Koito Manufacturing Co. fell the most in 18 years in Tokyo trading after the Bangkok Post said that Thai Airways International Plc may seek $550 million in compensation from a seat-making unit following delivery delays.
Koito, part-owned by Toyota Motor Corp., declined 16 percent, the biggest fall since March 1992. It’s unit, Koito Industries Ltd., dropped 3.3 percent.
Thai Air is seeking compensation from Koito Industries and may file a lawsuit if it doesn’t receive funds, President Piyasvasti Amranand said today, declining to say how much it’s seeking. Raj Tanta-Nanta, vice president for investor relations at Thai Air, said by phone the sum may be up to $200 million. Tanta-Nanta spoke after the close of trade in Tokyo.
Koito Industries earlier this year halted deliveries and began inspecting seats on about 1,000 planes worldwide after admitting to making unauthorized design changes and using uncertified materials for at least a decade.
Koito Industries hasn’t been informed of any pending legal action from Thai Air, said Yoichiro Kuroiwa, a spokesman for the Japanese manufacturer. The company has received claims from a “number” of airlines, he said.
The company set aside 3.6 billion yen ($44 million) for compensation last fiscal year and it expects to need another 3.3 billion yen in the year ending March 31, he said. Shinji Karasawa, a spokesman for Tokyo-based Koito Manufacturing, said the company was investigating the report.
The late arrival of Thai Air’s seats forced the carrier to delay plans to deploy 11 planes, including Airbus SAS A380s, the Bangkok Post said yesterday, citing unidentified people. Singapore Airlines Ltd. and All Nippon Airways Co. also postponed the introduction of planes earlier this year because of seat delays.
“It’s bad news that in a worst-case scenario Koito could have to pay $550 million compensation to just one company,” said Shiro Sakamaki, an analyst at Daiwa Securities Capital Markets. “Still, the odds are very high that if Koito does have to pay compensation then it will be less than $550 million.”
Koito Industries is down 52 percent this year. Koito Manufacturing, which owns 50 percent of Koito Industries, has dropped 29 percent.