Japanese media reports that the airline will soon file for bankruptcy protection triggered a flood of sell orders as investors rushed to offload JAL shares, forcing stock exchange officials to step in and suspend trading in the airline.
JAL shares have tumbled 72 per cent over the past three months as the airline struggles with soaring debts.
The latest share plunge came a day after the airline announced its intention to cut about a third of its workforce under a three-year rehabilitation plan.
Japan's Kyodo news agency said that 15,600 jobs would be cut along with employees' benefits and salaries.
The plan would also include a fresh investment of $3.3bn (300bn yen) by the state-backed Enterprise Turnaround Initiative Corp (ETIC), which is expected to reject giving foreign carriers a stake in the airline fearing that would complicate restructuring efforts.
JAL has attributed its current financial woes to a sharp drop in business passengers on international flights, triggered by the global financial crisis.
The ETIC also wants shares in JAL taken off the stock market so that investors share the burden of the company's troubles, the Nikkei business daily and other media reported.
Yukio Hatoyama, the prime minister, said on Tuesday that shareholders should share the pain, saying they had "certain responsibilities".
On Tuesday Seiji Maehara, the Japanese transport minister, met the heads of JAL's creditor banks to ask them to back a plan for the company to undergo bankruptcy proceedings with public financial support.
The airline is seeking its fourth government bailout since 2001 to enable it to keep flying amid mounting debts.