By Megumi Fujikawa
TOKYO-- Skymark Airlines Inc. became one of the biggest victims
of the yen's recent weakness, saying its plan to buy superjumbo
jets when the currency was much stronger led to its bankruptcy
protection filing.
The country's third largest carrier filed for court protection
late Wednesday, six months after it was hit with a $700 million
cancellation fee by Airbus when its order for six A380 planes was
scrapped.
"When we made the contract with Airbus, the yen was around Yen80
(against the dollar)," the company's new chairman Takashi Ide said
Thursday at a news conference. "Then the yen weakened rapidly to
Yen120, inflating the cost (of the A380 deal)."
While Skymark intends to keep flying during an attempted
rehabilitation, helped by a cash supply from Tokyo equity firm
Integral Corp., its collapse into bankruptcy protection highlights
one of the downsides of Prime Minister Shinzo Abe's economic
policies.
Mr. Abe's drive to reflate Japan's economy has sharply weakened
the yen, providing a tailwind for the nation's biggest exporters to
hit record profits, such as Toyota Motor Co. For other companies
the effect has been the opposite. Sharp Corp. recently said it
would fall short of its Yen30 billion net profit forecast for the
current business year ending March 31 due to the inflated prices of
items it imports.
Now Skymark has become the poster child for smaller firms and
import-reliant companies that are feeling the pain of the softer
yen.
The budget airline, founded in 1996, said the weaker currency
put pressure on its bottom line through the dollar-denominated
costs of leasing aircraft and purchasing jet fuel from abroad. But
it was Skymark's bold decision to buy the Airbus planes when the
yen was at a peak in 2011 that exposed the airline to a currency
risk that proved too large.
Mr. Ide said a request to postpone delivery of the planes,
sparked Airbus's decision to scrap the order in July and charge a
cancellation fee. The European plane maker initially asked for $700
million, but the two companies are still negotiating a final
figure, he said.
"We are aware that Skymark Airlines has filed for bankruptcy
protection. This is now a matter for the courts," Airbus said in a
statement Thursday.
Skymark's lawyer said the firm's debts of Yen71 billion ($604
million) don't include the cancellation fee.
Hoping to emulate Japan Airlines' resurgence after seeking
bankruptcy protection in 2010, Skymark will continue to operate
flights, withdrawing from unprofitable routes to save about Yen50
million a month.
Masakazu Arimori, who took over as Skymark's president on
Wednesday, said the airline would also like to continue with a
three-party code-sharing deal with All Nippon Airways and JAL,
adding that the company doesn't plan on any staff cuts for the time
being.
"Currently, there are only three independent airlines that can
base themselves at Haneda airport," Mr. Ide said, referring to ANA,
JAL and Skymark operations at the Tokyo airport. "Unless we
maintain our 36 (daily) slots at Haneda, those slots will be
distributed to ANA and JAL, leading to higher airfares."
Shawn Schroter contributed to this article.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
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