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Japan Airlines shares jump 31% on loan deal

Shares in Japan Airlines (JAL) jumped more than 30% on Monday following a deal to extend government loans.

On Sunday, the Japanese government agreed to double an offer of state-funded credit to JAL to 200bn yen ($2.2bn; £1.3bn).

More than half of the 100bn yen already pledged has been used by the airline, the government said.

The move follows concerns among investors last week that JAL was close to filing for bankruptcy protection.

The extra funding was agreed by Deputy Prime Minister Naoto Kan, Transport Minister Seiji Maehara and other ministers at a meeting on Sunday.

"The government has decided to expand from 100bn yen to 200bn yen the line of credit from the Development Bank of Japan to Japan Airlines," an official statement said.

Fears remain

The announcement was made before trading resumed on the Tokyo Stock Exchange on Monday, after the New Year's holiday.

In response, JAL's share price rose 31% after the days trading on the Nikkei.

Analysts said the move allayed concerns over the airline's short-term funding issues, but fears for its long-term future remained.

JAL is battling 1.5 trillion yen of debt, and a large-scale restructuring of the company is widely expected.

However, it is not clear if that restructuring will take place under bankruptcy protection.

The airline has been bailed out by the Japanese government four times since 2001.

Source: BBC News

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