Insolvent airline Hokkaido International Airlines, better known as Air Do, filed a reconstruction plan Tuesday with the Tokyo District Court that calls for a 100 percent cut in its 7.2 billion yen capital to pay its debts.
The Sapporo-based airline, now in the process of court-mandated restructuring, also plans to call on its creditors to give up 90 percent of their 4 billion yen in investments. The outmatched upstart is attempting to restructure under the fast-track civil rehabilitation law with help from All Nippon Airways.
Air Do President Michimasu Ishiko told reporters that Air Do has obtained the approval of the Fair Trade Commission to share flight codes with ANA as part of its restructuring strategy.
Earlier in the day, Air Do President Michimasu Ishiko visited the Hokkaido Prefectural Government and Sapporo City Hall, among the airline's largest creditors, to explain the plan.
Ishiko apologized to Hokkaido Gov. Tatsuya Hori for requesting the 90 percent cut in debts, company officials said.
The airline plans to hold a creditors' meeting in early November to solicit support for the reconstruction plan, the officials said. It also plans to ask local businesses to put up a combined 2 billion yen to 3 billion yen in fresh capital.
Ishiko is expected to step down after the company secures the new capital.
With the help of ANA, Air Do aims to return to profitability in fiscal 2003 by saving 2.3 billion yen a year in expenditures and earning some 130 million yen.
Commenting on Air Do's alliance with ANA, Land, Infrastructure and Transport Minister Chikage Ogi said she welcomes the tieup as it allows the two airlines to complement each other.
"I hope Air Do will revive as 'Hokkaido's wing,' " Ogi said in a statement.
