Kiyoshi Watanabe bought Japan Airlines Corp. shares last year at about ¥100 and lost more than 90 percent of his investment on speculation the former flag carrier will file for bankruptcy. Yet he supports the government’s decision to forgo a bailout.

“With the blood transfusions, JAL would just be surviving as a zombie,” said Watanabe, 44, chairman of a nonprofit organization in Tokyo. “This is a good thing. JAL must be rehabilitated.”

National pride in JAL, until now protected by what’s known as the “rising sun government umbrella,” has plunged since the 1970s, when it ranked first five times among companies that college graduates aspired to work for, according to placement company Recruit Co.

The carrier, which reported a first-half loss of ¥131 billion, has received four government bailouts in nine years.

“When I was a student in the U.S., I had a nice feeling when I saw a JAL plane at the airport,” said Yukio Noguchi, a finance professor at Waseda University in Tokyo. “It was our pride as Japanese.”

JAL finished 14th in Recruit’s survey last year.

The Enterprise Turnaround Initiative Corp., the government-affiliated agency leading the restructuring of the airline, will make a final decision on its restructuring plan Tuesday, transport minister Seiji Maehara said last week.

JAL was launched in 1951 as a private carrier called Japanese Air Lines. It became state-owned in 1953, was renamed Japan Airlines and started international services. The government sold its stake in 1987 and the airline was privatized.

JAL borrowed an undisclosed amount from the government in October 2001 to cope with the travel slump following the Sept. 11 attacks. In 2004, JAL received ¥90 billion in emergency loans from the Development Bank of Japan as the SARS virus and the Iraq war cut demand for travel.

JAL requested more government assistance last April, applying for a ¥200 billion loan from the Development Bank of Japan in the wake of the global recession. The following month JAL announced 1,200 job cuts and said it would cut costs by ¥50 billion this fiscal year.

Prime Minister Yukio Hatoyama promised during his election campaign last year to alter the relationship between government, the bureaucracy and big business — dubbed Japan’s “iron triangle.”

“The bankruptcy will change the image of governance in Japan and the relationship between government and companies,” said Martin Schulz, senior economist at the Fujitsu Research Institute in Tokyo. “The public clearly wants some of the old ties to be cut.”

The government has said the carrier will continue to operate.

More than 100 airlines worldwide have gone through bankruptcy since 1978, according to the Washington-based trade group Air Transport Association. The list includes Delta Air Lines Inc., UAL Corp.’s United Airlines, Northwest Airlines Corp., US Airways Group Inc. and Continental Airlines Inc.

Swissair and affiliate Sabena SA failed in 2001, and New Zealand nationalized Air New Zealand Ltd. that year to prevent its collapse.

Phoenix-based Mesa Air Group Inc. filed for bankruptcy earlier this year.

“I imagine this is a very difficult pill to swallow for JAL’s employees and pensioners,” said Kenta Kimura, 31, a JAL investor working in project development at the Japan International Cooperation Center. “In the long run, I think we will look back and say it was right to fix up the company.”

JAL’s long decline negates the shock value of bankruptcy, investors say. The collapse of Long-Term Credit Bank and Yamaichi Securities in the late 1990s stunned a nation coming to terms with the bursting of the bubble economy, while JAL’s potential bankruptcy, which may be the sixth largest in Japan, was years in the making.

“If it were five years ago, it would have been difficult to let JAL go bankrupt,” said Mitsushige Akino, who oversees about $450 million in assets at Ichiyoshi Investment Management Co. “There’s no such sentiment among Japanese people to want to save JAL, which only has the glory of past.”

Watanabe said JAL was “a pillar of national policy” under the previous government, making the possible bankruptcy even more of a startling twist. “This was a very bold decision in wielding the ax,” he said. “As a shareholder and as a Japanese citizen, I think it was absolutely the right thing to do.”

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