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Japan Airlines soars on hopes of rescue funding

JAPAN Airlines’ shares jumped 31 per cent yesterday as the government looked to secure funds to prevent the carrier from running out of cash as it awaits a possible bailout.

The stock lost a quarter of its value last Wednesday, the last trading day of 2009, after sources said a government-backed turnaround fund was leaning towards a bankruptcy proceeding for JAL as part of its restructuring plan.

But the shares rebounded on news the government had asked the state-owned Development Bank of Japan to double its credit line to JAL to 200bn yen (£1.34bn). A spokesman for the DBJ said it was considering the government’s request.

The extra funding is aimed at keeping the carrier going until the state-backed fund -- the Enterprise Turnaround Initiative Corp of Japan (ETIC) -- decides later this month whether or not to support JAL with taxpayer money.