A new member of SkyTeam?

Eyeing its lucrative Asian landing slots, US carriers American Airlines and Delta Air Lines are now in a bidding war for a slice of JAL.

Dutch carrier KLM said on Monday that talks involving Air France-KLM and Delta on JAL's future were "going well", after reports that the Japanese airline had agreed to tie up with Delta and switch to the SkyTeam alliance.

The government was expected to announce on Tuesday a new financial lifeline for JAL, which has received a series of public bailouts and lost about $1.5-billion in the six months to September.

JAL is reportedly set to slash more than 15 000 jobs while withdrawing from unprofitable routes and selling hotels and other assets.

Experts say radical downsizing is long overdue at JAL, which has been hobbled by high costs since its days as a state-owned flag carrier and is overexposed to unprofitable domestic and overseas routes.

"The problem is that the government lacks a clear vision on what to do with JAL's international network," said Yasuhiro Matsumoto, a credit analyst at Shinsei Securities. "They are focused on assisting JAL."

According to Japanese media, the company is set to receive an injection of government funds worth several hundred billion yen under a prepackaged restructuring plan that would see it file for bankruptcy.

At the same time JAL's creditor banks are expected to be asked to forgive loans worth several hundred billion yen.

JAL has been hit hard by industry turbulence unleashed by the 11 September 2001 terror attacks in the United States, the Iraq war and the global financial crisis, as well as global health scares in the past decade.