Bankruptcy looms for Japan Airlines

FEARS that Japan Airlines is heading for bankruptcy continued to grow yesterday, with shares tumbling by 45 per cent to a new all-time low despite an increased offer of investment from its Oneworld alliance partners.

The airlines, led by American Airlines and including British Airways, have upped their offer of investment in the struggling carrier to $1.4bn (£865m) from $1.1bn.

As part of the offer, British Airways said it would provide Japan Airlines with coveted slots at London’s congested Heathrow airport.

Under the terms of the improved offer, JAL must stay within the Oneworld alliance.

American, along with fellow members BA, Qantas Airways and Cathay Pacific Airways, also outlined a plan to provide $2bn in commercial benefits to JAL over three years.

Oneworld is trying to head off an approach to JAL from a rival alliance. Delta Airlines is offering $500m and wants JAL to join its SkyTeam network.

Japan Airlines applied for a government bailout in October last year, weighed down by mounting debts and suffering heavy losses.

A plan for a state rescue of the airline is still being discussed, but the state requires cost-cutting on pensions as well as major job losses before it will inject any capital in to the airline.

JAL is an estimated $16bn in debt.