Skymark’s blueprint leaves many problems unresolved
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.