TOKYO » Japan Airlines filed for one of the country's largest bankruptcies ever yesterday, entering a restructuring that will shrink Asia's top carrier and its presence around the world.

Staggering under a $25.6 billion debt mountain, the carrier applied for protection from creditors under the Corporate Rehabilitation Law—Japan's version of Chapter 11—with the Tokyo District Court.

Japan's flagship airline will slash nearly 16,000 jobs, reduce pensions for retired staff, cut routes and shift to more fuel-efficient aircraft as part of its restructuring.

Some $10 billion of government cash will keep JAL's planes in the air during the reorganization. Lenders will forgive $8 billion in debt, and JAL shares will be removed from the Tokyo Stock Exchange on Feb. 20, wiping out investors.

After bankruptcy, JAL will continue to operate four daily flights between Tokyo and Hawaii, one between Osaka and Hawaii, and one between Nagoya and Hawaii, said Winston Lee, director of passenger sales for JAL's Hawaii region.

There was no word on the outcome of a fierce tug of war between Delta Air Lines and American Airlines for a slice of JAL's business. Despite its woes, the airline's access to Asia is a mouthwatering prize for foreign airlines.

A state-backed turnaround agency pledged Yen900 billion ($10 billion) in financial support for JAL—Yen600 billion in credit lines and a Yen300 billion cash infusion. The bankruptcy is the fourth largest in Japan, according to figures from Teikoku Databank, which tracks corporate failures.

“;This is not the end of JAL,”; Transport Minister Seiji Maehara told reporters. “;Today is the beginning of a process to keep JAL alive.”;

JAL President Haruka Nishimatsu resigned, bowing deeply as he apologized for the company's troubles. Kazuo Inamori, a Buddhist monk and founder of Kyocera Corp. and Japan's No. 2 mobile carrier KDDI Corp., has been tapped as its next leader.

“;This is our last chance,”; Nishimatsu said. “;I believe we can be reborn as an airline that can represent Japan again.”;

JAL said flights will continue uninterrupted and that frequent fliers would not lose their miles. Tokyo asked foreign governments for cooperation to keep JAL flying around the world.

The day's events culminate a process that began in October when JAL—saddled with debts of Yen2.32 trillion ($25.6 billion)—first turned to the Enterprise Turnaround Initiative Corp. of Japan for help. Under the prepackaged reorganization, it will embark on a massive overhaul to shed the fat and inefficiency that hobbled its finances.

Maehara said the turnaround would involve 15,661 job cuts—a third of JAL's payroll—by March 2013.

The carrier will retire all 37 of its Boeing 747 jumbo aircraft and 16 MD-90s, which will be replaced by 50 small and regional jets. As of March, JAL's fleet consisted of 279 aircraft, mainly from Boeing Co. It served 220 airports in 35 countries and territories, including 59 domestic airports.

JAL shares, which have lost more than 90 percent of their value over the last week, tumbled another 40 percent yesterday to Yen3 before finishing flat at Yen5. The company is now essentially worthless, with a market capitalization of about Yen13.7 billion ($150 million)—the price of one Boeing 787 jet.

Nevertheless, American and Delta have continued to battle over JAL.

Delta and its SkyTeam partners have offered $1 billion, including $500 million in cash to lure JAL away from American's oneworld alliance. American Airlines and its partners say they would inject $1.4 billion cash into the Japanese airline.

“;Delta and SkyTeam fully support Japan airlines and stand ready to provide assistance and support in any way possible,”; the Atlanta-based airline said in a statement following JAL's bankruptcy filing.