NEW YORK — Japan Airlines Corp. filed Tuesday for court-led rehabilitation, the Japanese equivalent of a Chapter 11 bankruptcy, that will allow the carrier to operate as it undergoes restructuring.
The Tokyo-based carrier, Asia's second-largest in terms of annual customers and destinations, is also at the center of showdown between U.S. carriers Delta Air Lines and American Airlines, rivals that both want tighter relations to better tap into fast-growing markets on the continent.
Delta and American are each offering financial support to JAL in turn for greater coordination on routes and ticket prices, as well as revenue sharing.
JAL's debt totaled $25.6 billion as of the end of September, making it Japan's largest postwar, nonfinancial bankruptcy.
Overseeing JAL's rehabilitation is the government-backed Enterprise Turnaround Initiative Corp. of Japan, which will inject $3.3 billion into JAL so that it can continue operations.
Usually, the ETIC's resolutions are done out of court, but becoming JAL's administrator under the Corporate Rehabilitation Law would give it more control over the company's restructuring.
The ETIC and the state-backed Development Bank of Japan will also provide JAL with a credit line.
Haruka Nishimatsu, JAL president and chief executive, has stepped down as he said he would once the business rehabilitation plan details were finalized.
Tuesday's filing with the Tokyo District Court was widely presaged in both local and international media reports. Now that the plan's details are known, the next step is deciding the role foreign carriers will play.
American parent AMR Corp. has offered $2 billion over three years to keep JAL in its Oneworld alliance and create a trans-Pacific joint venture. Delta has offered about $1 billion in funding if JAL agrees to join its SkyTeam alliance.
JAL serves 103 destinations, including destinations in China, Vietnam, Thailand, and Malaysia, as well as domestic markets. In 2009, the company was Asia's largest airline by revenue.
The carrier's problems are familiar to the global airline industry: debt, massive pension obligations, rising fuel costs, unprofitable routes and a history of management woes.
But JAL now expects to post an operating profit in the fiscal year ending in March 2012.
The Tokyo Stock Exchange said after the filing that it will delist JAL's shares, effective Feb. 20, according to its usual delisting procedure. The shares will go to the exchange's delisting post, and trading will continue until Feb. 19.