TOKYO &S212; Japan Airlines posted a $357 million loss in the latest quarter and said it was in fresh talks to suspend loan payments as the debt-ridden carrier awaited a formal go-ahead for a government-led bailout.

The airline&S217;s president, Haruka Nishimatsu, also said that it would be easier for JAL to remain within the OneWorld Alliance, seemingly giving its alliance partner American Airlines a lead over Delta in talks over a possible stake in the Japanese carrier.

Finances at JAL, which is the largest Asian carrier by revenue, have been battered by a falloff in passenger traffic in the wake of the global economic crisis. Massive pension obligations, an aging fleet and dozens of unprofitable routes have also weighed heavily on JAL&S217;s bottom line.

The carrier said Friday that its net loss sank to &<65;32.2 billion in the July-September quarter, compared to a &<65;40.1 billion profit a year earlier. Quarterly sales fell 26 percent to &<65;429 billion.

The Japanese government has said it stands by JAL and has instructed the carrier to apply for assistance from a state-backed corporate turnaround body, which could set the stage for a large injection of public funds.

The government-sponsored Enterprise Turnaround Initiative Corp. is studying whether the airline, which has already received three bailouts, will be able to restructure its $15 billion debt and stage a recovery.

Meanwhile, American and Delta Air Lines have shown an interest in acquiring a minority stake in the Japanese airline, which could bring a stronger foothold in Japan and access to JAL&S217;s routes in Asia.

The scramble to invest in JAL is part of a wider race by the world&S217;s biggest carriers to use alliances with global partners to expand their international reach payday loan lenders.

A tie-up with Delta would require that JAL defect to the SkyTeam alliance from OneWorld, a move that could result in financial penalties and require the Japanese and American governments to determine that the move does not violate antitrust laws.

&S220;Considering our past, continuing to stay as an American Airlines partner would make more sense,&S221; Mr. Nishimatsu told reporters in Tokyo.

&S220;Moving to a different aviation alliance would be costly&S221; and &S220;would take about two years,&S221; Mr. Nishimatsu said. &S220;We need to consider such factors.&S221;

In an effort to restructure its debt, JAL also said Friday it was seeking to suspend some loan payments through alternative dispute resolution, under which the carrier would negotiate with creditors through a third party.

The government has pledged to enlist a state bank to offer bridge loans to prevent the carrier from running short of cash and keep it airborne.

Japan is also considering legislation that would allow JAL to cut back on its pension obligations.

Shares in the airline fell 0.9 percent to &<65;106 in Tokyo ahead of the earnings announcement. JAL shares have lost half their value since the start of the year, despite a 10 percent gain in the Nikkei stock index during that time.

Japan Air Posts $357 Million Quarterly Loss