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Japan budget carrier Skymark eyes joint support from ANA, JAL

Wednesday, December 10, 2014 - 18:40
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Struggling Japanese budget carrier Skymark Airlines said Wednesday it was considering asking for help from domestic giant All Nippon Airways, even while eyeing a tie-up with ANA's rival Japan Airlines (JAL).

[TOKYO] Struggling Japanese budget carrier Skymark Airlines said Wednesday it was considering asking for help from domestic giant All Nippon Airways, even while eyeing a tie-up with ANA's rival Japan Airlines (JAL).

"We are considering asking for assistance" from ANA, Skymark spokesman Hiroyuki Sakata said.

Skymark could ask for code-sharing as the main pillar of that assistance, as would be the case if a JAL tie-up is agreed, he told AFP by telephone.

Selling flights under JAL or ANA's codes would help reduce vacant seats.

The news on possible support from the nation's two biggest carriers sent Skymark shares soaring up 17.31 per cent to 271 yen Wednesday.

The Nikkei economic daily had reported Skymark planned to get ANA on board because the transport ministry is reluctant to let JAL be the sole saviour.

But the Skymark spokesman said it was the company's own decision to seek assistance from ANA.

"We need to rehabilitate our management urgently and are considering every possible measure," Sakata said.

The company also later issued a brief statement saying it was also considering seeking help from investment funds, but added no formal decision has been made.

The Nikkei said Skymark would soon make a formal request to ANA.

But ANA wants to support Skymark on its own and is currently unenthusiastic about a joint tie-up that would help expand JAL's business, it said.

ANA spokesman Ryosei Nomura said the carrier "is ready to consider it seriously" if Skymark makes a formal request for assistance of some form.

Skymark has struggled to offer the kind of heavily discounted fares of overseas no-frills carriers due to high operating costs, and has suffered from the plethora of new entrants into the sector.

It is bracing for a net loss of 13.68 billion yen ($114 million) for the year to March.

The airline was also side-swiped when Airbus cancelled a $2.2-billion jet order in July, apparently over concerns it would not get paid.

A penalty for breaking the contract, which would fall on Skymark and could widen its net loss, is still under negotiation.

Skymark was born out of deregulation measures in the 1990s that were aimed at challenging ANA and JAL's control of the market.

It operates lucrative flights in and out of Haneda Airport just a short train ride from downtown Tokyo.

Japanese media said some lawmakers in the ruling Liberal Democratic Party were critical of JAL as it was revived by a government-led scheme when the main opposition Democratic Party of Japan was in power.

AFP

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