TOKYO (Dow Jones) – Japan's transport minister said Friday the government will follow the Enterprise Turnaround Initiative Corp.'s decision on how to restructure Japan Airlines Corp., as the state-funded body and major creditor banks debate whether the carrier should pursue court-led bankruptcy protection.

"ETIC decides on which restructuring measures should be taken," Seiji Maehara, Minister for Land, Infrastructure, Transport and Tourism, said at a regular press conference.

People familiar with the matter said Thursday that JAL's main commercial creditors have proposed a debt-forgiveness package valued at more than $3 billion--a major concession designed to coax the ETIC away from leading the struggling carrier through court-led bankruptcy protection.

As the banks would see much of their loans to the carrier wiped out, they are opposed to the court-led process that ETIC views as the only way to restore taxpayers' confidence after a decade of public bailouts for JAL.

Maehara declined to clarify which reform procedure he would support, saying only that the government is focused on helping to restructure JAL while keeping its jets in the air.

The Nikkei reported Friday afternoon that the government favors the use of court-led bankruptcy protection for JAL, and will make a decision as early as Jan. 12, adding that the airline will file a petition with the Tokyo District court under the Corporate Rehabilitation Law around Jan. 19.

Concerns over a possible filing for bankruptcy protection triggered a JAL share plunge late last month, and its stock remains under heavy selling pressure. At 0534 GMT, JAL shares were down around 13% at Y66 on the Tokyo Stock Exchange.

The transport minister also said he expects the ETIC, which JAL has asked for help, to decide to support the airline's revival by the end of the month, but added that it will be hard for JAL to choose a foreign partner airline – either AMR Corp's (AMR) American Airlines or Delta Air Lines Inc. (DAL) – within the same time period.