JAL Slumps, Investors Say Bankruptcy an Option

TOKYO (Reuters) - Japan Airlines Corp <9205.T> shares slid 12 percent to a record low on Friday as investors suggested bankruptcy may be an option for Asia's biggest airline by revenue, even as the government again pledged to support the troubled carrier.

"There's increasing concern about the future of the company and whether it's heading for a GM-style bankruptcy or not," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

The airline, plagued with high costs in a severe industry downturn, has asked creditors for 600 billion yen ($6.6 billion) in financial aid, including 300 billion yen in debt waivers and debt-for-equity swaps, as part of a restructuring plan, according to two sources familiar with the matter.

JAL shares fell to 100 yen, their lowest since they were re-listed in 2002. By the close, the stock was quoted at 101 yen, down more than 11 percent. The shares have lost a quarter of their value this week.

Last month, JAL proposed a plan under which it pledged to cut 6,800 jobs, eliminate 50 routes and lower its operating costs by 30 percent, but it was forced back to the drawing board after the government said the steps were not enough.

The airline is now working with a government-appointed task force on a new plan to put to the transport ministry within two weeks. Transport Minister Seiji Maehara on Friday pledged his support for the airline while that process is underway.

"From I can see in the pre-draft plan I received the other day from JAL and its task force, I am confident that work on the plan is progressing smoothly," said Maehara, adding there was no change in the government's stance to support the airline.

But the lack of a clear growth plan for JAL is fuelling market concern that a rescue package may be throwing good money after bad, some investors said, leaving creditors such as Mitsubishi UFJ Financial Group (MUFG) <8306.T> and Mizuho Financial Group <8411.T> out in the cold.