Japan Airlines has announced a massive loss and sought breathing space from its creditors as Asia's biggest carrier pleads for another public bailout to keep flying.
The airline scrapped its forecasts for the rest of the year due to uncertainty surrounding its turnaround efforts, which are expected to involve thousands of job cuts and drastic route reductions.
JAL reported a net loss of 131.2 billion yen for the fiscal first half to September, against a year-earlier profit of 36.7 billion yen.
Revenue tumbled 28.8 per cent to 763.95 billion yen as the number of passengers flying with the carrier plunged 10.4 per cent.
"Since the subprime crisis emerged, our business has been affected by drops in the number of business passengers as well as the emergence of the new type of influenza," said JAL executive officer Yoshimasa Kanayama.
"We made various cost cuts but it is our worst earnings result ever. The second half of the year is expected to remain severe," he warned.
The cash-strapped carrier, which is seeking a financial lifeline from the government to keep flying, said it had applied for a debt restructuring scheme that could allow it to delay payments to creditors.
JAL president Haruka Nishimatsu hinted he could step down once the turnaround plan has been put together, apologising for the company's troubles.
The carrier is seeking an injection of public funds to boost its capital as it restructures under the supervision of government-backed Enterprise Turnaround Initiative Corp. of Japan.
But the turnaround body appears unlikely to make a decision on whether to inject public funds into the company before early next year.
JAL is also set to receive an emergency loan from the state-backed Development Bank of Japan, the government said earlier this week, without disclosing the amount.
The airline said it needed 125 billion yen in short-term financing, and hopes to get a bridging loan by the end of this month.
The global economic downturn has dealt a heavy blow to JAL's efforts to recover from a long period of financial turbulence stretching back to its privatisation more than two decades ago.
The airline, the recipient of three government bailouts since 2001, has said it plans thousands of job cuts and a drastic reduction in routes, although its restructuring plan has not yet been finalised.
JAL also hopes to tie-up with a foreign carrier, and Mr Nishimatsu said the group aimed to conclude an alliance agreement by the end of the year.
American and rival Delta Air Lines Inc. are said to be considering buying minority stakes in JAL, eyeing its lucrative Asian routes.