Shares in Japan's Skymark Airlines soared Friday (Oct 3) after the company said it was negotiating with Airbus to reduce a breach-of-contract penalty tied to the collapse of a US$2.2 billion jet order.
The carrier's Tokyo-listed shares closed 8.37 per cent higher at ¥220, after jumping as much as 15 per cent earlier in the day on reports that a deal was imminent. "Our company is negotiating with Airbus, and we're aiming to reach an accord by the end of October," Skymark said in a statement.
But the firm declined to comment on a report in the Asahi newspaper which said Airbus had agreed to cut the penalty to about ¥20 billion (US$183 million), well below its original ¥70 billion demand - which some feared would put Skymark out of business.
The struggling airline was sideswiped when Airbus in July said it had cancelled its US$2.2-billion jet order, apparently over concerns about getting paid. Skymark shares had lost more than 40 per cent at one stage following the collapsed deal.
At the time the carrier said Airbus had threatened it with "overpriced" penalties and called on it to merge with a bigger airline, a proposal which Skymark's top executive flatly rejected. The deal for six Airbus A-380 jets was signed in 2011, but Skymark missed a payment deadline earlier this year.
The carrier was born out of deregulation measures in the 1990s which were aimed at challenging All Nippon Airways and rival Japan Airlines' control of the market. However Skymark has been reporting ballooning losses as new entrants into the budget sector hurt its business.
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