JAL is now valued at less than the price of a new jumbo jet
Japan Airlines (JAL), Asia's biggest air carrier, has filed for bankruptcy protection, in one of the country's biggest corporate failures.
Some 15,600 jobs are expected to be cut. All board members have also voted to resign, according to Japanese media.
A state-backed turnaround organisation has said it plans to inject about 300bn yen ($3.3bn; £2bn) into JAL.
Japan's government says flights will continue as normal as the airline begins restructuring.
Its reorganisation will take place under the supervision of the state-backed Enterprise Turnaround Initiative Corporation (ETIC).
As well as reducing its headcount, JAL will have to replace some of the older, less fuel-efficient planes in its fleet and reduce the number of routes it flies.
Andrew Walker, economics correspondent, BBC World Service
Japan Airlines' problems partly reflect the carrier's own difficulty in controlling its costs. But they are also a reminder of the fact that aviation can be a very difficult industry.
In the US, some of the biggest airlines have been into and emerged from a bankruptcy procedure in recent years, including Delta and United. So Japan Airlines is joining some big names by going though this process.
Despite its troubles, it is the focus of a contest between two of the leading global airline alliances.
JAL is a member of the One World alliance, which includes American Airlines and British Airways. But Skyteam, whose members include Delta and Air France, are keen to recruit JAL, to add the routes they can offer to customers.
For all the problems facing many airlines, there is a real advantage in attracting passengers to be able to connect with a very wide range of destinations. And for that, both alliances have been offering financial help to a bankrupt airline.
JAL will also receive a 600bn-yen credit line and get 730bn yen in debt waivers.
Shares in JAL have fallen to an all-time low, valuing the firm at just $150m - less than the price of a new jumbo jet.
The Tokyo Stock Exchange said shares in the carrier would be delisted on 20 February.
Along with other major global airlines, JAL has been hit hard by falling passenger numbers during the global economic downturn. The carrier has debts of $25.6bn.
Investors to lose out
"Basically this shows that nothing is too big to fail, that America's GM and Japan's JAL were in the same situation," said Koichi Ogawa from Daiwa SB Investments.
"What this has shown is that the nation won't just take total care of a company, that they've now said they'll let badly-run companies fail."
A third of JAL's workforce face the prospect of losing their jobs, the BBC's Roland Buerk in Tokyo says.
While the turnaround plan backed by the government will see the airline continue to fly, investors in the company are likely to lose most of their money.
But JAL's competitors would only see a limited impact from its bankruptcy filing, Kazuyuki Terao, chief investment officer at RCM Japan, said.
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Founded in 1951, Japan's flagship carrier came to symbolise the country's rapid economic growth, leading to privatisation in 1987
But when Japan's stock market and property bubble of the 1980s burst, it was hurt by risky investments it had made in foreign resorts and hotels
It also found itself with growing pension and payroll costs, and running many unprofitable domestic routes, which it was politically obliged to maintain
More recently, it has seen falling passenger numbers in the global downturn, and as a result of increased competition from Japanese rival All Nippon Airways
It lost 131bn yen ($1.4bn; £880m) in the six months to September
"If consumers shift to other carriers, it might have a positive impact but it is also not likely because for consumers, utility is important - which will not change after bankruptcy."
Meanwhile, US carrier Delta Air Lines has issued a statement of support for JAL.
Delta wants JAL to leave the OneWorld Alliance and join its SkyTeam partnership.
"Delta and SkyTeam fully support Japan Airlines and stand ready to provide assistance and support in any way possible.
"Delta fully expects that JAL, with the support of ETIC, will be successful in its restructuring and return the airline to a position of prominence."