UPDATE 6-Japan Airlines turns to govt for 'huge' bailout

* JAL starts talks with state-backed turnaround body

* Transport minister says JAL revival 'extremely important'

* Task force says airline needs 'huge' govt bailout

* Govt considers legislation to slash pension costs-Nikkei

* Shares close up 2.7 pct, CDS spreads at distressed levels (Adds background and details throughout, analysts' quotes)

By Nobuhiro Kubo and Mariko Katsumura

TOKYO, Oct 29 (Reuters) - Japan Airlines Corp (9205.T) said it would apply for assistance from a state-backed corporate turnaround body, setting the stage for a large injection of public funds into the troubled airline.

The government has been scrambling to secure financing and map out a restructuring plan for JAL, which is headed for its fourth annual loss in five years, weighed down by $15 billion in debt and crippling pension and other costs. [ID:nT315449] [ID:nT367188]

JAL, Asia's largest airline by revenue, said it had started preliminary talks with the Enterprise Turnaround Initiative Corp, a body of turnaround specialists established this month to buy the debt of and invest in struggling but viable firms.

"JAL will need huge money, huge public money, through both capital and loans," Shinjiro Takagi, the head of a government-led task force that has been crafting JAL's revival plan, told a news conference. "JAL has three main problems: it has too many big planes, too many routes and a bloated structure," said deputy head Kazuhiko Toyama.

The ETIC, which can draw on up to 1.6 trillion yen ($17.8 billion) 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 several months.

JAL will still need to gain the support of its main creditors, which include the state-owned Development Bank of Japan and the country's three top lenders, as well as address a massive pension shortfall that may need new legislation to fix.

A decision by the ETIC not to support JAL would likely push the airline into bankruptcy, which would risk disrupting air travel and would likely cost taxpayers far more than an out-of-court restructuring, the task force said.

Dealing with the ailing airline is one of a long list of problems confronting Prime Minister Yukio Hatoyama's new government, which took office last month after his Democratic Party trounced its long-ruling conservative rival on a platform that promised to focus on the interests of consumers and workers.

"The Democratic Party of Japan is backed by labour unions and there are risks that the state-financed bailout will be determined without fixing real problems," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

"The widely held perception in the market is that the DPJ government favours anti-business measures and my concern is that such a perception could be strengthened depending on the government's handling of the JAL revival efforts."