Hong Kong / Singapore / Tokyo: Tony Fernandes, founder and chief executive of AirAsia, has dismissed as “rubbish” a Japanese media report that his Malaysia-based budget airline was in talks about a possible bid for struggling Japanese carrier Skymark.
“Never seen such rubbish. AirAsia has no interest in Skymark in Japan. There have been no discussions with Skymark. We focused on new airline,” he said on his Twitter feed.
In a separate statement, AirAsia said: “We dismiss the speculation as just another industry rumour”. Skymark also denied that it had been approached by Air Asia.
Shares in Skymark jumped 28 per cent on Tuesday morning, by their maximum allowable Y50 limit on the Tokyo stock exchange, after a report in the Nikkei business daily that AirAsia was in talks with financial institutions about a possible tender offer. Shares in AirAsia were up 0.4 per cent.
Skymark shares hit a five-year low last week, a few weeks after Airbuscancelled the Japanese carrier’s 2011 order for six A380 aircraft on concerns over its ability to pay. Investors worry that compensation claims from Airbus could crimp Skymark’s cash flow.
The purchase of half a dozen of the world’s largest passenger aircraft, considered odd at the time given Skymark’s small size and domestic focus, was worth $2.3 billion at catalogue prices in 2011. The carrier has flown a handful of domestic-only routes since it started operations in 1998 but planned to start flying to multiple destinations outside Japan this year.
Skymark is Japan’s third-largest air carrier but its fortunes have taken a sharp turn for the worse since it embarked, in 2010, on a bold expansion in which it sought to compete on international routes against two large incumbent carriers, All Nippon Airways and Japan Airlines. It had a net loss of Y1.8 billion ($17.5m) in the year to March 2014, versus a profit of Y3.8 billion the previous year.
The carrier was undone by the sharp decline in the Japanese yen that began in 2012, which raised the cost of foreign-currency denominated expenses including fuel and financing for the A380s, and by growing competition from other budget airlines.
Still, it has valuable assets, most notably 36 landing slots at Tokyo’s Haneda airport, the only slots at the crowded hub belonging to a budget carrier.
AirAsia has already shown an interest in expanding into the Japanese market. Just six weeks ago it formed a joint venture with online retailer Rakuten to run a low-cost airline in Japan.
In 2011 AirAsia formed a union with ANA — the parent of All Nippon — but it walked away after two unsuccessful years citing disagreements over strategy.
— Financial Times
