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Shares of Japan Airlines were flooded with sell orders yesterday on growing expectations the carrier is headed for bankruptcy and a delisting from the Tokyo exchange.

The sell-off, set to wipe out nearly US$900mil in market value from JAL, came despite an announcement from American Airlines that it had sweetened its investment offer by US$300mil to US$1.4bil to keep JAL from forging ties with Delta Air Lines.

A state-backed fund now weighing whether to support the carrier is planning to have it file for bankruptcy next week, provided banks agree to waive about 350 billion yen (US$3.80bil) in debt, sources have told Reuters.

Kyodo news agency said on Tuesday that Japan’s top three private banks – Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group – had agreed to the bankruptcy plan.

“With all the media reports there’s a lot of talk going around about JAL delisting or staying listed,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.

“Investors don’t know what to think any more,” he said.

JAL, weighed down by US$16bil in debt and mired in losses, applied in late October to the Enterprise Turnaround Initiative Corp of Japan (ETIC), a body of restructuring specialists that can tap state-backed funding to bail out ailing companies.

The ETIC plans to inject about 300 billion yen in fresh capital into JAL, provided it files for bankruptcy and creditors agree to waive around 350 billion yen in debts, sources told Reuters last week.

The ETIC is eyeing some time between January 19 and January 22 for the carrier to file for bankruptcy and for the ETIC to officially announce its plans to offer its support.

Shares of JAL were untraded due to a flood of sell orders at 37 yen, down 45% from Friday’s close. Japanese markets were closed for a national holiday on Monday.

JAL’s market value had sunk below US$2bil as of Friday’s close, from more than US$6bil a year ago and compared with smaller rival All Nippon Airways’ US$7.7bil.

Meanwhile, Japan Airlines Corp said yesterday that two-thirds of its retirees had agreed to proposed pension cuts, clearing a hurdle in its push to cut its pension shortfall and qualify for an injection of public funds.

The airline needed the agreement of two-thirds of current employees and retirees for the cuts so it can reduce a pension shortfall estimated at 331 billion yen (US$3.60bil) at the end of March.

A JAL spokesman said the carrier received notifications of agreement from 5,991 out of 8,936 retirees.

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Singapore’s budget carrier Tiger Airways will today launch in the republic the public offer for its shares as part of an initial public offering (IPO) to raise up to S$273mil.

The airline is slated to be listed on the Singapore Exchange on Jan 22 and retail investors have until Jan 18 to subscribe to the shares.

The final pricing for the shares will only be done at the closure of the book building exercise but the offer now is at S$1.35 to S$1.65 a share. That price is based on its price-earnings multiple for 2011 of 11.4 to 13.9 times.

Standard & Poor’s aviation analyst Shukor Yusof reckons the shares would be priced at the lower end – about S$1.35 to S$1.40 – after the books are closed. Tiger is going to the market to raise cash to fund aircraft purchases, set up an a new airline and/or operating bases and repay its outstanding short term loans.

The airline kicked off its roadshow for institutional investors on Jan 6, the same day Jetstar and AirAsia announced their alliance. Tiger is selling about 165 million shares or about 30% of its enlarged share capital. This IPO has been scaled down from its earlier estimates of S$300mil-S$350mil.

This is the first airline IPO after India’s Jet Airways was listed in 2005. But increasingly, carriers like Indonesia’s Garuda and Thailand’s Thai Airways will be returning to the market to look for new investors to fund their growth as there are signs of a rebound in the travel trade industry. Even Indonesia’s Lion Air is planning to sell shares to the public this year.

Will Tiger’s shares be snapped up given the impending competition from carriers in the region and the two alliance (AirAsia/Jetstar) partners? “It will not be an easy sell because of the recent indication that its rivals – Jetstar and AirAsia – want to work together. This has somewhat made Tiger’s pre-marketing of its IPO very complex. Nevertheless, this airline IPO will be supported,” said Maybank Investment Bank senior analyst Khair Mirza.

Shukor added that the “market is flushed with liquidity and Tiger is a well known brand. The only question is the pricing.”

Tiger has been very bullish in its prospectus with its profit numbers, say fund managers that attended the roadshow in Singapore.

No profit figures were available at press time but Tiger has been recording losses since its inception and also in the first half of the financial year ending Mar 31, 2010 (FY10).

However, this airline has done exceptionally well so far in the second half of FY10 and the profit forecast for FY11 is based on second half’s performance.

Tiger also managed to get approval for its listing based on the old ruling which did not specify that companies seeking a listing need to be profitable in the three years preceding its IPO, but that rule has since changed.

“The challenge for an airline like Tiger will be to meet its profit forecast in its prospectus with the constantly changing environment and certain cost items that are movable, such as fuel,” Khair said.

Tiger is backed by Singapore Airlines (SIA), Temasek Holdings, Indigo Partners LLC (an investment firm founded by Bill Franke) and RyanAsia, the investment arm of the Ryan family that also controls Dublin-based Ryanair. SIA holds 49%, Indigo Partners (24%), RyanAsia 16% and Temasek (11%) in Tiger.

Post listing, SIA and Temasek will retain their original stakes in the airline, Tiger officials told fund managers at the roadshow.

Yesterday Tiger said it was accelerating delivery of five A320 aircraft of its total order of 66 aircraft from 2016 to this and next year as it is in a hurry to expand in Australia and Asia with the economy picking up. The funding for two of the five aircraft was arranged by Standard Chartered Bank.

Tiger now operates a fleet of 17 Airbus A320-family aircraft and is planning to increase its fleet size to 68 by December 2015.

The airline operates flights to 33 destinations across 11 countries and territories in Asia and Australia from its aircraft bases in three locations – Singapore’s Changi Airport, Tullamarine Airport in Melbourne and Adelaide Airport in South Australia.

Jetstar operates 60 aircraft and is the world’s largest long-haul budget carrier, while AirAsia is South-East Asia’s biggest player with three bases and 85 planes servicing more than 60 destinations. Together, the two companies chalked up joint revenue of S$4bil last year, a report said.

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General Motors’ new CEO Ed Whitacre said he believes the company will return to profitability in 2010.

Speaking to reporters on a conference call, Whitacre, who assumed the top job on Dec. 1, gave the most bullish forecast yet for a turnaround in the company’s financial performance. The company has lost money every year since 2005 and was forced by the government to file for bankruptcy last year.

Asked if GM would be profitable this year, Whitacre said, “I’m hoping so. My prediction is we will be.”

Still, Whitacre cited uncertainty about the strength of the economic recovery and the battle to lure back customers who have soured on GM. “Do we have obstacles in our way? Of course we do,” he said.

While rivals Ford Motor Co (F, Fortune 500). and Toyota Motor (TM) posted a profit in the third quarter of 2009, GM lost $1.2 billion.

But GM has said its financial conditions have improved enough in the past few months that it has already started to pay back the $6.7 billion loan it received from the Treasury Department as it exited bankruptcy. GM expects to complete payments by June. That loan is only a fraction of the $50 billion in help the company received from Treasury, however.

Whitacre added that GM hoped to return to profitability by focusing on sales growth as opposed to just slashing expenses.

“You can always take out more cost, but we are focused on the revenue side if you want to prioritize it,” Whitacre said.

He said the company is projecting an end to its long string of market share losses in the U.S. this year. GM has not had an increase in market share since 2002 and its market share has plunged from 44% in 1980 to under 20% last year.

Whitacre would not divulge the company’s market share target in 2010 will be but when asked if it was higher, he responded “Of course.”

GM is now privately held, with the Treasury Department holding 61% of shares and the United Auto Workers union and the company’s former bondholders holding most of the remaining shares. The company will need to go public again before taxpayers can start getting most of the money back.

Whitacre said he doesn’t think that it is necessary for GM to be profitable again before an initial public offering, although he acknowledged it would be helpful. He repeated earlier statements that the company will not be ready to go public until the second half of this year at the earliest, and added he feels no pressure to do so this year.

“We have to show our financial viability first. We have to get everything pretty well set up. People have to see us perform,” he said.

In other news, Whitacre said he anticipates “hundreds” of GM dealers who the company had planned to shed in the coming year would be retained by GM as part of a review process mandated by recently passed legislation.

During its bankruptcy, GM identified more than 1,000 U.S. dealers out of its base of 6,000 that it wanted to terminate, along with hundreds of other dealers who will be cut lose as the company discontinues its Saturn and Pontiac brands and sells or closes Saab and Hummer. To top of page

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