JAL shares jump on government aid reports

Shares in Japan Airlines surged 7% after reports suggested the Japanese government is to guarantee billions of yen in loans to the troubled carrier.

The reports on Sunday said the government was ready to guarantee up to 700bn yen ($7.8bn; £4.7bn).

At the end of last month, the airline secured its fourth government loan since 2001 in order to keep flying.

Other leading Japanese shares also performed well, with the Nikkei index up 145 points, or 1.5%, at 10,168.

The main driver behind the wider rise in share prices was the strengthening dollar, which rose against the yen on Friday after better-than-expected US unemployment data.

This gave a boost to exporters whose products become cheaper in the US when the dollar strengthens against the yen.

'Superior offer'

Funding for the loan guarantees for Japan Airlines could come from an extra budget for the financial year to March, which is expected to be approved this week, the reports said.

They should help to secure the airline's short term future.

The company lost $1.5bn (£910m) in the six months to September and is struggling with debts of $15bn.

Along with other major global airlines, it has been hit hard by falling passenger numbersduring the downturn.

Last week, American Airlines and private equity firm TPG offered $1.1bn of investment to JAL.

It said the offer was "far superior" to the $1bn previously offered by rival Delta Air Lines.

Both carriers are keen for a stake in the Asia Pacific market. JAL has said it will make a decision on the bids by the end of the year.

Source: BBC News