TOKYO: Japan Airlines shares plunged more than 80 percent Wednesday, with analysts warning they may become almost worthless as investors rush for the exit ahead of an expected bankruptcy filing.

The market value of the once-venerable flagship carrier has crashed on fears that it will seek protection from creditors and delist its shares from the Tokyo Stock Exchange to aid its restructuring in the face of massive debts.

JAL's share price dived by the daily limit of 30 yen for a second straight day, falling 81.08 percent to hit a record low of seven yen (eight US cents), after a 45 percent drop on Tuesday.

"The selling is unstoppable," said Hideaki Higashi, a market strategist at SMBC Friend Securities.

"Event-driven market players are hammering down JAL. It's a money game. The market is driving the company to go under," he said, adding that the share price could technically fall to one yen.

While the stock was flooded by a deluge of sell orders, some speculators were buying to square their positions or make a profit on any rebound.

"The share price will go near zero," said Kazuhiro Takahashi, equity information chief at Daiwa Securities Capital Markets.

But some speculators "are looking for an opportunity to gain even one yen."

JAL's stock has plunged 95 percent over the past three months. Its highest share price since it began merging operations with small domestic carrier Japan Air Systems was 366 yen seen in 2003.

In a fresh blow to JAL, the ratings agency Moody's downgraded the airline's long-term debt rating to Ca from Caa1.

The lower rating, which puts JAL deeper into junk bond status, means the airline is seen as highly vulnerable to default.

"If the company files legal proceedings, it will show a greater likelihood of defaulting on its bonds in addition to securing debt forgiveness from its relational banks," the agency warned in a statement.

The government has pledged to avoid a total collapse of the former state-owned carrier, but has signalled likely bankruptcy proceedings which could aid JAL's recovery efforts while leaving investors out of pocket.

JAL is hobbled by heavy costs stretching back to its days as a state-owned flag carrier, as well as a route network that includes flights to small domestic airports that are often unprofitable to service.

US carriers American Airlines and Delta Air Lines are in a bidding war for a slice of the airline, the largest in Asia.

American Airlines, its Oneworld alliance partners and private equity company TPG on Tuesday lifted their proposed investment in JAL to 1.4 billion dollars, from a previous offer of 1.1 billion dollars.

Delta has offered JAL a one-billion-dollar financial package, included a 500-million-dollar equity injection, as the two airlines seek to increase their share of the lucrative Asian market.

The Japanese carrier is understood to favour a tie-up with Delta because it has a stronger trans-Pacific flight network than American Airlines.

JAL, which lost about 1.5 billion dollars in the six months to September, is seeking public aid in the face of mounting debts.

According to Japanese media, JAL is set to receive an injection of government funds worth several hundred billion yen (several billion dollars) under a restructuring package 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.

The airline is reportedly set to slash more than 15,000 jobs and sell non-core assets such as hotels to stem massive losses.