Japan Airlines plummet to fresh low amid bankruptcy fears

Shares in troubled Japan Airlines (JAL) plummeted to a fresh low today amid fears that the carrier is to enter bankruptcy proceedings within the next couple of days.

Shares fell by 45% to a fresh low of 37 yen on the Tokyo stock exchange as a bankruptcy filing seems unavoidable.

State-owned Development Bank of Japan has already agreed to the bankruptcy.

The airline, which is Asia’s largest carrier, is grappling with a mountain of debt and it is currently under the watchful eye of the state-backed turnaround body (the Enterprise Turnaround Initiative Corp of Japan), which will decide later this month whether or not to support JAL with taxpayer money.

Like many other airlines, it has been struggling amid the global economic downturn which has led to a slump in demand.

Many airlines have been forced out of business as fewer people are travelling by air.

Meanwhile, JAL stock fell today despite better offers from two rival airlines, American Airlines and Delta Air Lines. Both airlines are both fighting to hook up with JAL with a view to acquiring its profitable Asian landing slots.

American Airlines has upped its offer to $1.4 billion from $1.1 billion and finance minister, Naoto Kan, told reporters that the Government would consider increasing its assistance to JAL. It has been bailed out by the Government four times since 2001.

Delta Airlines is offering $500 million and wants JAL to join its Sky Team alliance.

JAL is also understood to be on the verge of abandoning British Airways and American Airlines by withdrawing from the Oneworld alliance.

However, American Airlines, British Airways and Qantas have outlined a new $2 billion proposal to keep JAL locked into the Oneworld alliance.

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