Japan Air Readies for Bankruptcy - TheStreet

Updated from Sunday, Jan. 10



) --

Japan Airlines

could file for bankruptcy next week, a report says.

A final decision on the future of Asia's largest carrier may be made this week, and a bankruptcy filing will follow next week,


reports, citing people familiar with the situation. Japan's finance ministry and the airlines' biggest lenders all favor a court restructuring for the struggling airline.

The bankruptcy filing would follow a decision by Prime Minister Yukio Hatoyama not to bail out Japan Airlines as his predecessors did before him.

Delta Air Lines

(DAL) - Get Report




American Airlines both have said a bankruptcy filing wouldn't deter their plans to invest in the carrier. Delta and American are fighting for a stake in JAL to gain access to its networks in China and Japan.

JAL's biggest banks, including

Mitsubishi UFJ Financial


, are set to agree to a bankruptcy proceeding, people familiar with the matter told


over the weekend.

Separate reports say Japan Airlines is set to cut about 15,600 jobs, a third of its work force, and reject billion-dollar cash offers from Delta and American Airlines, as it files for bankruptcy.

The state-backed Enterprise Turnaround Initiative Corp. of Japan will decline cash offers from Delta and American because it fears giving foreign carriers a stake in the company would complicate the restructuring, according to media reports, the

Associated Press


The airline instead will pursue only greater cooperation with either Delta or American, according to Japanese business daily


. The turnaround group will pick either Delta or American as JAL's partner after February, the newspaper reports.

-- Written by Joseph Woelfel in New York


Follow TheStreet.com on


and become a fan on