October 28, 2009 / 11:47 PM / 10 years ago

UPDATE 1-Japan govt may announce JAL bailout Thurs -media

(Adds details, background)

TOKYO, Oct 29 (Reuters) - Japan’s transport minister will likely announce as early as Thursday plans to tap a new state-backed corporate turnaround body to restructure Japan Airlines 9205.T, the Nikkei business daily said.

The Nikkei reported that the government was also considering a new law mandating the reduction of pension benefits to retirees of the struggling airline to address one of the key hurdles to its survival.

The government plans to submit legislation to an ordinary session of parliament next year, though differing views within the government make it unclear exactly what provisions the bill will contain, the Nikkei said.

Another proposal being weighed is for the state-owned Development Bank of Japan to provide 200 billion yen ($2.2 billion) in loans needed by JAL by the end of 2009 and for the state to guarantee loans once the legislation is passed, the Nikkei said.

The Japanese government has been aiming to come up with a blueprint this week for bailing out JAL, which is headed for its fourth annual loss in five years, weighed down by $15 billion in debt and a bloated cost base.

A task force composed of turnaround specialists and which reports to Transport Minister Seiji Maehara has been crafting the turnaround plan.

Maehara will announce as early on Thursday plans to tap the Enterprise Turnaround Initiative Corporation of Japan (ETIC) to work on JAL’s restructuring, the Nikkei said.

The corporation is a government-backed institution set up this month to revitalise struggling but viable firms. It has the ability to tap up to 1.6 trillion yen in state-guaranteed funds through March 2010. (Reporting by Nathan Layne; Editing by Hugh Lawson)

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