**Shares in Japan Airlines (JAL) fell by 45% on Tuesday as fears grew that the carrier is heading for bankruptcy.**The airline needs employees to agree to pension cuts in order to reduce its $3.6bn (£2.2bn) pension deficit and qualify for a state bail-out.
The deadline for an agreement is Tuesday. Current employees have already agreed to halve payments.
But those who have retired have yet to reach the two-thirds majority needed to agree to cuts.
JAL could extend the deadline for the agreement to 22 January.
Battle for the skies
Separately, American Airlines has raised the amount it is prepared to invest in the airline to $1.4bn, a $300m increase, as long as JAL stays with the Oneworld alliance that American is also a member of, along with British Airways and Qantas.
It wants to keep JAL from tying up with its own rival, Delta Airlines and its SkyTeam network.
Thomas W Horton, chief financial officer of American’s parent, AMR Corp, said: “While JAL and the Japanese government might decide to address capital requirements internally - and we certainly would understand and respect that - our offer of capital would be available if this was deemed an appropriate resource to aid in the restructuring of JAL.”
Staff cuts
Japan Airlines applied for a government bail-out in October last year through the state-backed Enterprise Turnaround Initiative Corporation of Japan (ETIC) - a body able to draw on taxpayers’ money to prop up the business while it restructures.
A decision on that is due before the end of January, but the ETIC requires cost-cutting concessions, including the restructuring of pension arrangements - and severe job cuts in the thousands.
It will inject fresh capital into JAL, provided it files for bankruptcy and creditors agree to waive around 350bn yen in debts.