The Japanese government has said that it will not guarantee funding for debt-ridden national carrier Japan Airlines (JAL).

Finance Minister Hirohisa Fujii said the state budget for the next financial year would not include any such loan guarantees.

“This is a matter that should be worked out by private companies,” Mr Fujii told Reuters.

“The DBJ is wholly owned by the state but it has the status of a private bank so the government is not allowed to meddle in its business,” he added.

But the new government’s refusal to offer JAL further guarantees does not rule out the state-owned Development Bank of Japan (DBJ) bailing out JAL.

In November, the airline secured an emergency loan from the DBJ, saying it was “necessary for continuance” of its flights

The full amount of the loan has not been revealed by JAL, but previous reports suggested the airline needed a loan of €1.3bn, and that it would have run out of cash by the end of November.

JAL is also awaiting a decision from employees and former staff over a 40% cut in their pensions.

The 17,000 staff and 9,000 pensioners were told by the airline management that it faced bankruptcy if payments were not cut.
A plan for future restructuring of the airline is also expected to be announced in January, overseen by the government’s Enterprise Turnaround Initiative Corporation of Japan.

Plans will include whether JAL will partner with wither American Airlines or Delta Air Lines. The U.S. carriers have made rival offers of financial aid, keen to gain a greater foothold in Japan and access to JAL’s network to the rest of Asia. Failing a tie-up other option include filing for bankruptcy or winning support from a government-backed turnaround.