Sky­mark’s blue­print leaves many prob­lems un­re­solved

The China Post - - COMMENTARY -

The blue­print of its cor­po­rate re­con­struc­tion has been pre­sented, but it is still un­cer­tain whether the planned re­ha­bil­i­ta­tion will suc­ceed or not.

Sky­mark Air­lines, the third­largest do­mes­tic air­line de­spite its col­lapse in Jan­uary, has sub­mit­ted a draft of its re­ha­bil­i­ta­tion plan to the Tokyo Dis­trict Court.

Un­der the plan, Sky­mark will re­tire all out­stand­ing shares and al­lo­cate new shares worth 18 bil­lion yen to a third party, with 15.5 bil­lion yen of the new cap­i­tal to be used to re­pay debts.

Fol­low­ing the cap­i­tal in­crease, the In­te­gral Corp. in­vest­ment fund will hold an eq­uity stake of 50.1 per­cent, while ANA Hold­ings, the par­ent of All Nip­pon Air­ways, will hold 16.5 per­cent. To­gether with a syn­di­cate of banks, which are aligned with the ANA group, the ANA camp will have an eq­uity stake of 49.9 per­cent.

If the plan wins ap­proval at a meet­ing of cred­i­tors, sched­uled to be held in July, Sky­mark re­port­edly aims to get relisted within five years.

An air­line com­pany is an im­por­tant pil­lar of public trans­porta­tion. Flight safety is most im­por­tant for an air­line, not to men­tion a sta­ble cor­po­rate man­age­ment.

Par­tic­i­pa­tion of ANA, a lead­ing air­line, in Sky­mark’s cor­po­rate turn­around is re­al­is­tic.

Yet in the process of drawing up the re­ha­bil­i­ta­tion plan, there was con­stant bickering be­tween In­te­gral and ANA, with the in­vest­ment fund as­sert­ing that Sky­mark’s re­con­struc­tion would not nec­es­sar­ily re­quire the sup­port of an air­line com­pany.

Although both sides com­pro­mised as the dead­line for sub­mit­ting the plan to the court ap­proached, mu­tual mis­trust re­mains ap­par­ent.

Air­bus, In­trepid Un­happy

The an­nounce­ment of a new man­age­ment team was also put off. Many prob­lems need to be ironed out for Sky­mark be­fore it can take off again.

It is im­por­tant for In­te­gral and ANA to make a con­certed ef­fort to tackle th­ese prob­lems so Sky­mark’s re­ha­bil­i­ta­tion does not “dis­in­te­grate in midair.”

Sky­mark will find the route ahead ex­tremely tur­bu­lent as it com­petes with ma­jor air­lines and low-cost car­ri­ers (LCCs), which rely on low air­fares. Sky­mark has to build a dis­tinc­tive busi­ness model.

An­other prob­lem is that Euro­pean air­craft maker Air­bus SAS and U.S. air­craft leas­ing firm In­trepid Avi­a­tion, both ma­jor cred­i­tors, op­posed the re­ha­bil­i­ta­tion plan.

Air­bus and In­trepid both sup­ported the re­ha­bil­i­ta­tion plan ear­lier, but have ap­par­ently hard­ened their stances as the plan will not make use of their air­planes as they hoped.

The claims Air­bus and In­trepid filed with the court amount to more than half of all claims filed by the trou­bled air­line’s cred­i­tors.

If the two ma­jor cred­i­tors’ claims are con­firmed in their en­tirety, it is pos­si­ble the cred­i­tors will re­ject the re­ha­bil­i­ta­tion plan at their meet­ing next month.

If the re­ha­bil­i­ta­tion plan is re­jected, Sky­mark could go bank­rupt. There­fore, cred­i­tors, in­clud­ing Air­bus, should go along with the re­ha­bil­i­ta­tion plan, so that part of their claims would be hon­ored. The par­ties con­cerned should dis­cuss the mat­ter in a level-headed man­ner and search for a com­pro­mise. The ed­i­to­rial was pub­lished by The Yomi­uri Shimbun on June, 2nd.

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