AMR Corp's American Airlines raised its offer to invest in Japan Airlines Corp. by $300 million to $1.4 billion, according to people familiar with the situation, intensifying its battle with rival Delta Air Lines Inc. to forge a partnership with the cash-strapped carrier, The Wall Street Journal reported. American met with JAL executives Thursday morning and sweetened its offer, according to these people. Last month, American, along with members of the Oneworld airline alliance and private equity fund TPG, said it would invest $1.1 billion into JAL.

Shares of Japan Airlines fell more than 4 percent on Wednesday after the Nikkei business daily reported the Development Bank of Japan (DBJ) and the Ministry of Finance are seeking court-led bankruptcy proceedings. Sources told Reuters last week that a government-backed turnaround fund was leaning towards bankruptcy proceedings for JAL as part of its restructuring plan, and was in negotiations with creditors to push such a plan. The Nikkei reported on Wednesday the state-owned DBJ, JAL's largest creditor, favours a pre-packaged bankruptcy option. DBJ declined to comment on the report.

American Airlines is considering sweetening its $1.1 billion investment proposal for Japan Airlines and would be willing to invest in the carrier even if it goes into bankruptcy, an American Airlines executive said. Will Ris, in charge of government affairs at American Airlines told Reuters that American Airlines was ready to invest if it applies for bankruptcy protection or is restructured out of court.

The government-backed body drawing up a proposal to restructure Japan Airlines Corp. hopes to bring in an outsider with no aviation experience as a successor to current Chief Executive Haruka Nishimatsu, according to a person familiar with the matter, The Wall Street Journal reported. If successful, the move would mark the first time that JAL would be headed by an outsider with no aviation experience, underlining the severe degree of change facing the cash-strapped carrier. The Enterprise Turnaround Initiative Corp.

The run-up to New Year is a time to tidy up loose ends in Japan so that in January everything starts afresh. For a fleeting moment, it looked as if the government was doing just that when, after months of indecisiveness, it hinted on December 30th that Japan Airlines might be headed for bankruptcy, The Economist reported in a commentary. But after the shares slumped by 24% to an all-time low on the same day, ministers lost their nerve over sanctioning what could be one of Japan’s biggest corporate failures.

Japanese authorities have thrown a lifeline to the crisis-struck Japan Airlines (JAL), the largest carrier in Asia, by doubling a state-sponsored credit line to £1.33 billion, The Guardian reported. The government in Tokyo asked the Development Bank of Japan to double its existing 100 billion yen (£665 million) commitment facility to JAL today after ministers – including Seiji Maehara, transport minister, and Naoto Kan, deputy prime minister – met for crisis talks to discuss how Tokyo could further support the troubled carrier.

The Development Bank of Japan (DBJ) has agreed to increase the amount of its unsecured loans to Japan Airlines, which is under threat of bankruptcy, from 100 billion yen ($1.08 billion) currently, Japanese media reported on Thursday. Executives of the state-owned DBJ, Transport Minister Seiji Maehara and National Strategy Minister Naoto Kan met on Thursday to agree to raise the amount of loans as JAL has already used 55 billion yen of a 100 billion yen credit line recently extended by DBJ, Jiji news agency said.

Several cabinet members of the Japanese government want Japan Airlines Corp to withdraw completely from its international flights business and consolidate it with that of All Nippon Airways Co, the Mainichi Shimbun newspaper reported on Thursday, Reuters reported. The cabinet members met on Wednesday and appeared to have floated the idea in order to improve JAL's financial condition, Mainichi reported, without citing any sources. But Transport Minister Seiji Maehara was opposed to the plan of having only one international flight service airline from Japan, the newspaper said.

Some hedge funds are starting to wager on painful times ahead for Japan, the world's second-largest economy, The Wall Street Journal reported. These investors, including some who made successful bets against risky mortgages and financial companies in recent years, anticipate trouble for Japan's financial system. Their concern: Government borrowing continues to climb while demand for the nation's debt could taper off.

Aiful Corp.'s debt restructuring is a credit event and has triggered an auction of the credit default swaps written on the Japanese consumer credit firm's debt, a committee of dealers and investors ruled Wednesday, The Wall Street Journal reported. The Japan Determination Committee of the International Swaps and Derivatives Association, or ISDA, determined that a "restructuring credit event" had occurred, according to ISDA's Web site.