Skymark adds 'going concern' warning after Q1 loss, Airbus order halt

TOKYO, July 31 Thu Jul 31, 2014 5:48am EDT

TOKYO, July 31 (Reuters) - Skymark Airlines Inc warned of uncertainty over its ability to continue as a "going concern" when it reported a quarterly loss on Thursday, which followed the revocation of an aircraft order by Airbus this week.

The Japanese carrier's order for six A380 superjumbos was cancelled on Tuesday after it was unable to get financing for the deal. Skymark said Airbus was demanding "an extraordinary amount of compensation" for the cancellation.

The airline, which posted a first-quarter net loss of 5.8 billion yen ($56 million), said in its earnings report that it would take steps to improve its financial situation including exiting unprofitable routes and borrowing from financial institutions.

It also said it did not think it was liable for the compensation demanded by Airbus and was considering measures including legal action.

Skymark said in the earnings report it acknowledged that at this time there is significant uncertainty regarding its status as a going concern.

A "going concern" is an accounting convention that assumes a company will continue to exist and trade normally for the foreseeable future. ($1 = 102.7600 Japanese Yen) (Reporting by Chris Gallagher; Ediitng by Edmund Klamann)

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