* Finmin Fujii: govt should not meddle in JAL loan problems

* Fujii: 2010/11 budget does not include JAL loan guarantees

* Transport minister says govt to support JAL

* Analyst: market paying more attention to pension issue

* Shares unchanged vs 1.9 pct Nikkei rise (Adds analyst comment and background)

TOKYO, Dec 22  - Japan's government will not offer guarantees on funding to Japan Airlines Corp (9205.T), Finance Minister Hirohisa Fujii said on Tuesday, eliminating one potential support for the carrier as it struggles for survival.

Fujii and other ministers had agreed to consider guarantees on loans to JAL including funding from the state-owned Development Bank of Japan (DBJ), which was tapped to provide the airline with a 100 billion yen line of credit. [ID:nBNG509104]

The agreement stated that we would consider the matter but it did not say we would actually do it, Fujii told a news conference, adding that the budget for next fiscal year would not include such loan guarantees.

This is a matter that should be worked out by private companies, he added. 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.

Shares of JAL, Asia's largest airline by revenue, closed flat at 101 yen, compared with a 1.9 percent rise in the Nikkei average .N225. JAL's stock has lost more than half its value this year amid a sharp deterioration in its earnings and worries over whether the state will continue to support it.

JAL is seeking a bailout from the Enterprise Turnaround Initiative Corporation of Japan (ETIC), a state-backed fund established to inject capital into and buy the debt of struggling but viable firms.

But JAL is struggling to get the approval of two-thirds of 8,800 retirees and two-thirds of 17,000 employees it needs to push through cuts in benefits and slice into a pension shorftall estimated at 330 billion yen in March. [ID:nTOE5BE080]

JAL is planning to get a final answer from its retirees on Jan. 12. The ETIC is expected to make a decision on whether to support the airline next month. A rejection from the ETIC would likely push JAL into bankruptcy.

The stock market is more interested in whether the carrier can reduce its pension burden, a prerequisite to receiving a bailout from the ETIC, said Ryouta Himeno, a transport analyst at Mitsubishi UFJ Securities.

BIG MONEY

The government was considering guaranteeing about 700 billion yen in funding, including the DBJ's credit line, to prepare for a further deterioration in JAL's earnings amid sluggish travel demand, according to a government source. [ID:nTOE5B601B]

Transport minister Seiji Maehara said after Fujii's comment on Tuesday that the government would back the airline even if the state does not offer guarantees.

The five ministers confirmed that the government would support JAL during its restructuring. The government will make sure JAL can gain support, including bridge loans, even if there aren't any state guarantees, Maehara told reporters.

The airline is also weighing rival offers of financial aid from American Airlines and Delta Air Lines (DAL.N), which are keen on access to JAL's network in Asia and a stronger foothold in Japan ahead of the expansion of the Haneda airport next year.

American (AMR.N), other members of the Oneworld alliance and private equity fund TPG are willing to invest $1.1 billion in JAL to prevent it from defecting to Delta and the rival SkyTeam group. Delta is offering about $1 billion in aid. [ID:nT194302]

Japan's Asahi newspaper reported last week that JAL was likely to choose Delta as its overseas partner, ending its ties with American and the Oneworld, though JAL denied the report and said it was planning to make a decision next month. [ID:nTOE5BH08D] ($1=91.14 Yen) (Reporting by Tetsushi Kajimoto and Nobuhiro Kubo; Editing by Chris Gallagher)