Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

AirAsia denies report it weighing a bid for Japan's Skymark

Send a link to a friend   Share

[August 19, 2014]  By Anshuman Daga

SINGAPORE (Reuters) - Malaysia's AirAsia Bhd dismissed a media report that it is weighing a bid for Japan's embattled Skymark Airlines Inc, saying it is focused on a budget airline it is setting up with Japanese partners.

The Nikkei business daily said AirAsia, the region's most aggressive budget airline, is in talks with financial institutions on a possible tender offer for the low-cost carrier - sending shares in Skymark surging 28 percent.

Skymark last month warned of uncertainty about its ability to stay in business if it had to pay penalties to Airbus for the failing to follow through on an order for six A380 superjumbos. The carrier, which had been unable to get financing for the deal, said Airbus was demanding "an extraordinary amount of compensation."

While the Nikkei report sent Skymark's shares up by their daily limit of 50 yen, AirAsia Chief Executive Tony Fernandes was emphatic in his denial.

"Never seen such rubbish. AirAsia has no interest in Skymark in Japan," he wrote on Twitter. "We focused on new airline.".
 


AirAsia said last month it is planning a low-cost airline with Japan's biggest online retailer, Rakuten Inc <4755.T>, and other companies, its second attempt to tap the Japanese market.

Skymark said in a statement it has not been approached by AirAsia. Despite the denial of interest from AirAsia, its shares remained swamped by a glut of buy orders at 230 yen, valuing the company at $205 million.

Skymark could be attractive to some airlines as it has 36 slots at Tokyo's Haneda airport. But Goldman Sachs analyst Kenya Moriuchi said in a note to clients that he saw little chance of a takeover while Skymark was financially viable because regulations suggest those slots are unlikely to automatically pass over to AirAsia.

"As long as there is uncertainty over how those slots would be distributed, it's difficult to imagine that AirAsia would push through with this," he wrote.

[to top of second column]

Others said there was a growing concern that AirAsia is trying to do too much at once.

"It needs to diversify outside Southeast Asia, where conditions have become challenging and growth opportunities are no longer so huge, but not at any cost or risk," said Brendan Sobie, chief analyst at Centre For Aviation, an industry consultancy.

In addition to its new budget airline in Japan, AirAsia has also just started an affiliate in India, where it faces strong and established competitors. It is also trying to rev up growth at its Southeast Asian affiliates in Thailand, Indonesia, and the Philippines amid intense competition and slowing economic growth.

(Additional reporting by Aradhana Aravindan in Singapore, Al-Zaquan Amer Hamzah in Kuala Lumpur and Chris Gallagher and Chang-Ran Kim in Tokyo. Editing by Siva Govindasamy and Edwina Gibbs)

[© 2014 Thomson Reuters. All rights reserved.]

Copyright 2014 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

< Recent articles

Back to top