TOKYO: Fears deepened Wednesday about the future of debt-ridden Japan Airlines, with shares in Asia's biggest carrier plunging by a quarter on fears it might file for bankruptcy, dealers said.

JAL, battered by the global recession and swine flu pandemic, is scrambling to slash costs and seeking its fourth government bailout since 2001 to keep flying in the face of mounting losses.

Media reports that bankruptcy is one option for the cash-strapped carrier have spooked investors, who sent shares in the airline crashing 25 percent to 66 yen in morning trade, after an 8.3 percent dive on Tuesday.

The shares slid to 60 yen at one point, the lowest level since JAL merged with Japan Air System Co. in 2002.

"Speculation is rife that JAL may face court-led proceedings, which could result in its delisting" from the Tokyo Stock Exchange, said Kazuhiro Takahashi, equity information chief at Daiwa Securites SMBC.

"We have the impression that somebody needs to take responsibility in order to move JAL's restructuring plans forward. Worries are growing among shareholders," he said.

Local media have reported that the state-backed body overseeing JAL's restructuring is considering filing for protection from creditors as one possibility for the cash-strapped carrier.

Bankruptcy protection can enable a company to restructure its debts with creditors and implement other measures to emerge stronger, as seen with ailing US auto giant General Motors.

But it can also mean that shareholders will see the value of their investment wiped out.

JAL, which lost about 1.5 billion dollars in the six months to September, has said it plans thousands of job cuts and a drastic reduction in routes as part of its efforts to return to profitability.

It has been offered financial assistance by both American Airlines and Delta Air Lines, who are competing to take a minority stake in the Japanese carrier, eyeing its coveted Asian landing slots.

Japan's government has ruled out allowing JAL to collapse, but has left the door open to possible bankruptcy proceedings to allow the group to restructure more easily.

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.