March 1 (Bloomberg) -- Shares of Japan Airlines Corp. had their biggest gain in two years on speculation Asia's largest carrier will replace President Toshiyuki Shinmachi to end a boardroom feud and stem losses.

Directors will announce their choice to run the Tokyo-based airline at a 5 p.m. press conference today at the transport ministry, said Japan Airlines spokesman Yoshiteru Suzuki. He declined to comment on reports in several Japanese newspapers that Finance Director Haruka Nishimatsu will replace Shinmachi.

The new management must resolve safety lapses that prompted passengers to switch to All Nippon Airways Co., contributing to losses that Japan Airlines predicts will total 47 billion yen ($406 million) this fiscal year. Executives may also need to win labor union support for plans to cut as many as 5,900 jobs over six years to help return to profit.

``Unless the company restructures thoroughly under the new management, the future of the airline will be uncertain,'' said Yoku Ihara, head of equity research at Retela Crea Securities Co., a Tokyo-based brokerage.

Japan Airlines shares rose 4.8 percent to an 11-day high of 326 yen on the Tokyo Stock Exchange. They earlier climbed as much as 5.1 percent, the biggest intraday gain since Feb. 27, 2004.

Both Shinmachi and Nishimatsu will attend today's press conference at the transport ministry in Tokyo, according to a notice placed at the ministry.

Pressure to Quit

Shinmachi, 63, will resign in June to end a growing conflict with executives at the unprofitable carrier, according to reports by Kyodo News Service, Nihon Keizai newspaper and Japan's NHK television, citing unidentified people.

Nishimatsu, 58, will be promoted to the top job, while Executive Vice President Katsuo Haneda and Senior Managing Director Hidekazu Nishizuka may quit, Kyodo said.

On Feb. 6, Eitaro Itoyama, the airline's largest individual shareholder, called for Shinmachi's resignation. Four days later, his call was supported by four of the carrier's directors.

Nishimatsu, a University of Tokyo graduate in economics, joined Japan Airlines in 1972. He was promoted to executive officer in 2003 and was appointed a director in 2005.

The four directors who asked for Shinmachi's resignation will get assignments in the carrier. Kiyoshi Kishida, a former pilot and managing director of Japan Airlines' international unit, will be promoted to executive director, Kyodo said.

Managing Director Makoto Fukada will be assigned to head Japan Airlines' Beijing office while directors Tetsuo Takahashi and Hiroyasu Omura will become advisers, Kyodo said.

All Nippon

All Nippon, Japan's second-largest airline, on Jan. 31 raised its full-year profit forecast by 70 percent to 17 billion yen as it won customers from Japan Airlines and hedged fuel costs.

Japan Airlines is among the global airlines that have been hurt by surging fuel prices, in an industry that may report a combined 2006 loss of $4 billion, according to the International Air Transport Association.

The Japanese carrier's third-quarter loss widened to 11.1 billion yen in the three months ended Dec. 11, as its fuel bill rose 28 percent to 102.8 billion yen. Japan Airlines will use financial contracts to hedge up to 75 percent of its fuel in the year starting April 1, about the same level as the current year.

To help regain profitability in the next business year, Japan Airlines plans to cut employees' base salary by 10 percent starting in April, reducing the labor cost by 6 billion yen. The cut will be three months later than planned because the airline could not reach agreement with all nine of its labor unions.

On Jan. 31, Japan Airlines submitted a second plan to the government on ways to improve its safety record. The airline had been warned twice by the transport ministry about its safety lapses, which included cases of take-offs and landings without permission and erroneous use of evacuation equipment.

To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net

Last Updated: March 1, 2006 01:35 EST