TOKYO, Dec. 27 (Reuters) – A decision on whether Japan Airlines will be kept afloat with taxpayers' money or allowed to go bankrupt will be made over the next few weeks.

At the same time JAL is being courted by American Airlines and Delta Air Lines. The US 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.

JAL says it will make a decision on which overseas partner it will choose by early January.

Following are possible scenarios for the restructuring of Asia's largest carrier by revenue.

The fact that JAL's share price is holding steady at around 100 yen suggests investors see an out-of-court restructuring under the auspices of the state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) as the most likely outcome.

JAL applied to the ETIC for support in late October. The ETIC has finished basic due diligence on JAL's assets and is aiming to present a request to the main creditors soon for their help in lowering JAL's debt, sources familiar with the matter said.

The ETIC's combined request for debt forgiveness and debt-for-equity swaps will likely be around the same size as the 250 billion yen ($2.7 billion) sought by a government-appointed task force that worked on JAL's revival plan before its application to the ETIC.

However, there could be some provisions to make the deal more palatable to creditors, which include two state-owned lenders and the country's three largest private banks. The creditors remain keen to work with the ETIC to keep JAL out of bankruptcy court. The ETIC, which can draw on 1.6 trillion yen in state-guaranteed funds to inject capital and buy the debt of troubled but viable Japanese companies, is expected to make a decision on whether to support JAL next month.

The disbanded government-appointed task force had estimated JAL would need 300 billion yen in fresh capital.

The ETIC has said it will support JAL only if it believes the carrier has the potential for revival, but it could face intense political pressure depending on the stance taken by the leaders of the ruling Democratic Party, who have so far given conflicting messages on the extent to which the state should support JAL.

Chances of JAL facing a Chapter 11-style bankruptcy appeared to rise after Finance Minister Hirohisa Fujii said earlier this week that the government would not guarantee loans and other funding to JAL.

The state-backed Development Bank of Japan has set up a 100 billion yen credit line for JAL on condition that the government guarantee it. JAL has used part of it but the DBJ may not lend the rest without a government guarantee.

JAL's earnings have deteriorated sharply and it is burning through cash. There is therefore a risk that it could run out of money for operations before the ETIC can make a decision to support it and start supplying it with funds.