JAL shares fall on report DBJ, MOF seek bankruptcy

Shares of Japan Airlines <9205.T> fell more than 4 percent on Wednesday after the Nikkei business daily reported the Development Bank of Japan (DBJ) and the Ministry of Finance are seeking court-led bankruptcy proceedings.

Sources told Reuters last week that a government-backed turnaround fund was leaning toward bankruptcy proceedings for JAL as part of its restructuring plan, and was in negotiations with creditors to push such a plan.

The Nikkei reported on Wednesday the state-owned DBJ, JAL's largest creditor, favors a pre-packaged bankruptcy option.

DBJ declined to comment on the report.

I get the impression from the news that JAL has gone one step closer to a court-led-bankruptcy, said Ryouta Himeno, transport analyst at Mitsubishi UFJ Securities.

JAL, Asia's largest carrier by revenue, is seeking its fourth state bailout since 2001 as it grapples with $16 billion in debt, a massive pension deficit and dozens of unprofitable flight routes.

A bankruptcy would complicate JAL's talks with Delta Air Lines Inc and American Airlines, a unit of AMR Corp , both of which are courting Asia's largest carrier by revenue with promises of financial aid and revenue growth through partnering on overseas routes.

Shares of JAL were down 4.4 percent at 86 yen, underperforming a 0.4 percent gain in the benchmark Nikkei average <.N225>. The stock has lost 60 percent of its value in the past year.

(Reporting by Taiga Uranaka and Nobuhiro Kubo; Editing by Chris Gallagher and Lincoln Feast)