Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Tokyo  >  Mitsubishi Heavy Industries Ltd    7011   JP3900000005

SummaryChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

Airbus halts sale of six A380s to Japan's Skymark

share with twitter share with LinkedIn share with facebook
share via e-mail
0
07/29/2014 | 03:44pm CEST

Airbus (>> AIRBUS GROUP) said on Tuesday it had revoked an order for six A380 superjumbos from Skymark Airlines (>> Skymark Airlines Inc), losing the only Japanese customer for its biggest jet after the discount carrier struggled to raise cash to pay installments.

Airbus (>> AIRBUS GROUP) said on Tuesday it had revoked an order for six A380 superjumbos from Skymark Airlines (>> Skymark Airlines Inc), losing the only Japanese customer for its biggest jet after the discount carrier struggled to raise cash to pay installments.

The collapse of the contract, worth over $2 billion when it was formally signed in 2011, triggered a public clash with the principal owner of Japan's third-largest airline, who accused the European planemaker of refusing to negotiate a compromise.

"We didn't get a chance to revise the contract. We never once formally sat down to discuss it," Skymark's chief executive and main investor, Shinichi Nishikubo, said.

"Airbus informed us in a fax to our office on Sunday."

Nishikubo, a former Internet entrepreneur who had promised to halve the price for business-class tickets by introducing the world's largest airliner, said Airbus had refused to consider reducing the number of jets or offering smaller ones.

He said Airbus had asked loss-making Skymark to become an affiliate of a major carrier as a condition for changing the contract, and demanded a cancellation fee when it refused.

In France, an Airbus spokesman denied this and said it had been negotiating with Skymark for months.

"Airbus had discussions with Skymark over the past few months and explored various solutions to ensure that Skymark was in a position to take delivery of the first two aircraft," the spokesman said by email.

"Those discussions are confidential but Airbus terminated the contract when Skymark made it clear that it was not going to perform its contractual obligations."

Skymark, which began flying in 1998, has been Japan's most successful discount carrier to date and a rare case of a small carrier in Japan able to survive without becoming an affiliate to either of Japan's leading airlines.

But losses incurred as it grappled to win market share from Japan's two dominant carriers, ANA Holdings (>> ANA Holdings Inc) and JAL, meant it was unable to convince lenders to finance the purchase of the six A380s.

Skymark is unlikely to recover 26 billion yen ($255 million) in installments it has paid to Airbus, Nishikubo said.

Shares in the 15-year-old company fell 13 percent.

For Airbus, it is the second unexpected order setback in as many months after Emirates canceled 70 A350s and comes amid concern about the number of cancellations so far this year, which have helped to push its shares down 13 percent in three months.

It also takes the edge off a successful run in Japan, a stronghold of its U.S. rival Boeing (>> The Boeing Company), after it won its first direct order last year from Japan Airlines (>> Japan Airlines Co Ltd).

Airbus has reported 225 cancellations since the start of the year, or about 130 after adjusting for conversions between models. Boeing has posted 54 cancellations, but both planemakers face signs that a recent aircraft ordering boom is slowing down.

REMARKETING CHALLENGE

Although significantly smaller than the Emirates A350 cancellation in value, the loss of the Skymark A380 order presents Airbus with a more immediate headache as two of the jets are virtually built and the market for them is thin.

Two aircraft are nearing completion, with one already fitted with its Rolls-Royce (>> Rolls-Royce Holding PLC) engines. Neither aircraft has had its cabin fitted, and Skymark has previously reported delays in getting equipment from French supplier Zodiac (>> ZODIAC AEROSPACE).

The first Skymark jet was due to have been delivered at the end of the year and the second soon afterwards. A380 aircraft are heavily customized and reselling the aircraft may take time.

Analysts said the last-minute cancellation could also squeeze near-term cash generation and put a negative spotlight on Airbus's objective of reaching breakeven on the A380 in 2015.

Airbus reports half-year results on Wednesday.

British engine maker Rolls-Royce (>> Rolls-Royce Holding PLC) said the termination of the Skymark order would shave 0.5 percent off its order book, a reduction of 351 million pounds ($595.6 million). Shares in Airbus fell 0.9 percent, while Rolls-Royce rose 0.6 percent.

The cancellation meanwhile adds to a growing list of challenges surrounding the A380. Orders for the plane are hanging in the balance elsewhere, according to aerospace sources, including 10 aircraft earmarked for Hong Kong Airlines.

Reuters reported this month the Hong Kong carrier no longer wanted the jets after an associated leasing company struck an expanded deal to buy 70 smaller A320-family aircraft.

Since March the order has not been attributed to Hong Kong Airlines, but to an "undisclosed" customer, raising questions over its status, according to Airbus data.

Other question marks surround planes due to Air Austral, Qantas (>> Qantas Airways Limited) and Virgin Atlantic. Airbus canceled an order for 5 A380s from bankrupt Indian airline Kingfisher in January.

Airbus has meanwhile been forced to redesign part of the A380's doors after leaks and noise, and faces a refusal by Qatar Airways to take its first three aircraft over what the airline describes as inadequate installation work on the cabin.

Although Airbus is confident of resolving the cabin problem, the clock is ticking towards a roughly 180-day contractual deadline for delivering the first plane that was originally due in May, according to one person familiar with the matter.

The airline has increased the stakes further by raising concerns over the doors, two people said. Airbus sought to allay concerns over the doors at this month's Farnborough Airshow and has said it expects its fix to be approved in the autumn.

(Editing by Edwina Gibbs and Tom Pfeiffer)

By Tim Kelly and Tim Hepher

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on MITSUBISHI HEAVY INDUSTRIE
05:17p MITSUBISHI HEAVY INDUSTRIES : MHI-PPM Receives Order for 'DIAMONDSPIRIT' Newspap..
09:33a MITSUBISHI HEAVY INDUSTRIES : MHI to Launch Discussions toward Forming Alliances..
07:41a Japan's jet back in hangar following tests
07:40a Japan's jet back in hangar following tests
06:53a MITSUBISHI HEAVY INDUSTRIES : Regional Jet's flight to U.S. eyed for late Sept.
08/29 MITSUBISHI HEAVY INDUSTRIES : MHI-PPM Receives Order for 'DIAMONDSPIRIT' Newspap..
08/28 UPDATE3 : Mitsubishi Regional Jet flight to U.S. aborted for 2nd time
08/28 UPDATE2 : Mitsubishi Regional Jet flight to U.S. aborted for 2nd time
08/28 MITSUBISHI HEAVY INDUSTRIES : Kyodo Top12 News
08/28 UPDATE1 : Mitsubishi Regional Jet aborts flight to U.S. for 2nd time
More news
Sector news : Industrial Conglomerates
06:16pDJAgrium, Potash Report Merger Talks
06:08pDJGENERAL ELECTRIC : GE Capital CEO Keith Sherin, a 35-Year GE Veteran, to Retire ..
04:16pDJGENERAL ELECTRIC : GE Capital CEO Keith Sherin, a 35-Year GE Veteran, to Retire
03:55pDJGENERAL ELECTRIC : GE Capital Chief to Retire After Pivoting GE's Finance Arm
08/29DJMondelez Walks Away After Hershey Spurns Raised Bid
More sector news : Industrial Conglomerates
News from SeekingAlpha
08/08 Iran to buy regional jets from Mitsubishi Heavy
2015 BOEING : Capital Returns Trump The Wall Of Worries
2015 Mitsubishi Aircraft delays jet delivery by a year
2015 A bidding war is shaping up for Australia's $36B submarine contract
2015 Investment In The Changing Regional Aircraft Fleet - 2015 Onwards
Advertisement
Financials ( JPY)
Sales 2017 4 299 180 M
EBIT 2017 -
Net income 2017 112 979 M
Debt 2017 740 147 M
Yield 2017 2,80%
P/E ratio 2017 12,59
P/E ratio 2018 9,45
EV / Sales 2017 0,51x
EV / Sales 2018 0,46x
Capitalization 1 456 741 M
More Financials
Chart MITSUBISHI HEAVY INDUSTRIE
Duration : Period :
Mitsubishi Heavy Industrie Technical Analysis Chart | 7011 | JP3900000005 | 4-Traders
Full-screen chart
Technical analysis trends MITSUBISHI HEAVY ...
Short TermMid-TermLong Term
TrendsBearishNeutralBearish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 570  JPY
Spread / Average Target 32%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Shunichi Miyanaga President, CEO & Representative Director
Hideaki Omiya Chairman
Masanori Koguchi Chief Financial Officer & Representative Director
Michisuke Nayama Director & Chief Technology Officer
Yoji Kawamoto Executive Officer & Manager-General Research
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
MITSUBISHI HEAVY INDUS..-19.14%14 231
GENERAL ELECTRIC COMPA..0.67%281 024
3M CO19.82%109 094
SIEMENS AG17.88%102 154
HONEYWELL INTERNATIONA..13.13%89 152
E I DU PONT DE NEMOURS..5.78%61 596
More Results