Japan Airlines (JAL), Asia's biggest air carrier, has filed for bankruptcy protection, in one of the country's biggest corporate failures.
Some 15,600 jobs are expected to be cut. All board members have also voted to resign, according to Japanese media.
A state-backed turnaround organisation has said it plans to inject about 300bn yen ($3.3bn; £2bn) into JAL.
Japan's government says flights will continue as normal as the airline begins restructuring.
Its reorganisation will take place under the supervision of the state-backed Enterprise Turnaround Initiative Corporation (ETIC).
As well as reducing its headcount, JAL will have to replace some of the older, less fuel-efficient planes in its fleet and reduce the number of routes it flies. JAL will also receive a 600bn-yen credit line and get 730bn yen in debt waivers.
Shares in JAL have fallen to an all-time low, valuing the firm at just $150m - less than the price of a new jumbo jet.
The Tokyo Stock Exchange said shares in the carrier would be delisted on 20 February.
Along with other major global airlines, JAL has been hit hard by falling passenger numbers during the global economic downturn. The carrier has debts of $25.6bn.
Investors to lose out
"Basically this shows that nothing is too big to fail, that America's GM and Japan's JAL were in the same situation," said Koichi Ogawa from Daiwa SB Investments.
"What this has shown is that the nation won't just take total care of a company, that they've now said they'll let badly-run companies fail."
A third of JAL's workforce face the prospect of losing their jobs, the BBC's Roland Buerk in Tokyo says.
While the turnaround plan backed by the government will see the airline continue to fly, investors in the company are likely to lose most of their money.
But JAL's competitors would only see a limited impact from its bankruptcy filing, Kazuyuki Terao, chief investment officer at RCM Japan, said.
"If consumers shift to other carriers, it might have a positive impact but it is also not likely because for consumers, utility is important - which will not change after bankruptcy."
Support
Meanwhile, US carrier Delta Air Lines has issued a statement of support for JAL.
Delta wants JAL to leave the OneWorld Alliance and join its SkyTeam partnership.
"Delta and SkyTeam fully support Japan Airlines and stand ready to provide assistance and support in any way possible.
"Delta fully expects that JAL, with the support of ETIC, will be successful in its restructuring and return the airline to a position of prominence."
Japan Airlines (JAL), which entered bankruptcy protection last month, has announced a massive increase in loses.
The airline said it lost 177.9bn yen ($1.99bn, £1.3bn) in the last nine months of 2009 - up from a loss of 1.9bn yen a year earlier.
JAL is continuing to operate flights while it undergoes major restructuring under court supervision.
The company is expected to cut staff, routes and aircraft numbers in an attempt to return to profitability.
Reflecting on the company's failure, JAL said it was "deeply apologetic" for the situation that shareholders, creditors and customers now found themselves in.
"[We are] working fervently... to draw up an effective corporate revitalisation plan to rebuild the airline, while continuing to provide safe and stable flight operations and services to customers," the airline said in a statement.
JAL collapsed earlier this year after racking up $16.5bn in debts.
It is one of the most high-profile airlines to fall victim to the global recession, which caused a collapse in passenger numbers and left many airlines facing big losses.
from ews.bbc.co.uk
