Japan Airlines is bankrupt; it filed for protection from creditors under the country’s corporate rehabilitation law on Tuesday.

The government is guaranteeing that the company will continue flying, but a court-supervised reorganization is expected to result in it shrinking. Shareholders’ funds will be eliminated and creditors will have to forgive debt, while the government stumps up cash to recapitalize the airline.

Better-managed rival All Nippon Airways, which has remained solvent amid the same market conditions, says it is highly concerned that government funding for the restructuring will distort competition.

Japan Airlines will cooperate with Delta Air Lines and move to the Skyteam alliance, switching from Oneworld as part of its corporate restructuring, two leading Japanese media organizations report.