Japan Airlines was expected to file for bankruptcy protection Tuesday and embark on a program to renegotiate the terms of its debt and to cut costs, the Nikkei financial daily reported Monday.

Asia's biggest airline is hobbled with $16.5 billion US in debt, but its access to Asia has led to a dogfight between Delta Air Lines and American Airlines.

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An employee of Japan Airlines helps passengers at a check-in counter at Narita International Airport in Narita, east of Tokyo, on Jan. 13. Reports say it will file for bankruptcy protection on Tuesday. ((Itsuo Inouye/Associated Press))

The Nikkei said the filing would most likely be immediately followed by a restructuring plan crafted by a government-backed corporate turnaround body.

The airline's shares have lost more than 90 per cent of their value over the last week and tumbled another 29 per cent on Monday to six cents Canadian. The company now has a market value of $150 million US, the price of one Boeing 787 jet.

Both Delta Air Lines — the world's biggest airline — and rival American Airlines are courting JAL with massive financial offers as they try to expand their Asian networks.

Delta and its SkyTeam alliance members have offered $1 billion, including $500 million in cash, to lure JAL away from American's Oneworld alliance. American Airlines and its partners say they are ready to inject $1.4 billion cash into the Japanese airline, up from a previous $1.1 billion offer.

JAL was founded in 1951 and owned during its early years by the government. It expanded quickly in the decades after the Second World War, along with Japan's economy, and was privatized in 1987.

Four government bailouts

Risky investments in foreign resorts and hotels eroded profits when Japan's property and stock bubble of the 1980s burst at the same time as pension and payroll costs grew and as it struggled to service a big network of unprofitable domestic routes it was politically obligated to maintain. Despite four government bailouts since 2001, it reported a loss of $1.4 billion US in the six months ending in September.

Transport Minister Seiji Maehara has said JAL will keep flying through the restructuring process. It serves 220 airports in 35 countries and territories, including 59 domestic airports.

With files from The Associated Press