Business / Corporate

Skymark creditors pick ANA as sponsor, rejecting Delta

by Kazuaki Nagata

Staff Writer

Creditors of Skymark Airlines Inc. voted Wednesday to tap ANA Holdings Inc., Japan’s biggest airline, for help in rehabilitating the No. 3 carrier, naming it Skymark’s sponsor.

In a meeting at the Tokyo District Court, creditors rejected Delta Air Lines Inc., the only other suitor. Skymark filed for bankruptcy protection in January.

“I think the creditors understood our plan’s potential to lead Skymark’s rehabilitation in a swift manner,” said Toyoyuki Nagamine, an executive officer at ANA Holdings, parent of All Nippon Airways.

Connecticut-based Intrepid Aviation Ltd., the biggest creditor, which held 38.1 percent of Skymark’s debt, proposed a rehabilitation plan centered on support from Delta, but failed to secure the votes needed. Airbus Group and jet engine-maker Rolls-Royce Holdings — the second- and third-biggest creditors — voted for the ANA plan.

For a rehabilitation plan to be approved, it needed the support of a majority of creditors and those who hold more than 50 percent of Skymark’s debts. The ANA plan met the required support.

In May, Tokyo-based private equity firm Integral Corp. agreed with Skymark that it would become a sponsor along with ANA.

ANA offered to help Skymark in a range of matters, including the possible joint purchase of jet fuel and the tying-up of flights through code-sharing.

It is thought that ANA had its eye on Skymark in part because of its possession of 36 takeoff and landing slots at Tokyo’s busy Haneda airport. An alliance would give it a competitive edge over rivals.

Delta apparently sought to increase its presence in Japan by teaming up with Skymark, especially because no Japanese airlines are members of the SkyTeam alliance, which includes Delta.

Mitsuru Miyazaki, general manager at SMBC Friend Research Center, said one merit of having ANA’s support is that the rehabilitation process will likely go more smoothly than with Delta given ANA is deeply acquainted with Japan’s airline industry and market.

Meanwhile, some fear the ANA-led rehabilitation may result in lower competition among domestic carriers, though it would help the domestic airline sector stabilize.

If Delta had become a partner, “the Japanese airline market would have gained value, namely SkyTeam, and would have become more diverse,” said Miyazaki. But “the market continues to be ruled by the two major players, JAL and ANA,” he said.

Skymark was founded in 1996 as a budget carrier with the aim of stimulating competition in an industry dominated by Japan Airlines and ANA.

Now that ANA will be teaming up with Skymark, it is unlikely that Skymark will make moves to get ANA to lower airfares.

Asked about this, and if the airline is ready to compete with ANA, Skymark Chairman Takashi Ide said ANA had promised to guarantee Skymark’s independence and individuality. “I believe (ANA) will let us keep walking the path that we have been walking,” he said.

Nagamine stressed that ANA and Skymark have agreed to maintain Skymark’s independence, saying ANA will not interfere in deciding Skymark’s airfares and air routes.

Nobuo Sayama, who heads Integral Corp., said Skymark aimed to provide services that no airlines — neither major players nor budget carriers — currently offered, although he did not give examples.