Mr Yosano said he has received a request by Transport Minister Kazuyoshi Kaneko, in charge of overseeing airlines, for the Development Bank of Japan (DBJ) to extend loans to JAL, Japan's biggest airline.

'I replied that we hope to cooperate through DBJ loans and that I will pass on the request to them,' Mr Yosano told a news conference after a cabinet meeting. The Ministry of Finance oversees operations of DBJ, a state-owned bank.

A bank official said it would likely provide around 100 billion yen (S$1.6 billion) in emergency financing to JAL.

Hit by slumping global travel and rising fuel costs, global airlines are forecast to lose US$9 billion this year, the International Air Transport Association said this month, nearly double its estimate of just three months ago.

JAL earlier this year requested finance through a government emergency loan lending programme.

JAL has not announced the amount it is seeking, but a company source said it may be around 200 billion yen. The carrier reported a 50.9 billion yen operating loss for the year to March 2009 and warned of a 59 billion yen loss in the current year to next March.

A syndicate of Japan's three biggest banks and the state-backed DBJ are planning to lend about 100 billion yen to the airline as early as this month, the Nikkei daily reported earlier this month. Government support for the carrier will help ease funding strains as it would encourage commercial banks to lend to JAL, Mr Yosano said.

Mr Kaneko said the transport ministry did not see any big problems in JAL's operation itself. 'The airline firm JAL and the airline industry are very important for the Japanese economy as well as for the people, and it is important to maintain airlines in Japan in order to operate internationally, too,' he told a news conference.

JAL spokesman Satoru Tanaka said the airline hoped to draft out a new business plan as early as possible, reflecting the government's help. -- REUTERS