Japan Airlines has filed for bankruptcy with 2.3 trillion yen (€17.7 billion) in debt as of the end of September, as it seeks to revive itself under a state-backed restructuring plan.
All board members also voted to resign, Jiji News Agency and other media said. JAL officials were not immediately available for comment.
A JAL bankruptcy is expected to see the carrier slash 15,000 jobs and replace ageing planes to survive.
JAL, Asia's largest airline by revenues, will remain in the skies under a state-backed restructuring plan as it tries to free itself from about €11billion in debt in exchange for slashing its workforce by a third and shedding unprofitable routes, sources said.
"I am not worried about the future of the carrier as I believe the government will strongly support it," said Yasuhiro Matsumoto, credit analyst at Shinsei Securities.
"But whether it will be able to grow as a business is unclear. I can't see how JAL is going to build its network domestically and internationally."
The move could make rival All Nippon Airways Japan's new flagship carrier, some analysts said.
Shares of JAL were trading at 4 yen, a decline of 20 per cent.
JAL had earlier been seen by many Japanese as a symbol of the country's postwar boom as it transformed a handful of leased planes in 1951 into a nearly 50,000 staff airline with a fleet of almost 280 aircraft.
Echoing similar bankruptcies by overseas airlines such as Delta Air Lines and United Airlines, JAL plans to cut some 15,000 jobs and erase about two dozen unprofitable routes, sources said.
JAL is expected to file for protection from creditors using a procedure that will allow it to continue operations and seek to rebuild itself, similar to Chapter 11 in the United States.
In return, the state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) will support the carrier with about 300 billion yen in capital and its creditors will be asked to forgive about 350 billion yen of their loans, sources said.
Units including Japan Airlines International, which handles domestic and overseas flights and JAL Capital, which raises operational funds, will also file for bankruptcy, one source said.
But that will only be the beginning for an airline with depleted capital, facing headwinds such as rising fuel costs and shrinking passenger numbers, on top of hefty restructuring costs.
JAL needs to do what it has long put off: make a list of its operations in order of priority and start cutting the ones it doesn't need, said Andrew Miller, chief executive officer of CAPA Consulting.
"I would have a fire sale - get rid of the family silver, sell everything that is non-core and focus in on the core and make that work efficiently," he said.
JAL will also need to come to a decision about competing offers for aid from Oneworld alliance partner American Airlines and rival Delta, which is trying to woo JAL into the competing SkyTeam group.
The carrier has spent two decades trying to recover public trust following a 1985 crash that became the world's worst single aircraft disaster in history, claiming 520 lives.
JAL, headed for its fourth net loss in five years, last week drew down on the 145 billion yen in emergency funding left from a 200 billion yen credit line supplied by the state-owned Development Bank of Japan.
JAL was saddled with 1.5 trillion yen in total liabilities as of the end of September. That level of debt would make it the sixth-biggest bankruptcy ever in Japan, ranking just below the 2001 collapse of retailer Mycal.
The state-backed ETIC can draw on government-backed funding to support ailing Japanese companies. The fund has said it would guarantee payment for fuel and other commercial transactions to ensure JAL can maintain its operations.
Kazuo Inamori, the 77-year-old founder of electronics maker Kyocera Corp, was tapped last week to become JAL's new chief executive officer to oversee its restructuring.
JAL's restructuring plan also calls for increasing the fuel efficiency of its fleet, procuring 33 small jets and 17 regional jets while retiring 53 bigger ones.
"I think a revival of JAL will be good for manufacturers such as Mitsubishi Heavy industries which is developing new regional jets," said Shinsei's Mr Matsumoto.
Reuters