By Maki Shiraki
TOKYO (Reuters) - Japan's leading independent budget airline Skymark Airlines Inc <9204.T> filed for protection from creditors late on Wednesday, blaming a weak yen and a dispute with Airbus Group (PA:AIR) for its financial straits.
The low-cost carrier had liabilities of 71.09 billion yen (398 million pounds) as of its bankruptcy filing with the Tokyo District Court, it said in a statement via the Tokyo Stock Exchange after an emergency board meeting.
Chief Executive Officer Shinichi Nishikubo resigned and was replaced by board member Masakazu Arimori, said the company, which will delist on March 1.
Skymark said Tokyo-based private equity firm Integral Corp has agreed to provide financing to help the airline restructure, pending court approval.
The airline's downpayments for Airbus A380 jets and its fuel contracts became a difficult financial burden as the yen plunged last year, Skymark said.
"The company, believing the demands for breach-of-contract payments were unreasonable, attempted to negotiate a reduction in the payments with Airbus but reached a situation in which there were concerns that payment for breach of contract would have worsened the company's financial base," Skymark said.
Last July, Airbus revoked the $2 billion contract for six A380 superjumbo jets and filed a law suit in December over a dispute with Skymark concerning unpaid deposits.
"We are aware that Skymark Airlines has filed for bankruptcy protection, this is now a matter for the courts," said an Airbus spokeswoman.
TUSSLE FOR CONTROL
Skymark, struggling with rising operating costs and intensifying competition from Japan's two big carriers, ANA Holdings (T:9202) and Japan Airlines Co (T:9201) (JAL), had projected a record net loss of 13.6 billion yen ($116 million) for the business year ending in March.
Nishikubo, the outgoing CEO and leading shareholder, had threatened to take on JAL and ANA on their international routes too. The former Internet entrepreneur had planned to use the Airbus A380's to offer cut-price business class tickets on lucrative routes such as to New York.
Skymark's bankruptcy could spark a tussle between ANA and JAL for control of the company and access to its valuable landing rights at Tokyo's crowded Haneda airport. The discount carrier holds 36 landing slots at Japan's main domestic hub.
ANA and its affiliates and partners have about half of the 465 domestic slots at Haneda, with JAL controlling 184.5 of the daily landing rights.
Established in 1998, Skymark was a rare example of a Japanese budget carrier surviving without any affiliation with ANA or JAL.
The dominance of those two carriers at Haneda, which sits at the heart of an urban sprawl that is home to about one in four Japanese, has kept low cost carriers at bay as it allows them to introduce stinging price competition on the few routes new budget airlines ply.
In a December bid to find a lifeline, Skymark said it would hold talks with both JAL and ANA on code-share flights and seek more funds from investors.