JAL shares tumble; court bankruptcy not ruled out

By Nobuhiro Kubo and Nathan Layne

TOKYO (Reuters) - Japan's transport minister declined to rule out a court-led bankruptcy for Japan Airlines, sending the struggling carrier's stock to a record low, even as U.S. carriers lined up with offers of financial support.

Delta Airlines said it and its partners in the SkyTeam alliance were ready to offer $1 billion in total aid, including a $500 million equity investment, in return for defecting from the Oneworld alliance and its partnership with American Airlines.

The offer follows news last week that private equity firm TPG was considering partnering with American Airlines on an investment in JAL. The Nikkei newspaper said on Wednesday that investment could be as big 100 billion yen ($1.1 billion).

Delta and American have been courting JAL for the past few months, eager to gain access to its network to fast-growing Asian markets and a stronger foothold in Japan.

But those talks have been overshadowed by the much larger issues facing JAL, which is seeking a state bailout to avoid bankruptcy and by one estimate needs 300 billion yen in fresh capital, or six times the offer from SkyTeam.

JAL's stock closed down 3.9 percent at 98 yen after touching 94 yen, its lowest since relisting in 2002. Investors sold on comments by Transport Minister Seiji Maehara they interpreted as a change to prior assertions the state should not let JAL fail.

"I have never said a court-led bankruptcy is impossible," Maehara told parliament, explaining that previously he had meant to rule out a liquidation and not a court-led restructuring, which could also render the airline's shares worthless.

JAL, headed for its fourth loss in five years, has applied for assistance from a government-backed fund that is expected to take until January to study its assets and decide whether it is worthy of an injection of public funds.