JAL, a Oneworld alliance partner of British Airways, ended months of speculation over its future by applying for protection from creditors under the country's Corporate Rehabilitation Law, Japan's version of Chapter 11.

The airline is now expected to shed 15,700 jobs by March 2013, cut pensions for retired staff, trim its route network and retire 37 Boeing 747 aircraft as part of a funding deal with the Enterprise Turnaround Initiative Corp of Japan (ETIC).

To keep the carrier airborne, government-backed organisations will inject almost $11bn of cash, while lenders will write off about $8bn of debt. Equity investors will lose their money, with the shares delisted.

"JAL lacked strong governance and was unable to keep up with changing times," said Akitoshi Nakamura, ETIC executive director. "In a sense JAL encapsulates what is a typical problem and hurdle for Japan as a whole."

The carrier has been the subject of a tug-of-war between Delta Air Lines and American Airlines, both of which had tabled potential $1bn-plus cash injections in return for control. It is unclear whether either carrier could yet return with an improved offer.

Had Delta have won the day, it would have had ramifications for BA. Delta is part of the SkyTeam alliance that was keen to lure JAL away from Oneworld.

On Tuesday, in an almost comic press statement, Oneworld insisted it was "business as usual for Japan Airlines".

The bankruptcy is thought to be the fourth-largest in Japan and represents a humiliating outcome for Japan's leading airline. It was founded in 1951 and once symbolised the country's growing power.

Haruka Nishimatsu, JAL president, bowed deeply as he resigned and apologised for the ignominious situation at the company. "This is our last chance," he said. "I believe we can be reborn as an airline that can represent Japan again."

"This is not the end of JAL," insisted Seiji Maehara, Japan's transport minister. "Today is the beginning of a process to keep JAL alive."