Thursday, January 29, 2015

Japan's Skymark to stop flying Airbus A330 in favor of Boeing-only fleet

Japan's Skymark Airlines said it will stop flying Airbus A330 jets in favor of a single-model fleet of Boeing 737 aircraft to cut costs after the discount carrier filed for protection from creditors late on Wednesday.

"We will stop using the A330s from February," Skymark's chairman, Takashi Ide, told reporters at a news conference in Tokyo on Thursday.

Japan's leading independent budget airline, Skymark sought protection from creditors blaming a weak yen and a dispute with Airbus for its financial straits. It said in a statement on Wednesday its liabilities were 71.09 billion yen (400 million pounds) as of its filing with the Tokyo District Court.

Skymark, which had planned to introduce ten leased A330s into its fleet, currently operates five of the European jets. In July the carrier cancelled an order for six Airbus A380 superjumbos.

In addition to the weaker yen, pushing up leasing costs and other expenses, Skymark is blaming Airbus's demand for a $710 million dollar cancellation fee for its financial troubles.

Skymark's new president, Masakazu Arimori, in Tokyo declined to say how the carrier's filing will affect negotiations with Airbus over the cancellation fee.

Skymark, which has a fleet of 28 Boeing 737s, said on Wednesday that Tokyo-based private equity firm Integral Corp has agreed to provide financing to help the airline restructure, pending court approval.

An Airbus spokeswoman said on Wednesday that the European plane maker was aware of the Skymark filing. "This is now a matter for the courts," she said.

Skymark said using one type of aircraft will help cut monthly operating expenses, a strategy the airline adopted when it began flying in 1998 in an effort to undercut its bigger rivals, ANA and Japan Airlines.

The loss of Skymark as an operator of its jets marks a partial reversal of recent gains by Airbus in Japan, a market long dominated by Boeing. The U.S. firm has deep ties to local aerospace firms in one of Asia's biggest aircraft markets.

Airbus made its big breakthrough in Japan in October 2013, in a landmark deal for JAL to buy 31 wide-body A350 jets with a combined $9.5 billion list price.

(Maki Shiraki and Tim Kelly - Reuters)

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