Skymark Airlines tanks on A380 concerns
Shares in Japanese LCC Skymark Airlines plummeted by the daily limit of JPY150 or 15% to JPY793 - marking its steepest drop since Mar-2005. The company stated it plans to acquire four A380s plus two options for use on international services.
- Skymark Airlines' shares plummeted by 15% after announcing plans to acquire A380s for international services.
- Analysts express concerns about Skymark's move into a different business and potential risks associated with fuel prices, aircraft financing, staffing, and operating costs.
- Skymark's entry into international markets will face tough competition from ANA, JAL, and foreign LCCs.
- JetBlue's shares fell 6% despite reporting an increase in passengers and load factor for October.
- Virgin America records its first-ever quarterly profit of USD7.5 million in Q3.
- Cebu Pacific and Norwegian experience positive stock market performance, with Cebu Pacific closing up 6.4% and Norwegian gaining 8.8%.
Skymark stock tanked yesterday as the airline ran into headwinds with markets questioning the LCC's plans for the A380. Takagi Securities Co analyst Satoshi Yuzaki said "the plunge in the shares reflects concern about the risks Skymark faces moving into a completely different business". Other analysts expressed similar concerns, focusing on future fuel price increases and aircraft financing, and possible difficulties with staffing, operating certificates, maintenance and unit costs.
Skymark currently operates all-economy services within Japan with a fleet of Boeing 737-800 aircraft. The arrival of the A380 and the launch of international services would be its first foray into scheduled international markets, and analysts noted that Skymark is likely to face tough competition from incumbents ANA and JAL, as well as foreign LCCs eyeing the Japanese market.
See related article: Skymark announces surprise A380 order - first LCC and first Japanese A380 customer
JetBlue pax up, load factor up, but shares down
JetBlue shares fell 6% yesterday, after the stock reached a 52-week high of USD7.60 during trade. The New York JFK-based LCC announced it carried 2.0 million passengers in Oct-2010, a 16.4% year-on-year increase. Load factor increased 1.8 ppt to 82.6%.
Also in the US, privately-held Virgin America announced it recorded its first ever quarterly profit, posting a USD7.5 million net profit for Q3 on revenues of USD202.1 million (+22.1%). Operating profit at the SFO-based LCC was up 314.4% to USD21.0 million.
Cebu Pacific and Norwegian strongest gainers
Cebu Pacific shrugged off the negative trend on the Philippine Stock Exchange index to close up 6.4% at PHP124.50.
Norwegian continued its recent surge, gaining 8.8% in Olso - its fifth consecutive daily gain.
Selected LCCs daily share price movements (% change): 09-Nov-2010
Source: Centre for Asia Pacific Aviation, Yahoo! Finance & Reuters