As background information, Japan Airlines Corp. has been bailed out four times by the Japanese government in the past ten years. JAL's 2.3 trillion yen bankruptcy is the fourth largest in Japan and the largest non financial bankruptcy.

The fact that JAL has been allowed to fail, marks a shift in government policy. The four month old Democratic Party led by Prime Minister Yuko Hatoyama, has refused to bail out JAL. However, Hatoyama's government said it would provide the necessary support for JAL.

Japan Airlines (OTC: JALSY) gained 8% Monday morning, thanks to weekend rumors that Delta Airlines (NYSE: DAL) and American Airlines (NYSE: AMR) are vying for a piece of the largest airline in Asia's largest travel market. Both Delta and American hope to use an investment in JAL to gain broader access to the Japanese travel market.

Though JAL refuses to comment on any talks, it's been reported over the weekend that Delta could be interested in buying a minority stake in the airline for several hundred million dollars, while American's bid could be $1 billion or more for a joint venture. At the same time, JAL has mentioned wanting to raise a total of $2.8 billion.