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By Bloomberg

Skymark Airlines Inc.’s share price has more than doubled in a month on optimism cooperation with other fliers could keep Japan’s third-biggest carrier from going broke. Technical indicators suggest it may be time to sell.

Skymark surged 105 percent since reports in late November that it would get a code-sharing agreement with Japan Airlines Co., the nation’s second-biggest carrier. The shares had dropped after Skymark warned investors on Oct. 30 that it may go out of business should it have to pay Airbus Group NV a penalty after the planned purchase of six A380 superjumbos fell through.

The 14-day relative strength index on Skymark’s stock closed at 75 today after rising over 90, with some traders taking readings above 70 as a sign shares are poised to fall. Over 140 million shares have been traded in the airline this week, nearly triple its free float of 47 million shares. The carrier fell 9.9 percent to 400 yen at the close of in Tokyo, erasing a gain of as much as 17 percent. The Topix index rose 1.8 percent.

“Sell,” said Mikey Hsia, a trader at Sunrise Brokers LLP. Gains like this “usually mean it’s time to take profits. So much volume has been traded and you have so many days of outsized moves on the stock, which won’t last. It’s a sell in the short-term.”

The airline said in the Oct. 30 statement that it was negotiating with Airbus to reduce the “large amount” of penalty being sought for cancelling the order -- worth $2.5 billion in list prices. Skymark’s president said on Dec. 10 that it was considering a private share sale to an investment fund to raise money. The company in October predicted it would lose 13.7 billion yen ($115.6 million) for the year ending March.

Government Support

“The market had envisaged the worst-case scenario,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. in Tokyo. “But now the view is that it is helping itself, and the government is supporting it, so it will avoid” bankruptcy.

Skymark will begin a code-sharing alliance on flights with ANA, the Asahi newspaper reported on Dec. 16, following a Nov. 21 Nikkei newspaper report that JAL was discussing a possible partnership. The Yomiuri newspaper today said the link with ANA will go forward after Japan’s transport ministry requested the cooperation, according to a report that didn’t cite a source. Skymark surged 23 percent on Dec. 16 and 26 percent on Nov. 21. JAL was relisted in 2012 after a government-backed bailout.

Skymark will also be allowed to keep 36 of its Haneda airport flight slots, the Nikkei newspaper reported yesterday. Shares soared 22 percent after the report.

Airline Outlook

The recent slump in oil prices and gains in tourism amid a weaker yen are positive for Japan’s airlines, Hsia said. Foreign visitors to Japan rose 39 percent in November to 11.2 million people as tourists from China doubled, the Japan National Tourism Organization said yesterday.

“Skymark is an example of Abenomics in that Japan is looking to promote tourism and this naturally will require the carriers to be running at full steam,” Hsia said. “We are at the early stages of what happened to tourism in Hong Kong and Singapore as the Chinese look for new destinations to open their eyes to the world.”