JAL shares nosedive as fears grow

       Japan Airlines Corp shares slid more than 11% to a record low yesterday 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%. 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%, 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 yesterday 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) and Mizuho Financial Group out in the cold.
       MUFG, JAL's No.2 creditor behind the state-owned Development Bank of Japan, is owed about 50 billion yen ($551 million).
       Kyodo news agency reported JAL was reconsidering a plan to sell shares in its group firms, suggesting that restructuring efforts needed to turn the company around might be slow to come.
       "Even if they do get the funds, where's the prospect of growth? I don't see it,"said a portfolio manager at a Japanese asset management firm, who asked not to be named as he was not authorised to comment on individual stocks."In some ways, bankruptcy might be the better option - it would allow the firm to restart from a clean slate."
       JAL has put on hold separate talks with Delta Air Lines and AMR Corp's American Airlines for a capital infusion and business ties, aiming to focus first on its own revival plan, Kyodo reported last week.
       Ratings agency Moody's dealt a fresh blow to the troubled carrier, downgrading its long-term debt rating, to B1 from Ba3 and put the JAL unit on review for a further possible downgrade.