Tokyo Securities.
But investors were still wary of the risk of JAL filing for bankruptcy protection.
"The future outlook is still uncertain," Sengoku said.
JAL shares had nosedived on Wednesday, the final trading day of 2009, losing 23.9 per cent to 67 yen after local media reported that bankruptcy was a possibility for the beleagued airline.
Cabinet ministers including Transport Minister Seiji Maehara and Vice Prime Minister Naoto Kan agreed on the increased credit line from the state-backed Development Bank on Sunday, the day before the Tokyo market resumed trading.
JAL, battered by the global recession and swine flu pandemic, is scrambling to slash costs and is seeking its fourth government bailout since 2001 in the face of mounting losses.
Local media have reported that the state-backed Enterprise Turnaround Initiative Corp (ETIC), which is overseeing JAL's restructuring, is considering the possibility of the carrier filing for protection from creditors.
The body is expected to decide on a financial package for the carrier in mid-January.
JAL president Haruka Nishimatsu said in an interview with the Asahi Shimbun newspaper published on Sunday that he was opposed to any bankruptcy filing.
"Legal liquidation gives an image that will affect us and reduce the number of our clients," he said.
The airline, which lost about $1.5 billion in the six months to September, has said it plans thousands of job cuts and a drastic reduction in routes as part of its efforts to return to profitability.
JAL has been offered financial assistance by both American Airlines and Delta Air Lines, which are competing to take a minority stake in the Japanese carrier, eyeing its coveted Asian landing slots.
The Asahi Shimbun quoted Nishimatsu as saying that he was in favour of the airline switching to Delta's global alliance SkyTeam from the OneWorld group of American Airlines.
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