Skymark relaunched with ANA sponsorship.

On September 29th, bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.) officially revamped its ownership structure and management. A 100% capital reduction was performed, followed by a 18 billion JPY capital injection together from Integral Corporation, ANA Holdings, and UDS Airlines Investment, which officially became the new owners of the embattled airline, controlling 50.1%, 16.5%, and 33.4%, respectively (Creditors choose ANA/Skymark proposal over Delta/Intrepid.). UDS is a new investment firm jointly owned by Development Bank of Japan (DBJ) and Sumitomo Mitsui Banking, both now long-time partners of ANA Holdings.

Boeing 737-86N(WL) JA73NJ taxies at New Chitose. Skymark intends to retain a fleet of at least 26 baby Boeings. Can Skymark remain independent? Caught in between the incumbent carriers and new LCCs, what market could it pursue outside its bread-and-butter (for now) Haneda? (Photo: Ryosuke Yano)

The former Skymark management, including Chairman Takashi Ide and President Masakazu Arimori, has been entirely replaced by six new executives. Integral's President Nobuo Sayama has become Chairman and Masahiko Ichie of Development Bank of Japan (DBJ) assumed the role of President. Senior Managing Director is Hideo Yaguchi from OCS, an ANA Holdings cargo subsidiary, who will be responsible for general supervision. Manabu Motohashi, the sole person on the board from within Skymark, is Managing Director and Executive Officer, taking responsibility for management planning, overall control for marketing, and information system. Integral's Shigeki Nishioka has become Director and Executive Officer, overseeing finance, accounting, general affairs, human resources, and listing preparation. ANA's Noriyuki Masukawa has been appointed Director to supervise safety operations.
 
At the same time, Skymark signed a binding code-sharing agreement with rival All Nippon Airways [NH/ANA], subsidiary of the bankrupt carrier's now 16.5% owner ANA Holdings, which is the centerpiece of the struggling airline's corporate rehabilitation plan (Skymark gives in to ANA; Japan reverts to duopoly.). Discussions are being held to implement code-sharing on 13 routes; all but three routes out of Tokyo/Haneda [HND/RJTT] and Sendai [SDJ/RJSS], which is being axed at the end of next month (Skymark to pull out of Sendai in October.). Omitted from Haneda are to Fukuoka [FUK/RJFF], Kagoshima [KOJ/RJFK], and Sapporo/New Chitose [CTS/RJCC], where ANA already commands the lion's share of flights and they learned the Japan Fair Trade Commission is unlikely to give a nod.

"We're working towards starting code-sharing in Winter 2016/2017," said Mr. Sayama, adding "We hope to reveal the outline of code-sharing by mid-October." ANA has been pushing Skymark to adopt their Able-D reservations system, which was also taken up by previous ANA-sponsored airlines AIRDO [HD/ADO] (d.b.a Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. However, taking up the system meant pricing needed to have consent from ANA, and all income would go into ANA first and then later be transferred to the airlines, virtually making the three quasi-subsidiaries of ANA. Mr. Sayama has said "Nobody can call that independent, so Skymark can't do that." Outgoing Chairman Mr. Ide had also stated that preserving Skymark's own reservations system, handmade by former President and CEO Shinichi Nishikubo, and modifying it to make it compatible with code-shares, instead of abandoning it and wholly-adopting Able-D, is key to keeping Skymark independent from ANA.

Boeing 737-881(WL) JA75AN takes off from Haneda. Now the ANA group has direct and indirect influence over a dominant 60% of domestic slots at Haneda. With Air Do, Solaseed Air, and Star Flyer having adopted ANA's reservations system and effectively becoming de facto subsidiaries of ANA, a key to Skymark's independence in the long term is to continue using its own platform. (Photo: Ryosuke Yano)

In addition, Skymark reached an agreement with Mizuho Bank for the establishment of a commitment line on September 17th, allowing up to 10 billion JPY in financing. Payments to creditors will commence on November 30th, and those claiming 1 million JPY will receive the entire figure while those claiming more will initially be given 5% of the amount exceeding 1 million JPY. Biggest creditor Intrepid Aviation, which initially sought for 900 million USD (108 billion JPY) for scrapping Airbus 330 leases (Skymark terminates all Airbus A330 leases.) and fought against ANA to sponsor Skymark with Delta Air Lines [DL/DAL] (Intrepid picks Delta to sponsor Skymark.), has compromised at 57.3 billion JPY, while talks are still continuing with Airbus, Rolls-Royce, and CIT Aerospace, which are the second, third, and fourth largest creditors, respectively. A settlement with Airbus and Rolls-Royce is to be watched, as rumors point out to ANA making a backroom deal to purchase three of Skymark's canceled Rolls-Royce-powered A380s and taking options for two more, which prompted the two creditors to make a last-minute sway in favor of ANA's sponsorship over Delta's (Bye-bye Skymark, Hello ANA Airbus A380?).

Mr. Ichie said that no new routes nor route cuts are planned for the following year, after Sendai is axed. The new chief said Skymark will focus more on building loyalty in its communities where it has a relatively stronger brand recognition, such as in Kobe [UKB/RJBE] and Ibaraki [IBR/RJAH]. The fleet will be kept at at least 26 Boeing 737-800s, and whether to renew the lease of the 27th machine, which is expiring in January 2016, is currently being evaluated. Mr. Sayama confirmed that Skymark will retain its current identity even after it emerges from bankruptcy protection, instead of renaming it SKY bee (Skymark hints at new brand: SKY bee?). Both the new and old management agree that Skymark could become quickly profitable and be listed again in three years. Regulator Japan Civil Aviation Bureau (JCAB) has hinted limiting ANA's financial involvement in Skymark to five years to keep competition at Haneda, however, ANA's cozy relationship with the governing Liberal Democratic Party (LDP) could make the winds blow in their favor again.

Skymark's load factors are quickly recovering. Although August is normally a high month as it is the peak summer vacation travel season coupled with Obon homecoming, the bankrupt airline produced load factors exceeding 90% for most Haneda routes. It doesn't directly translate to yields, however, it is nevertheless a positive sign. With the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) currently planning to allocate most, if not all of, new future slots at Haneda to international flights in preparation for the 2020 Tokyo Olympics/Paralympics, its domestic market remains closed off to LCCs, making Skymark the only low-fare option at Japan's most important airport. But what market will Skymark pursue beyond that? It has lost against LCCs on almost every other directly-competing route, and though much lower cost and offering lower fares than ANA or JAL, it has failed to generate demand, which the LCCs have succeeded in doing. Regional international routes within reach of its 737s are also seeing growing competition from LCCs. And with the domestic market shrinking, Haneda is not a safe haven forever.

Finding itself being caught in between the majors and LCCs forced Skymark to boldly (and unsuccessfully) pursue the demand for affordable premium travel, initially in the domestic market with all-premium A330s (Skymark Airlines inaugurates Airbus A330 service.) and in the international long-haul arena with premium-only A380s (Skymark posts loss but optimistic with strategy tweaks.). The A330s were also equipped with full galleys so that it could fly regional international routes as well. However, it was too costly and Skymark failed there. So what future lies for Skymark in the long term?

Source: Aviation Wire, 2015 September 1st. (in Japanese)
Source: Aviation Wire, 2015 September 2nd. (in Japanese) 
Source: Aviation Wire, 2015 September 11th. (in Japanese)
Source: Hokkaido Shimbun, 2015 September 15th. (in Japanese)
Source: Toyo Keizai, 2015 September 17th. (in Japanese)
Source: Toyo Keizai, 2015 September 24th. (in Japanese)
Source: Aviation Wire, 2015 September 29th. (in Japanese)
Source: Skymark Airlines, 2015 September 29th. (in English)
Source: Nikkei Shimbun, 2015 September 29th. (in Japanese)
Source: Aviation Wire, 2015 September 29th. (in Japanese)

Bye-bye Skymark, hello ANA Airbus A380?

ANA Holdings, parent of All Nippon Airways [NH/ANA], has won the bid to lead bankrupt Skymark Airlines' [BC/SKY] rehabilitation process (Creditors choose ANA/Skymark proposal over Delta/Intrepid.). It was a landslide victory for Japan's already largest carrier, garnering 78% votes in terms of the number of creditors and 60.25% in terms of the amount of Skymark's liabilities, fulfilling both conditions.

But at least the latter was widely speculated to be a Delta/Intrepid victory (Intrepid picks Delta to sponsor Skymark.), as creditors Airbus, Rolls-Royce, and CIT Aerospace, accounting for 29%, 16%, and 14%, respectively (Skymark's total debts skyrocket to 300 billion JPY.), were all opposed to ANA involvement at least until very recently (Airbus and Intrepid to reject ANA/Skymark tie-up.). With Intrepid claiming 38%, just one of the three creditors supporting the Delta Air Lines [DL/DAL]-led scheme would have given them a win in terms of proportions of liabilities, prompting another round of vote within two-months. So how did ANA win the support of the three key players in the last few days?

Airbus A380-841 F-WWSL/JA380A at Toulouse. Two of Skymark's have been completed while the third has partially been built. ANA's taking up of the A380s was necessary for them to win support from Airbus and Rolls-Royce, and keep true competition out of bread-and-butter Haneda for as long as possible by keeping Skymark under its control. ANA has deep pockets, but can they fly the A380 profitably? How long can protectionism prevail? (Photo: Airbus)

During the last days of July, "ANA made a promise with Airbus to place a significant future order, carefully couched so as not to trigger a disclosure requirement," said an ANA official close to the matter who asked not to be named. That order includes acquiring three displaced A380s initially ordered by Japan's embattled third largest airline (Skymark's Airbus A380 order in jeopardy.), and taking options for two more. Two aircraft have been completed and are currently stored at Toulouse/Blagnac [TLS/LFBO], with a third partially finished. Rolls-Royce Trent 900s power the super-jumbos, and hence Rolls-Royce's defect to ANA as well.

Airbus initially supported ANA as they had earlier talked positively about inducting Skymark's A380s, but then sided with Delta/Intrepid after ANA scrapped the talks a few weeks later saying plans had changed. Intrepid also supported ANA in the first place, as a non-binding Letter of Intent (LoI) was signed for ANA to lease Skymark's A330s (Skymark terminates all Airbus A330 leases.). But ANA also canceled it just a few weeks later, causing outrage at Intrepid and prompting the U.S.-based aircraft lessor to come up with their own rehabilitation plan for Skymark that eventually lured Delta as its sponsor. So this time around, ANA couldn't have gained Airbus and Rolls-Royce's support without a binding agreement. According to the same source, ANA will release plans for the A380 "when the time is appropriate."

The next question is why did CIT Aerospace support ANA? Delta is a big customer for CIT, while ANA has no record of having business with them. What is known from multiple sources is that ANA pledged to lease aircraft from them in the near future. Rumors say that Japan's largest carrier talked of an idea to lease some, if not all three of CIT's A330s that were destined for Skymark, and place them in service with ANA's wholly-owned subsidiary LCC Vanilla Air [JW/VNL] for Hawaii services. However, how much reliability this rumor has is unsure, as at least one of CIT's ex-Skymark A330s seems to have found a new operator in Spain with Air Europa [UX/AEA].

Boeing 737-8HX(WL) JA73NA. Now how much independence Skymark would be able to retain is up to Integral. But adopting ANA's reservation system is a double-edged sword. Skymark's stable income would be assured by ANA, but they would forever become a slave of Japan's largest carrier, as with Air Do, Solaseed Air, and Star Flyer. (Photo: Aviation Wire)

For Skymark, it would be a very bitter end to its challenge against the ANA/JAL duopoly (Skymark gives in to ANA; Japan reverts to duopoly.). Paper-wise, ANA will only control 16.5% with Integral Corporation holding 50.1% and UDS Airlines Investment 33.4%. However, UDS is a new investment firm jointly owned by Development Bank of Japan (DBJ) and Sumitomo Mitsui Banking, both loyal ANA partners. Six executives will sit on the board and Integral will select three, but ANA two, and UDS one; Integral's President Nobuo Sayama will take the Chairman's seat but DBJ's former Managing Director Masahiko Ichie, a strong ANA ally, will become President.

And the centerpiece of the ANA/Skymark plan is an extensive code-share. Skymark's current reservations system developed by former hands-on President and CEO Shinichi Nishikubo cannot handle any code-shares, and Skymark will most likely adopt ANA's system. An official of the regulating Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) has quoted it as "an addictive poison," as it allows ANA to access Skymark's entire ticket sales data, including pricing policy and reservation rates. But for Skymark, developing an all-new system would be too costly. ANA's other de facto puppet carriers AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ] all share ANA's system. Skymark's network will gradually be aligned to complement that of ANA's, essentially stopping short of a takeover.

Regulator MLIT knows competition is necessary. But for now, the ruling Liberal Democrat Party (LDP) sits on top of them. The LDP is said to have pressured ANA to accept A380s so that Skymark remain in Japanese (ANA) hands. In return, the regime is rumored to have unofficially promised to give ANA the lion's share of new slot-pairs at Haneda when the next expansion comes before the 2020 Olympics/Paralympics. A fifth runway is far-fetched, and the MLIT is currently talking with local authorities to allow aircraft to overfly densely-populated business and residential areas, which could create up to 50 more slot-pairs per day. Conservative LDP supports ANA in order to dilute JAL's remarkable comeback as it was bailed out when the opposing Democratic Party of Japan (DPJ) was at helm. Foreign involvement is out of question, at least at Haneda. The LDP is determined to protect ANA, and to a lesser extent JAL.

Welcome to Japan. Here we go back in time with the two incumbents ANA/JAL and its affiliates controlling 100% of the Haneda market and 97% of the entire domestic market. And at the preferred downtown Tokyo airport, ANA would already command the lion's share of domestic slots, having direct/indirect control over 60% when combined with de facto subsidiaries Air Do, Skymark, Solaseed Air, and Star Flyer, with JAL accounting for the remaining 40%. Sadly for the ordinary flyer, the incumbent government prefers a closed market, benefiting selected powers at the expense of the interest of the flying public and broader industry evolution. The government should stop toying with aviation politics.

Source: Nikkei Shimbun, August 6th. (in Japanese)
Source: Aviation Wire, August 6th. (in Japanese)
Source: Aviation Wire, August 6th. (in Japanese)
Source: Nikkei Shimbun, August 6th. (in Japanese)

Creditors choose ANA/Skymark proposal over Delta/Intrepid.

On August 5th, the creditors of bankrupt Skymark Airlines' [BC/SKY] (Skymark to file for bankruptcy.) approved a rehabilitation plan backed by ANA Holdings, parent of All Nippon Airways [NH/ANA], against the Delta Air Lines [DL/DAL]-sponsored proposal submitted by largest creditor Intrepid Aviation (Intrepid picks Delta to sponsor Skymark.). A plan was required to win approval of a majority of debt holders, both in terms of the proportion of liabilities and the number of creditors, and ANA/Skymark garnered 60.25% for the former and 135.5 out of 174 votes for the latter. Delta/Intrepid gained 38.13% and 37.5, respectively, while 25 creditors abstained. Japan is reverting to ANA/JAL duopoly, where they would control a whopping 97% of the domestic market together with its affiliates (ANA/JAL directly account for 79%).

Dark days ahead for the flying public? Seen taxiing at Fukuoka, Boeing 737-8HX(WL) JA73NH left Skymark in January 2015 and now flies with Jeju Air as HL8034. ANA would like to trim Skymark's fleet from the current 27 to around 20, as part of a process to transform the former rival into a de facto subsidiary, as with Air Do, Solaseed Air, and Star Flyer. (Photo: Ryosuke Yano)

With U.S.-based lessor Intrepid claiming 38% of Skymark's debt, the decisions of Airbus (Skymark's Airbus A380 order in jeopardy.), Rolls-Royce, and CIT Aerospace, accounting for 29%, 16%, and 14%, respectively (Skymark's total debts skyrocket to 300 billion JPY.), had been crucial. The Delta/Intrepid proposal was poised to win in terms of the proportion of liabilities as the three had opposed ANA involvement (Airbus and Intrepid to reject ANA/Skymark tie-up.). However, reportedly, in the final days before the vote, ANA etched in a deal with Airbus and Rolls-Royce to acquire some, if not all of Skymark's canceled A380s, powered by Rolls-Royce Trent 900 engines, and also promised CIT Aerospace that they would lease aircraft from them in the future, prompting the three to support ANA. For the number of creditors, it was ANA's to win from the first place, as most of the 197 creditors are smaller domestic companies having business ties with ANA.

Intrepid had initially welcomed ANA's involvement when Japan's largest carrier reportedly talked positively about inducting Skymark's canceled A330s (Skymark terminates all Airbus A330 leases.), however, outraged after the lessor learned ANA would not take them up, it decided to submit its own proposal (Skymark and Intrepid submit rivaling revival plans.). In June, the Tokyo District Court approved both plans for voting (Skymark/ANA and Intrepid both given go-ahead by court.). Intrepid's blueprint had originally lacked concreteness without an airline sponsor, but it selected Delta in July, and came out to boast a higher repayment rate at 5.5% for debts over 1 million JPY, made possible by Intrepid voluntarily withdrawing 30 billion JPY of debts Skymark owes them, provided the deal went through.

At the center of Skymark's bankruptcy was always their 36 coveted slot-pairs, or 8%, at regulated Tokyo/Haneda [HND/RJTT]. A bitter battle that started out with JAL luring Skymark for an extensive code-share (Skymark in talks with JAL for broad tie-up.) and rebuffed by ANA and the government (Skymark forced to seek ANA & JAL dual tie-up.) in the first round, former partners ANA and Malaysia-based pan-Asian LCC AirAsia [AK/AXM] (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.) fighting in the second, and world's largest airline Delta going against ANA in the third has ended in Skymark falling into the hands of Japan's biggest airline, putting a period to Skymark's challenge against the ANA/JAL duopoly. Founded in 1996, they were Japan's first child of deregulation and also the last to remain independent (Skymark gives in to ANA; Japan reverts to duopoly.).

Airbus A380-841 F-WWSL/JA380A at Toulouse. Two of Skymark's six ordered (and canceled) have been completed and are stored. ANA's taking up of the A380s was necessary for them to win support from Airbus and Rolls-Royce, and keep true competition out of bread-and-butter Haneda for as long as possible by keeping Skymark under its control. ANA has deep pockets, but can they fly the A380 profitably? How long can protectionism prevail? (Photo: Airbus)

Skymark's new owners will together inject 18 billion JPY into the embattled carrier, and a debt-equity swap would leave Integral Corporation holding 50.1%, UDS Airlines Investment 33.4%, and ANA Holdings 16.5%. UDS is a new investment firm jointly owned by Development Bank of Japan (DBJ) and Sumitomo Mitsui Banking, however, as both are loyal ANA partners, ANA would de facto control 49.9%. Six executives will sit on the board, and Integral will select three, ANA two, and UDS one; Integral's President Nobuo Sayama will take the Chairman's seat while DBJ's former Managing Director Masahiko Ichie will become President. The ANA/Skymark plan is expected to include extensive code-sharing, joint ticket sales, joint fuel purchases, joint crew training, and gradually aligning Skymark's network to complement that of ANA's, essentially stopping short of a takeover, replicating the cases with AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. A new corporate identity is also likely (Skymark hints at new brand: SKY bee?).

Now, all but one of Japan's mainline carriers would be associated with either ANA or Japan Airlines [JL/JAL]; Air Do, Skymark, Solaseed Air, and Star Flyer along with LCCs Peach Aviation [MM/APJ] and Vanilla Air [JW/VNL] are all in the ANA flock, while Fuji Dream Airlines [JH/FDA], Japan Transocean Air [NU/JTA], and Jetstar Japan [GK/JJP] have JAL influence. Independent of the two incumbents is fledgling Spring Airlines Japan [IJ/SJO] (Spring Airlines Japan plans Kansai, Sapporo, and China.), which will soon be joined by AirAsia Japan (Mk II) (AirAsia Japan confirms Spring 2016 launch from Nagoya.) in Spring 2016. For Haneda's slots, ANA/JAL would control 100%; JAL holds 40% (184.5) and ANA 37.4% (172.5), however, when the slots of de facto subsidiaries Air Do, Skymark, Solaseed Air, and Star Flyer are combined, ANA's figure jumps to a whopping 60%.

Source: Skymark Airlines, August 5th. (in Japanese)
Source: Reuters Japan, August 5th. (in Japanese)
Source: Nikkei Shimbun, August 5th. (in Japanese)

Skymark/ANA and Intrepid both given go-ahead by court.

On June 15th, the Tokyo District Court, where Skymark Airlines [BC/SKY] filed for bankruptcy protection (Skymark to file for bankruptcy.), approved both rehabilitation proposals for the embattled carrier for discussion at a creditors' meeting; one submitted by Skymark themselves that involves sponsorship by ANA Holdings, parent of All Nippon Airways [NH/ANA] (Skymark gives in to ANA; Japan reverts to duopoly.), and the other by Intrepid Aviation, aircraft lessor and Skymark's biggest creditor (Skymark and Intrepid submit rivaling revival plans.). In Japan, it is very unusual for multiple plans to be approved for consideration. The meeting will be held on August 5th.

Boeing 737-82Y(WL) JA73NE comes in to land at New Chitose near Sapporo. Japan's third largest carrier controls 36 coveted slots-pairs at preferred Haneda. (Photo: Ryosuke Yano)

Under the Skymark/ANA scheme, a total of 18 billion JPY would be injected into the bankrupt airline by Integral Corporation, UDS Airlines Investment, and ANA Holdings, which would in turn control 50.1%, 33.4%, and 16.5%, respectively. Six executives would sit on the board; Integral would select three, ANA two, and UDS one, while Integral would appoint the Chairman and UDS the President. The proposal would likely include reducing Skymark's network and fleet, implementing code-sharing, joint ticket sales, joint fuel purchases, and joint crew training with ANA, and gradually aligning its network to complement that of ANA's. This would virtually transform Skymark into another zombie feeder carrier, replicating how ANA controls AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. Debt repayment rate to those who claim over 1 million JPY is set at 5%.

Boeing 767-381 JA8569 arrives at Haneda. Adding Skymark to ANA's portfolio of zombie carriers Air Do, Solaseed Air, and Star Flyer would have them control a dominant 60% of domestic slots at Haneda. With the remaining 40% controlled by JAL, it effectively brings back duopoly to Japan's most important airport. (Photo: Ryosuke Yano)

Meanwhile, Intrepid's deal includes the same 18 billion JPY, however, the plan has been amended to have Integral as the sole provider of the injection. This effectively paves the way for non-investment sponsorship by foreign airlines, which could be more acceptable to the regulators who are still uncomfortable about allowing foreign investment in Japanese carriers at slot-restricted Tokyo/Haneda [HND/RJTT]. Skymark's biggest creditor is seeking 900 million USD (104 billion JPY) for scrapping seven Airbus A330 contracts (Skymark terminates all Airbus A330 leases.), and though it favored ANA sponsorship when Japan's largest airline said it could induct the A330s, it decided to submit its own proposal when it learned ANA would not take them. Debt repayment rate for those claiming over 1 million JPY has been increased from 3% to 5% or higher, matching that of the Skymark/ANA plan.

Intrepid is reportedly holding talks with a number of candidate sponsors, who would be willing to take up the grounded A330s. Rumors point to Delta Air Lines [DL/DAL] and Hainan Airlines [HU/CHH], and at least the former's President Ed Bastian confirmed they had been approached though declining to give any details. The Skyteam member has long wanted a partner in Japan, and fought hard and failed to lure then-bankrupt Japan Airlines [JL/JAL] from American Airlines [AA/AAL] and Oneworld back in 2010. However, times have changed and so may have Delta's priorities; Japan is a shrinking market and U.S. airlines are focusing more on China, and Delta is reportedly negotiating a deeper cooperation, if not a joint-venture (JV), with Skyteam partner Korean Air [KE/KAL]. Delta also recently decided to forfeit its Seattle-Tacoma [SEA/KSEA] slot-pair at Haneda, leaving only Los Angeles [LAX/KLAX].

Boeing 777-232/ER N862DA at Narita. Delta's Tokyo presence it inherited from the Northwest merger continues to shrink; other than U.S. cities, only five intra-Asian/Pacific routes are expected to remain by 2016. Pursuing China through a potential deeper cooperation with Korean Air seems to be their priority. (Photo: Ryosuke Yano)

In addition, though Delta may take the Rolls-Royce-powered A330s (their current A330s are Pratt & Whitney and General Electric), they have no interest in A380s (Skymark's Airbus A380 order in jeopardy.). So how much support from Airbus, which also opposed the Skymark/ANA deal after ANA turned down the canceled A380s (Airbus and Intrepid to reject ANA/Skymark tie-up.), Intrepid's plan would be able to gain remains questionable. At the August 5th creditors' meeting, a proposal is required to win approval of a majority of debt holders, both in terms of the proportion of liabilities and the number of creditors. With Intrepid and Airbus's claims together accounting for over 60% of the liabilities, the European planemaker's decision is crucial. "We will study both plans. We hope one of them, if not two, will be viable for Skymark," said Fabrice Brégier, CEO of Airbus.

The supervisory board selected by the court said both proposals were realistic, commenting "It can't be said that Skymark wouldn't be able to carry out its rehabilitation without an airline sponsor," adding "Skymark had originally sought for a revitalization process without a sponsoring airline. Also, it can't be said that another sponsor (other than ANA) could not be found in the future." Skymark and ANA will hold an emergency meeting in early July to persuade creditors to endorse their proposal on August 5th, while Intrepid will continue to talk with airlines in search of a sponsor (and taker of the A330s). For most of the flying public, Intrepid's proposal would be welcome as it confirms Skymark's future as the third force independent from ANA or JAL, ensuring competition remains at Haneda. Stay tuned.

Source: Nikkei Shimbun, June 17th. (in Japanese)
Source: Yomiuri Shimbun, June 17th. (in Japanese)
Source: Reuters Japan, June 19th. (in Japanese)

Skymark and Intrepid submit rivaling revival plans.

On May 29th, Skymark Airlines [BC/SKY] filed a corporation rehabilitation plan with the Tokyo District Court that includes a sponsorship agreement with ANA Holdings, parent of All Nippon Airways [NH/ANA]. The new owners would together inject 18 billion JPY into the bankrupt carrier (Skymark to file for bankruptcy.), and a debt-equity swap would leave Integral Corporation holding 50.1%, UDS Airlines Investment 33.4%, and ANA Holdings 16.5%. UDS is a new investment firm jointly owned by Development Bank of Japan and Sumitomo Mitsui Banking. Six executives will sit on the board, and Integral will select three, ANA two, and UDS one; Integral will appoint the Chairman while UDS will choose the President.

Boeing 737-86N(WL) JA73NK rotates from Haneda. If the ANA partnership is approved, Skymark will likely use some of its 36 slots to take over or launch less profitable routes for ANA, as is the case with Air Do, Solaseed Air, and Star Flyer. (Photo: Ryosuke Yano)

The proposal includes allocating all 18 billion JPY to repay its debt, which Skymark targets to reduce to just 5% for creditors who claim over 1 million JPY. Creditors have so far filed claims totaling 308.9 billion JPY (Skymark's total debts skyrocket to 300 billion JPY.), including aircraft lessor Intrepid Aviation seeking 900 million USD (104 billion JPY) for scrapping seven Airbus A330 contracts (Skymark terminates all Airbus A330 leases.) and Airbus demanding 700 million USD (85 billion JPY) for the canceled A380 order (Skymark's Airbus A380 order in jeopardy.). The ANA/Skymark plan is expected to include code-sharing, joint ticket sales, joint fuel purchases, and joint crew training with ANA. A new corporate identity is also likely (Skymark hints at new brand: SKY bee?).

Meanwhile, biggest creditor Intrepid, which has decided to oppose ANA involvement in the rehabilitation proceedings (Airbus and Intrepid to reject ANA/Skymark tie-up.), also submitted a rivaling plan on May 29th. It says Integral would be the primary sponsor, but it would select an alternative airline partner other than ANA. "We are currently in the process of identifying candidates for a new airline sponsor," said the U.S.-based leasing firm, revealing Delta Air Lines [DL/DAL] as one of them (Skymark's fate: AirAsia, ANA, Delta, or...?). The debt repayment rate for those claiming over 1 million JPY is set at 3%, which is lower than the ANA/Skymark proposal. The European planemaker had also handed in a statement to the court on May 28th saying "If Skymark submits the plan (that involves ANA's sponsorship), there is a significant and realistic risk that it would not be able to gain the support of major creditors, including Airbus."

Airbus A320-211 N341NW at Salt Lake City. Intrepid Aviation is reportedly asking Delta Air Lines to sponsor Skymark. Airbus may also support the scheme, as the SkyTeam carrier is a major customer with 25 A350-900s, 25 A330-900neo aircraft, nine more A330-300s, and 45 A321s on order with potential for more. Delta has long wanted a partner in Japan, but has so far refrained from assisting Skymark. (Photo: Ryosuke Yano)

Intrepid had initially welcomed ANA's involvement as Japan's largest carrier reportedly talked positively about inducting Skymark's A330s, however, after they learned Japan's largest carrier would not take them up, it changed its mind. "It is true that we discussed the possible use of Skymark's A330 with Intrepid. And some media are reporting as if we are breaking a promise, but we didn't have any binding agreement. We ourselves are confused by what Intrepid is saying," said Toyoyuki Nagamine, Senior Executive Officer of ANA. Airbus is also unsatisfied with ANA not taking up the A380s. "We're not going to acquire a new aircraft just because we became Skymark's sponsor. We believe we enjoy a long friendly relationship with Airbus, and that would continue in the future. We will assist Skymark in negotiations with them," responded Mr. Nagamine.

Skymark criticized Intrepid's plan, saying feasibility of the rival proposal "is not clear at all" and offers a lower repayment rate for creditors' claims. The bankrupt carrier expressed confidence that if the court approves both plans, a majority of creditors would give consent for the ANA/Skymark rehabilitation plan at their meeting currently planned for July. A proposal is required to win approval of a majority of debt holders, both in terms of the proportion of liabilities and the number of creditors; thus rejection of the proposal by the two biggest creditors effectively blocks the ANA/Skymark tie-up. However, Skymark believes its actual debt they owe to Intrepid and Airbus are much lower, and hence do not need the support of the two (at least for now) biggest creditors.

Airbus A320-211 JA8947 taxies past a JAL Boeing 737. Adding Skymark to ANA's portfolio of puppet carriers Air Do, Solaseed Air, and Star Flyer would have them control a dominant 60% of domestic slots at Haneda. The JAL Group controls the remaining 40%, effectively bringing back duopoly at Japan's most important airport. (Photo: Ryosuke Yano)

ANA Holdings President Shinya Katanozaka said "We are the best sponsor." Although ANA and Intrepid have agreed to re-list Skymark within five years, the chief said "Our firm hold of Skymark shares will translate into their revitalization," adding "If there is a merit to both of us, we want to continue the partnership beyond their rehabilitation period." With so much priority on keeping genuine competition out of Tokyo/Haneda [HND/RJTT], ANA likely has no intention of letting go of its influence on the former rival start-up, which ultimately forced Japan's largest carrier to launch full-fledged LCCs Peach Aviation [MM/APJ] and the first AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.), which now operates as Vanilla Air [JW/VNL].

Skymark plans to commence code-sharing with ANA as soon as it receives approval from regulator Japan Civil Aviation Bureau (JCAB), though routes have not been disclosed. Nobuo Sayama, President of Integral said, "We will suspend Sendai (Skymark to pull out of Sendai in October.) and Yonago (Skymark decides to close Yonago, keep Ibaraki.), but will fly elsewhere, where we can find more customers," adding "We will discuss new destinations with ANA as early as autumn." As with ANA's other minority-owned but de facto controlled carriers AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ], some of Skymark's Haneda slots are likely to be used to take over ANA's less profitable routes or launch new links on behalf of ANA, gradually transforming Skymark into a feeder carrier for Japan's biggest carrier.

ANA's Mr. Nagamine says Skymark would still be independent, as "Pricing would be decided by Skymark." Well, not many would agree with that.

Source: Aviation Wire, May 29th. (in Japanese)
Source: Aviation Wire, May 29th. (in Japanese)
Source: Reuters Japan, June 1st. (in Japanese)
Source: Nikkei Shimbun, June 2nd. (in Japanese)
Source: Yomiuri Shimbun, June 3rd. (in Japanese)
Source: Business Journal, June 3rd. (in Japanese)
Source: Nikkei Shimbun, June 5th. (in Japanese) 

*Edited/updated on June 5th, 2015.

Airbus and Intrepid to reject ANA/Skymark tie-up.

Skymark Airlines' [BC/SKY] biggest creditors Intrepid Aviation and Airbus have informed the bankrupt carrier (Skymark to file for bankruptcy.) that they would block a corporation rehabilitation plan involving All Nippon Airways [NH/ANA]. Creditors have filed claims totaling 320 billion JPY (Skymark's total debts skyrocket to 300 billion JPY.), with the U.S.-based leasing firm seeking 900 million USD (104 billion JPY) for scrapping seven A330 contracts (Skymark terminates all Airbus A330 leases.) and the European planemaker demanding 700 million USD (85 billion JPY) for the canceled Airbus A380 order (Skymark's Airbus A380 order in jeopardy.).

Boeing 737-86N(WL) JA73NX lands at Haneda near sunset. Its fleet of 27 baby Boeings is also expected to be reduced. (Photo: Ryosuke Yano)

Both Airbus and Intrepid had earlier welcomed the tie-up after ANA reportedly told them it would consider taking up the A380s and A330s in concern, but the latest scheme does not include any use of the displaced airframes by ANA nor Skymark. The plan, which needs to be submitted to the Tokyo District Court by May 29th, is required to win approval of a majority of debt holders, both in terms of the proportion of liabilities and the number of creditors; thus rejection of the proposal by the two biggest creditors effectively blocks the ANA/Skymark deal.

On April 22nd, Skymark, Integral Corporation, and ANA Holdings had signed a Memorandum of Understanding (MoU) where the investment fund would take a 50.1% control while Japan's largest carrier would virtually control 49.9% together with its partner banks (Skymark gives in to ANA; Japan reverts to duopoly.). The latest plan calls for ANA to hold 16.5% while Development Bank of Japan and Sumitomo Mitsui Banking would together hold 33.4%; Skymark's 36 lucrative slots-pairs at Haneda would need to be relinquished if ANA's shareholding exceeds 20%, as required by the regulator. The initial corporation rehabilitation plan is expected to include code-sharing, joint ticket sales, joint fuel purchases, and joint crew training with ANA. A new corporate identity is also likely (Skymark hints at new brand: SKY bee?).

Skymark is boldly setting its debt repayment ratio target at around 5%, asking its creditors to write off the remainder. The embattled airline does not have enough time to reach a deal with creditors by May 29th, and negotiations are likely to continue until July. Meanwhile, either Nobuo Sayama or Reijiro Yamamoto, the two Presidents of Integral Corporation, is expected to be appointed Skymark's Chairman, representing the airline. ANA was looking for a veteran to install in Skymark as President, but the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) is reportedly opposing it to keep Skymark as independent as possible, and that position is now likely to come from Development Bank of Japan.

ANA and Integral's agreement is still fragile with looming distrust and conflicting interests; ANA wants to place Skymark under its influence once and for all and keep genuine domestic competition out of bread-and-butter Haneda for as long as possible, while Integral wants to rebuild Skymark as a fully independent carrier. And now, either ANA (or Skymark) is forced to take up the A380s and A330s or pay the hefty compensation, and in the worst case scenario at least for ANA, Skymark would need to find another partner (ANA and AirAsia bid to save Skymark.). But for Skymark too, it is questionable if they have enough financial strength and support to withstand the time and work needed to propose another plan with a new partner from scratch.

Source: Nikkei Shimbun, May 19th. (in Japanese)
Source: Mainichi Shimbun, May 26th. (in Japanese)
Source: Yomiuri Shimbun, May 26th. (in Japanese)
Source: Nikkei Shimbun, May 26th. (in Japanese)
Source: Nikkei Shimbun, May 27th. (in Japanese) 
Source: Yomiuri Shimbun, May 27th. (in Japanese)

*Edited/updated on May 27th, 2015.

Skymark's total debts skyrocket to 300 billion JPY.

Skymark Airlines' [BC/SKY] total liabilities grew to nearly 300 billion JPY, after all creditors filed claims by the March 18th deadline specified by the Tokyo District Court, where Japan's third largest carrier sought for bankruptcy protection (Skymark to file for bankruptcy.) in January. Airbus is demanding 700 million USD (84 billion JPY) in compensation for the canceled Airbus A380 order (Skymark hopes to settle Airbus A380 penalty in October.), while aircraft lessor Intrepid Aviation is seeking 900 million USD (108 billion JPY) for scrapping seven A330 lease contracts (Skymark terminates all Airbus A330 leases.).

Two of Skymark's Airbus A330-300Es are seen grounded at Tokyo International Airport at Haneda. All five could be heading out to the desert for long-term storage, now that the leases have been terminated. (Photo: Ryosuke Yano)

Other major creditors include ANA Trading, Boeing, Central Japan International Airport (operator of Nagoya/Chubu Centrair [NGO/RJGG]), Japan Airlines [JL/JAL], Japan Airport Terminal (operator of Terminals 1 & 2 at Tokyo/Haneda [HND/RJTT]), and Shinichi Nishikubo (Skymark's former CEO). The embattled carrier had earlier estimated its liabilities at 71 billion JPY, excluding claims from Airbus and leasing firms. A 300 billion JPY debt would push Skymark into insolvency, as their total assets stood at 74 billion JPY as of December 2014. The airline is expected to perform a 100% capital reduction. 

By April 15th, Skymark will issue a statement of approval or disapproval for the submitted claims, and the cash-strapped airline and creditors have between April 22nd and May 8th to negotiate final figures. A corporation rehabilitation plan must be handed in to the Tokyo District Court by May 29th, and it would need majority go-ahead at a creditor's meeting that would be held in late June for the plan to be implemented by the end of July. Skymark is likely to decide whether to accept an airline sponsorship, either from AirAsia [AK/AXM] or All Nippon Airways' [NH/ANA] parent ANA Holdings (ANA and AirAsia bid to save Skymark.), or go without it and only endorse financial assistance from Integral Corporation plus other investment firms.

Sponsorship proposals from neither AirAsia nor ANA Holdings have been made public. However, the Malaysia-based pan-Asian LCC group is reportedly calling for a re-branding of Skymark under AirAsia, launching a new joint-venture (JV) long-haul subsidiary (a hint at AirAsia X Japan?), and a potential future merger with AirAsia Japan (Mk II), which is currently preparing to launch operations from Chubu Centrair by the end of this year (New AirAsia Japan's first Airbus A320 due in July.). It would also mediate talks with Airbus to reduce Skymark's debt. Meanwhile, ANA Holdings' plan reportedly calls for reducing Skymark's fleet to around 20 aircraft, implementing extensive code-sharing, joint ticket sales, joint fuel purchases, joint crew training, and aligning its network to complement that of ANA's, virtually transforming Skymark into a feeder carrier for Japan's largest carrier.

Source: Nikkei Shimbun, March 20th. (in Japanese)

Skymark braces for 13.7 billion JPY loss in FY2014.

On October 30th, Skymark Airlines (BC/SKY) announced that they predict a whopping 13.7 billion JPY net loss, its worst ever financial record, for FY2014, reversing a previous forecast for a 354 million JPY net profit. Talks with Airbus regarding the settlement for Skymark's cancellation of the A380 order (Skymark hopes to settle Airbus A380 penalty in October.) have also not bore fruit yet and will continue into November.

Boeing 737-8FZ(WL) JA737U ONE PIECE JET arrives from Naha operating BC858 on October 25th as the final Skymark flight into Narita, ending a three-year presence at the airport. The airline will now concentrate on increasing revenue in its core Haneda market. (Photo: Aviation Wire)

Japan's third largest carrier cites increase in costs due to the introduction of the all-premium 271-seat Airbus A330s (Skymark Airlines inaugurates Airbus A330 service.), continued depreciation of the JPY, fuel costs remaining high, and intensified competition with the LCCs as the primary reasons. Skymark hopes to bring up revenue per passenger with the A330, and "Reservations-wise, we're gradually getting there," told Masakazu Arimori, Director of the carrier. The European widebody twin-jets have so far brought a 9.1% increase in capacity over last year, but passenger revenue has decreased 1.4%.

Total assets stood at 77.5 billion JPY, down 1.3 billion JPY from March this year. Capital-to-asset ration decreased from 56.2% in FY2013 to 49.7%. Cash reserves dwindled to 4.5 billion JPY, down 2.5 billion JPY from half a year ago. Skymark will look for loans and also sell off engines (and lease them back), a flight simulator, and other assets to raise cash. Meanwhile, it will continue to rent a hangar at Haneda to carry out a Flight Hour Services (FHS) maintenance deal reached with Airbus in November 2013. Fleet-wise, two Boeing 737-800s, which became surplus after their withdrawal from Narita (Skymark announces Narita closure and Yonago cuts.), will be returned to lessors early, in November and March, respectively, bringing down the number of 737s to 27.

Skymark repeatedly stressed that if they are obliged to pay a hefty penalty for the A380 order termination, the amount of which was originally rumored to be around 700 million USD, there would be "material uncertainty" over whether the company could remain a going concern. They have already paid pre-deposits worth 26.5 billion JPY, more than the airline's market value, but Airbus does not need to refund this and will therefore unlikely do so. The European planemaker would obviously want to make sure they don't lose money, so a buyer for the already completed two airframes (plus a third under assembly) would probably have to be found first.

Reference: Skymark Airlines, October 30th. (PDF; in Japanese)
Reference: Aviation Wire, October 30th. (in Japanese)

Skymark hopes to settle Airbus A380 penalty in October.

On October 2nd, Skymark Airlines (BC/SKY) admitted a report by Nikkei Shimbun which said Japan's third largest carrier and Airbus have started talks for a settlement for the canceled Airbus A380 order (Skymark's Airbus A380 order in jeopardy.). Representatives from both sides, including Skymark's President and CEO Shinichi Nishikubo and senior officials of the European planemaker, met in France on September 29th for the first time after the termination of the order.

Airbus A380-841 F-WWSL/JA380A takes off from Toulouse. Rumors have it that Airbus has found a buyer for the first two A380s that had been destined for Skymark, leading to eased talks. Who's buying them? (Photo: Airbus)

On July 29th, Airbus unilaterally axed the contract for six A380s worth more than 2 billion USD at list prices after Skymark stopped making installment payments from April. It subsequently demanded the Japanese carrier pay a penalty estimated at 700 million USD (76 billion JPY), or come under the umbrella of a major carrier. In turn, Skymark said that Airbus was demanding an unreasonable cancellation fee.

During the new talks, the two agreed to reach a settlement by the end of October. According to Skymark, Airbus would consider the financial state of the troubled airline in discussing the penalty so that it can remain a listed company on the Tokyo Stock Exchange. It currently operates four A330s (Skymark Airlines inaugurates Airbus A330 service.) with another six to be delivered by September 2015, and though these are leased from Intrepid Aviation and not purchased from Airbus, the European planemaker confirmed that Skymark would continue to be a valued customer. News of possible settlement sent Skymark's shares up 11% on October 2nd, after the stock had lost nearly a third since the issue came to light in July.

Meanwhile, Skymark denied an Asahi Shimbun report that claimed both parties had reached a deal in principle, with the cancellation fee limited to somewhere between 20 to 23 billion JPY and that it would be paid from the already-made prepayments amounting to 26.5 billion JPY. Contractually, Airbus does not need to refund this, and penalties would come on top of this figure. The article claims that Airbus has found a buyer for the first two A380s (Skymark's first Airbus A380 completes maiden flight.) which were earmarked for Skymark, leading to easing the penalties. Skymark vehemently denied this, and stressed that talks have just commenced and no details of the settlement have been agreed on yet.

In July, Skymark had posted a staggering 5.7 billion JPY net loss for just the first quarter of FY2014, more than triple the amount they lost for the whole year of FY2013 (Skymark posts 5.7 billion JPY loss for 1Q FY2014.). Their cash reserves and near-term assets had declined to 7.2 billion JPY as of June, and the A380 penalty, depending on the figure, could force them into insolvency. However, if the above report turns out to be true, that could be avoided. Meanwhile, talks are well underway with various firms for potential investment and capital injection, but none will go ahead without knowing how big (or small) the penalty is. In any case, the industry is moving on and competition will only get more fierce, and Skymark's settlement with Airbus would only be their first step to get themselves back on track.

Reference: Aviation Wire, October 2nd. (in Japanese)
Reference: Asahi Shimbun, October 3rd. (in Japanese)
Reference: Nikkei Shimbun, October 3rd. (in Japanese)

Skymark's fate: MLIT discourages foreign investment.

Follow-up from Skymark's fate: AirAsia, ANA, Delta, or...?

Seeing reports of an investment in Skymark Airlines (BC/SKY) by the AirAsia Group circulating (Is AirAsia considering a Skymark takeover?), a senior official of the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) has told that if there is a significant ownership structure change, their precious slots at Tokyo/Haneda (HND/RJTT) would have to be returned to the MLIT for redistribution over all carriers.

"Haneda slots are prized properties that belong to the Japanese public. We gave Skymark slots as part of a scheme to promote young airlines. But if they declare bankruptcy, the MLIT will collect all of their slots. If there is a significant ownership structure change, we would view the airline as a different company, so the slots would also have to be returned to us and we would consider a reallocation process," the source said.

Airbus A330-343E JA330B. Skymark currently has three, with seven more to arrive by September 2015. All will be deployed on their lucrative Haneda domestic routes. They are also pushing the MLIT to grant night-time international slots at Haneda for flights to Hawaii, Singapore, and Thailand using the A330. (Photo: Ryosuke Yano)

The MLIT rule says that if a carrier owns more than 20% of another airline that holds Haneda slots, those slots must be relinquished and redistributed, but the above statement in response to the AirAsia rumor tells that overseas airlines are no exception. This almost rules out foreign investment; AirAsia Group would probably want managerial control (and a re-brand as well) and now that would be impossible, and it would also be a questionable use of cash for Delta Air Lines (DL/DAL), which is currently concentrating on raising its investor value.

So who now? Under the so-called '8-10 Paper' (released on August 10th, 2013), Japan Airlines (JL/JAL) is still required to submit all investment and route plans to the government for monitoring and evaluation before they go ahead, so that leaves All Nippon Airways (NH/ANA) as the only cash-rich option. Some internet-based travel firms have also been named as possible contenders as well, but nothing more has come out yet, and many believe the MLIT currently favors an ANA investment in Skymark. Wanting to portrait JAL's bailout by the previous government (Democratic Party of Japan) as a failure, the current (Liberal Democratic Party) has been putting ANA first.

When domestic slot-pairs at Haneda were increased by 25 in March 2013, ANA received eight, Air Do (HD/ADO) two, Skynet Asia Airways (d.b.a. Solaseed Air) (LQ/SNJ) three, Star Flyer (7G/SFJ) five, while Skymark was awarded four and JAL only three. But with ANA virtually controlling Air Do, Solaseed, and Star Flyer and code-sharing and coordinating schedules, they essentially got 18 slot-pairs. For international slot-pairs that were awarded in March 2014, ANA received 11 (ANA's Summer 2014 international expansion.) while JAL only five.

Boeing 777-281 JA8968 arrives at Okinawa's Naha Airport. (Photo: Ryosuke Yano)

On the other hand, after JAL placed its historical first Airbus order for up to 56 A350 XWBs, the government is said to have asked ANA to order the Boeing 777X (ANA selects Boeing 777-9X and Airbus A321neo.) to save the U.S. ally's face. This was probably one of the reasons for the order, though obviously not the only one, along with Boeing offering much more aggressive discounts and the Japanese aerospace industry pressing to order Boeing products. Initially, ANA was also leaning towards the A350. The government has since ordered a pair of 777-300ERs to replace the nation's aging two 747-400s used to transport government VIPs and the imperial family, and they will switch its maintenance contract from JAL to ANA in 2019 when the aircraft are delivered.

But, we all know that a Skymark investment by ANA would give Japan's now largest carrier too much power. It would be detrimental to the flying public as there would be no 'third force' at Haneda, Japan's largest and most important market, to challenge the ANA/JAL duopoly. And we could potentially be going back to an age of high ticket prices. Narita has a growing portfolio of LCCs, but most of the public still prefer convenient Haneda for domestic travel.

On the other hand, on September 5th, Skymark's President and CEO Shinichi Nishikubo promised the Governor of Tottori Prefecture that Haneda – Yonago (YGJ/RJOH) would be resumed from the Summer 2015 schedule. They only recently announced the axing of the unprofitable route as part of their restructuring (Skymark announces Narita closure and Yonago cuts.), so this is peculiar. Is there a prospect for a potential major investor willing to respect Skymark's independence and Mr. Nishikubo's leadership?

Anyway, backroom politicking is probably already well underway, but everyone will likely keep their mouths closed, at least until Skymark settles on a penalty price with Airbus for the A380 cancellation (Skymark's Airbus A380 order in jeopardy.), which is expected by October. The European planemaker is reportedly calling for 70 billion JPY, in addition to the 26.5 billion JPY of prepaid deposits that will not be refunded. Stay tuned.

Reference: Jiji Press, September 5th. (in Japanese)
Reference: J-Cast, September 6th. (in Japanese)