TOKYO -- Malaysia-based AirAsia is considering options for aid to Skymark Airlines, seeking control of Japan's third-largest domestic carrier, people familiar with the matter said Monday.
While Skymark has fallen on hard times, it holds an enviable 36 slots at Tokyo's Haneda Airport. AirAsia is not the only foreign or domestic airline eyeing this trove and may find itself in a bidding war.
A takeover by AirAsia, which has grown from a two-plane outfit into a major regional low-cost carrier flying more than 200 routes, would usher in a new era of competition in Japan's airline industry. Skymark is the sole remaining independent member of a new breed of domestic carriers born of 1990s deregulation.
Eager to expand into international service, Skymark ordered six Airbus A380 superjumbo jets, only to fall behind on payments. Airbus canceled the order last month and may seek around $700 million from the carrier for breaking the terms of their contract, prompting concerns about the airline's cash flow.
AirAsia is in talks with financial institutions on a possible tender offer for Tokyo-listed Skymark, people familiar with the matter said. As a major Airbus customer, it has also approached the European aircraft manufacturer about reducing Skymark's cancellation payouts.
AirAsia once flew the Japanese skies in a joint venture with ANA, but the pair dissolved their partnership last year amid disagreements over service and other matters. AirAsia has been planning to re-enter the Japanese market next year through a new local unit backed partly by Japanese e-commerce group Rakuten. Since Japanese law caps foreign airlines' stakes in domestic carriers at less than one-third, AirAsia may use this subsidiary to launch a bid for Skymark.
But attempting a takeover would be fraught with uncertainty. It is unclear whether Japan's transport ministry would let Skymark keep its Haneda slots in the event of a change in ownership. Negotiations with Airbus remain a sticking point. And Skymark President Shinichi Nishikubo, who holds a roughly 30% stake in the company, insists that it aims "to survive on its own."