Japan's Skymark surges on possible Airbus 'penalty deal'

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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Japan's Skymark Airlines surges on AirAsia takeover report

Skymark Airlines shares soared Tuesday (Aug 19) after a report said Malaysia's AirAsia was eyeing the struggling Japanese carrier, but both firms dismissed the story, with AirAsia's chief executive saying he had "never seen such rubbish". The Tokyo-listed stock jumped 27.77 per cent to finish at 230 yen, its maximum allowable single-day gain, on the report in Japan's leading Nikkei business daily.

The report, which cited unnamed sources, said AirAsia was in talks with its lenders over a possible takeover bid for money-losing Skymark. In a statement, AirAsia dismissed the story as "speculation" and "just another industry rumour". "Never seen such rubbish. AirAsia has no interest in Skymark in Japan," AirAsia chief executive Tony Fernandes wrote on Twitter. "There have been no discussions with Skymark."

The putative takeover target also questioned the report. "We're not aware that there is any truth in what has been reported," Skymark said in a statement.

In the wake of its bitter split last year with All Nippon Airways (ANA) over a budget carrier joint venture, AirAsia has announced it would jump back into the Japanese market in a tie-up with e-commerce giant Rakuten. The Nikkei had said the low-cost carrier might create a new local subsidiary, backed by Rakuten, to launch the bid for Skymark to get around restrictions on foreign ownership in Japanese airlines.

Skymark was born out of deregulation measures in the 1990s which were aimed at challenging ANA and rival Japan Airlines' control of the market. But the carrier has been reporting ballooning losses as new entrants into the budget sector hurt its business.

The airline was sideswiped when Airbus last month said it had cancelled a US$2.2 billion jet order with the carrier, apparently over concerns about getting paid. Skymark shares had lost more than 40 per cent at one stage following the collapsed deal.

The company said the European aviation giant 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 Nikkei report also said AirAsia, a major Airbus customer, had approached the plane maker about reducing the cancellation penalties. Skymark has said it was mulling the cutting of unprofitable routes and borrowing more money from its banks to stay afloat.

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Skymark shares sink deeper on quarterly loss

Shares in Skymark Airlines tumbled more than eight per cent early Friday (August 1) after the budget airline embroiled in a row with Airbus said its quarterly loss had ballooned.

Skymark Airlines fell 8.61 per cent to 191.0 yen, on top of a string of sharp drops this week. The stock has lost more than one third of its value, or 8.86 billion yen ($86 million), since the row with Airbus came to light.

Airbus said on Tuesday it had cancelled a $2.2-billion jet order from Skymark, even as the airline said it was negotiating with Airbus to "revise" the multi-plane order. The low-cost carrier said that Airbus threatened it with "overpriced" fees to cancel -- or slim down -- the order.

Skymark said late Thursday its loss in the three months to June expanded to 5.80 billion yen ($56 million), four times higher than its shortfall the previous year. The company said in a financial statement that it would consider suspending service on unprofitable routes and borrowing money from banks as there were doubts over whether the company would be able to remain as a going concern.

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Airbus confirms decision to cancel jet order from Skymark Airlines

Airbus on Thursday (July 31) said its decision to cancel a $2.2 billion jet order from Skymark Airlines was final, rejecting the Japanese carrier's suggestion that talks were still ongoing.

The European aircraft maker said this week it had informed Skymark that its purchase of six A380 superjumbos "has been terminated", just hours after the airline said it was still locked in tough negotiations over the order. Skymark's Tokyo-listed shares plunged in the wake of Airbus announcement, wiping out a quarter of its market value in just two sessions.

"We will not talk about the issue of the shipment anymore, as we have cancelled the order," a spokesman for the European firm's Tokyo unit told AFP on Thursday. He added that Airbus would now be working on a compensation deal over the failed deal, which was inked three years ago.

The carrier's shares were down another 1.85 per cent to 212 yen in Tokyo morning trade. Skymark, which reports its latest financial results later on Thursday, had on Tuesday (July 29) acknowledged that the deal was in trouble as a sharp decline in the yen since late 2012 jacked up the cost of purchasing the jets, while it faced increasingly fierce competition.

The carrier said Airbus had threatened it with "overpriced" fees to cancel -- or slim down -- the order as it suggested the small airline be merged into a bigger carrier, which it flatly rejected.

Skymark has posted its first net loss in five years as stiff competition in the domestic market dented its books. The company, which was launched in 1998 in a bid to offer more choice in a market long controlled by Japan Airlines and All Nippon Airways, flies dozens of domestic routes with a fleet of thirty aircraft.

However, the emergence of a handful of low-cost carriers in recent years has offered up stiff competition to the major carriers, and dented Skymark's finances. The airline posted a net loss of 1.85 billion yen ($18 million) in its last fiscal year, after seeing profits drop by more than half in the prior year.

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Japan's Skymark orders four Boeing planes

Japan's Skymark Airlines on Monday announced it would buy four of Boeing's 737 MAX planes, the first Japanese airline to choose the US firm's new mid-range plane.

"It's a commitment to a minimum of four firm orders and we're still in discussions on how the transition of the whole fleet will go," John Wojick, vice president of global sales for Boeing, told reporters at the Paris Air Show.

Skymark currently has 30 of the US firm's mid-range 737 planes, and will have five more of those by next year. It then intends to gradually renew its entire fleet with the newer 737 MAX aircraft, which has yet to come into service.

At catalogue prices, Skymark's order for four planes announced on Monday is worth $402 million (301 million euros).

The air show just north of Paris kicked off on Monday, with Boeing and Airbus announcing a slew of orders as they battle for supremacy at the major event.

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A relatively small order for Boeing with a minor airline based in Japan.