Debt-ridden Japan Airlines (JAL) is forecast to have posted a group operating loss of about 160 billion yen ($1.7 billion) for the financial year that ended in March, Japan's Sankei newspaper reported on Sunday.

JAL and two subsidiaries filed in January for bankruptcy protection with a combined $25 billion in debt -- on of the largest corporate failures in Japanese history.

JAL's results will be the worst since it had tied up with Japan Airlines System in 2002 as revenue dropped sharply due to a rapid slowdown in the Japanese economy, the newspaper reported without citing any sources.

The airline's subsidiary, Japan Airlines International, appears to have secured a small profit in March, Sankei reported.

But JAL continues to face difficulties in its business in April as volcanic eruptions in Iceland forced flight cancellations, the newspaper added.

JAL and the state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) compiled a restructuring plan earlier in the month to reduce its workforce by a third, or more than 16,000 jobs, by the end of current financial year in March 2011, Sankei said.

(Reporting by Chikafumi Hodo; Editing by Jerry Norton)

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