Airbus Group NV share price up, nears settlement with Skymark over terminated A380 deal

Toulouse-based Airbus Group NV was reported to be closing in on a settlement with Japans third-biggest carrier, Skymark Airlines Inc, over a canceled order of six Airbus A380 superjumbo jets.

The shares of both companies rose, with Skymark surging by an intraday 11%, as investors greeted the possible resolution after months-long quarrel.

The Japanese carrier announced on Thursday that its President Shinichi Nishikubo had agreed on a settlement by the end of October at talks held with the aircraft manufacturer on Monday. A reduction of the cancellation fee was also on the table, Skymark said, so that the penalty does not impact busines.

The companies have so far failed to reach an agreement after Airbus terminated the Japanese airlines order for six A380 jets in July, saying that Skymark made it clear it was not going to meet its contractual obligations. Skymark has said that the $244 million it had paid to Airbus for the aircrtaft, which exceeds its current market capitalization, may not be refunded and that it could face three times as much in penalties, fueling concern over its already weakened balance sheet.

Skymark, which had been preparing to launch its fleet of A380 superjumbo jets for four years, posted a $50-million net loss in the three months through June, exceeding threefold its annual loss for the previous fiscal year ended March.

Pressured by intensifying competition on home turf following the entry of budget airlines such as Vanilla Air, Skymark has seen its shares drop by more than 40% in the last 12 months. The company has lost almost a third of its market value since Airbus terminated the A380 delivery deal in July.

Airbus Group NV rose by 0.93% to €49.55 per share in Paris, marking a one-year change of +2.00%. The company is valued €38.50 billion based on Wednesdays close. According to the Financial Times, the 25 analysts offering 12-month price targets for Airbus Group NV have a median target of €58.00, with a high estimate of €70.00 and a low estimate of €34.00. The median estimate represents a 18.15% increase from the last price of €49.09.

Skymark Airlines Inc closed Thursdays session in Tokyo 3.57% higher at ¥203.00, having surged 11% in intraday trading. The company has lost 43.45% of its market capitalization in the last 12 months and is currently valued at ¥18.36 billion. The 4 analysts offering 12-month price targets for Skymark Airlines Inc have a median target of ¥190.00, with a high estimate of ¥280.00 and a low estimate of ¥90.00. The median estimate represents a -6.40% decrease from the last price of ¥203.00.