You are here

Japan carrier Skymark hit by collapsed investment deal report

[TOKYO] Shares in Japanese budget airline Skymark plunged on Thursday after a report said talks about a capital injection deal with bigger rival All Nippon Airways (ANA) had collapsed.

The firm's Tokyo-listed shares dropped as much as 15.38 per cent in early trading before recovering slightly to sit 7.95 per cent lower at 359.0 yen by the break.

Investors were spooked by a report in the Asahi newspaper that said a possible agreement over ANA investing in Skymark had fallen apart, and that the money-losing carrier would try to climb out of the red on its own.

However, Skymark, which flies domestic routes in Japan, rejected the report.

Market voices on:

"It is not true that we requested a capital injection (from ANA) and we don't plan to do so," a company spokeswoman said.

But she added that the firm was talking to ANA and rival Japan Airlines about code-sharing, as well as domestic and overseas funds for a possible investment deal.

"We are working to reach a deal as soon as possible," but nothing concrete had been decided, the spokeswoman said, referring to the code-sharing agreements.

The top-selling Yomiuri newspaper said ANA and JAL planned to start code-sharing with Skymark in late March. Responding to that report, the airlines said a timeline and other details had not yen been decided.

Skymark has been struggling owing to fierce competition in the airline industry and its woes deepened in July when Airbus cancelled a deal for the carrier to buy six A380 jets, apparently over payment concerns.

The company's shares plunged in the wake of the collapsed Airbus deal, but have recently recovered on the ANA investment speculation.