Airdo and Solaseed Air, based in the cities of Sapporo and Miyazaki, respectively, said Monday they will launch a joint holding company as early as October 2022.
The two companies will realign their operations as they are facing an earnings slump due to the fallout from the novel coronavirus.
“Self-help efforts have limits,” Airdo President Susumu Kusano told a news conference in Sapporo, explaining his company’s decision to pursue the realignment.
“To overcome the tough business environment and be prepared for a post-coronavirus world, we need to undertake drastic reforms,” Solaseed Air President Kosuke Takahashi said at a news conference in Miyazaki.
Both of the airline names will be retained, with the two companies coming under the wing of the joint holding company. The name of the holding firm and other details will be decided later.
By bringing together their human resources and skills, the two companies aim to improve business efficiency.
They plan to jointly procure goods to cut costs and work together to maintain their flight networks amid the novel coronavirus crisis.
In the business year to March this year, Airdo suffered an unconsolidated net loss of ¥12.1 billion, against the previous year’s profit of ¥400 million. Solaseed Air logged a net loss of ¥7.6 billion, compared with ¥900 million in profit.
To strengthen their financial foundations, Airdo and Solaseed Air will raise ¥7 billion and ¥2.5 billion, respectively, by issuing preferred shares, chiefly to the government-backed Development Bank of Japan, the largest shareholder for both of them.
The two companies will also reduce their respective capital to ¥100 million so that they come under the small company category of the tax system and can reduce tax burdens.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.