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
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)