The Development Bank of Japan (DBJ) has agreed to increase the amount of its unsecured loans to Japan Airlines from 100 billion yen ($1.08 billion) at present, Jiji news agency reported on Thursday.
Executives of the state-owned DBJ, Transport Minister Seiji Maehara and National Strategy Minister Naoto Kan met on Thursday to agree to raise the amount of loans as JAL has already used 55 billion yen of a 100 billion yen credit line recently extended by DBJ, Jiji said.
The increase in the loan amount will be finalized on January 3 after a discussion between key cabinet ministers, and an announcement will be made, Jiji said.
DBJ was not immediately available for comment.
JAL's share price dropped to a record low on Wednesday due to growing expectations the cash-strapped carrier was headed for bankruptcy under a state restructuring plan.
The chances of bankruptcy appeared to increase last week when Finance Minister Hirohisa Fujii said the government would not back any more loans to JAL. Private banks are unlikely to extend loans without guarantees against future losses.
(Reporting by Chikafumi Hodo; Editing by Muralikumar Anantharaman)