Its highest share price since it began merging operations with small domestic carrier Japan Air Systems was 366 yen seen in 2003.

Mounting debts

JAL, which lost about $1.5bn in the six months to September, is reported to be seeking a fresh injection of government aid in the face of mounting debts.

"The market is driving the company to go under"

Hideaki Higashi, SMBC Friend Securities market strategist

In a fresh blow to JAL, the ratings agency Moody's downgraded the airline's long-term debt rating to Ca from Caa1.

The lower rating, which puts JAL deeper into junk bond status, means the airline is seen as highly vulnerable to default.

The airline has already announced plans to slash about 15,600 jobs – 33 per cent of its group workforce – and sell non-core assets such as hotels to stem massive losses.

The Enterprise Turnaround Initiative Corp of Japan, the state-backed body responsible for JAL's restructuring, will ask banks to forgive 350bn yen ($3.8bn) of debt owed by the airline, the Nikkei business daily said at the weekend.

"The selling is unstoppable," Hideaki Higashi, a market strategist at SMBC Friend Securities, told AFP.

"Event-driven market players are hammering down JAL. It's a money game. The market is driving the company to go under," he said, adding that the share price could technically fall to 1 yen.

Global bids

While Japan's national carrier is teetering toward bankruptcy, its access to Asia is a prized asset for other airlines.

Japan Airlines is set to slash more than 15,000 jobs to stem massive losses [Reuters]
Two American-led airline alliances are bidding to bail out the Japanese carrier, in return for a stake in the company.

Delta Air Lines Inc – the world's biggest airline operator – and its rival American Airlines are offering cash support for JAL as they seek to expand their Asian networks.

American Airlines, along with its One World alliance partners, on Tuesday boosted its offer of support to Japan Airlines to keep the money-losing airline with the alliance.

American Airlines, British Airways, Qantas and Cathay Pacific said they are ready to inject $1.4bn cash into Japan's flagship carrier, as well as guarantee $2bn in revenue over the next three years if JAL stays in the alliance.

Meanwhile Delta and its SkyTeam partners have offered $1bn, including $500m in cash.

The government fund restructuring the airline however is reported to favour bankruptcy instead, viewing a foreign stake in the airline as a potential obstacle to effective restructuring.