Tuesday, May 26, 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.

Saturday, May 16, 2015

Star Flyer back in black, mulls international charters.

Star Flyer [7G/SFJ], which reported a 431 million JPY net profit for FY2014 ending on March 2015, announced its mid-term strategy dubbed Pursuit of Star Flyer-ness 2020. During the next five years, the Kitakyushu [KKJ/RJFR]-based carrier will consider midnight international charters to regional Asian destinations, as well as revamp its aircraft interiors and crew uniforms with an emphasis on its high service quality, which has earned the carrier first place for Japan Customer Satisfaction Index (JCSI) in the domestic long-distance travel category for six consecutive years.

Airbus A320-214(SL) JA20MC rotates from Haneda's Runway 34R. Star Flyer holds 19 slot-pairs at the heavily-regulated downtown Tokyo airport, with another four allocated for international/domestic connections which are specifically used for Haneda – Kansai. (Photo: Ryosuke Yano)

A reverse from a 3.04 billion JPY net loss in FY2013, Star Flyer's total sales stood at 34.7 billion JPY for FY2014 (5.2% increase over FY2013), operating profit was 247 million JPY (3.04 billion JPY operating loss in FY2013), while ordinary profit was 910 million JPY (2.64 billion JPY ordinary loss for FY2013). "Material uncertainty" whether the carrier could remain a going concern, warned in October 2013, was resolved by April 2014.

Star Flyer axed their four-times daily Osaka/Kansai [KIX/RJBB] – Fukuoka [FUK/RJFF] service in February 2014 as well as their double-daily Kitakyushu – Busan/Gimhae [PUS/RKPK] route, which was their sole but highly unprofitable international service, the following month, and instead shifted that capacity to launch Fukuoka – Nagoya/Chubu Centrair [NGO/RJGG] in March 2014, replacing the same number of ANA flights. In October, it reduced the hotly-contested Tokyo/Haneda [HND/RJTT]  – Fukuoka route from 10 to seven round-trips, and instead launched Haneda – Yamaguchi-Ube [UBJ/RJDC] (Star Flyer launches Yamaguchi-Ube.), again virtually taking over some ANA flights.

Network restructuring brought total passengers carried down by 18% to 141 million and available seat kilometers (ASK) down by 14.8%, but translated to a 2% system-wide load factor increase to 67.7%. All flights except for a single Haneda – Kitakyushu round-trip code-share with All Nippon Airways (Star Flyer to add ANA's code on all flights.), subsidiary of 17.26% owner ANA Holdings, and schedules are closely coordinated with them. Star Flyer earned a whopping 10.7 billion JPY just from code-sharing payments from ANA, an increase of 88% over the previous fiscal year, accounting for over 30% of their revenue. ANA veteran Sadami Matsuishi virtually took the helm in March 2014 and was officially installed as President in June (New Star Flyer President is from ANA.).

Sadami Matsuishi, former ANA Operations Director, heads Star Flyer. ANA virtually has the tiny carrier's slots at its disposal as seen through route swaps and heavy code-sharing. (Photo: Aviation Wire)

Their FY2015 forecast estimates total sales at 34.1 billion JPY, operating profit at 380 million JPY, and ordinary profit at 1.18 billion JPY, producing a net profit of 820 million JPY. Calculations are based on currency rates staying at 125 JPY per USD and 145 JPY per EUR, and kerosene price averaging 70 USD per barrel.

No new routes are planned for the moment, and Star Flyer will concentrate on increasing profitability on its five current routes, though frequency adjustments are not ruled out. Meanwhile, midnight international charters to neighboring Asian cities from Kitakyushu, Kansai, Chubu Centrair, and Haneda, all 24-hour airports, are being considered. Its fleet of 150-seat Airbus A320s will be kept at nine, with orders for two more aircraft deferred indefinitely. However, Mr. Matsuishi has said "It's difficult to make a profit with 150-seat aircraft," adding the interior product revamp could include raising capacity to 166 seats, which would be identical to ANA's A320s.

Source: Star Flyer, May 1st. (in Japanese)
Source: Aviation Wire, May 4th. (in Japanese)
Source: Traicy, May 7th. (in Japanese)
Source: Aviation Wire, May 7th. (in Japanese)

Wednesday, May 13, 2015

Hokkaido Air System to resume three intra-island routes.

Hokkaido Air System [HC/NTH] (unofficially referred to as HAC) is planning to resume three intra-Hokkaido routes; Hakodate [HKD/RJCH] – Kushiro [KUH/RJCK], Hakodate – Asahikawa [AKJ/RJEC], and Sapporo/Okadama [OKD/RJCO] – Memanbetsu [MMB/RJCM]. These routes were suspended by January 2013, after Japan Airlines [JL/JAL] reduced its shareholding in the commuter carrier to 14% in March 2011 as part of their restructuring and axed all code-shares. On October 24th, JAL raised that figure back to majority ownership again (JAL raises Hokkaido Air System stake to 51%.).

Saab SF340B-WT JA02HC rests between flights at Misawa. Two of its three airframes still retain JAL Group's old Arc of the Sun livery. (Photo: Ryosuke Yano)

According to an interview by Nikkei Shimbun, Yoichiro Kuwano, HAC's new President effective March 31st did not give any time frame regarding when the resumption would take place. The JAL veteran who came from Operations Management replaced Chihiro Tamura, another JAL manager from the same field.

Meanwhile, Hakodate – Misawa [MSJ/RJSM] is expected to be restarted as early as July as a seasonal service operating on weekends and holidays during the peak summer vacation travel months in cooperation with the parent company. It was initially launched in August 2013 with a daily service, in addition to the daily Okadama – Misawa round-trip (CoachFlyer HC330: MSJ - OKD on Hokkaido Air System's Saab SF340.), but was suspended in December, and though it was resumed in April 2014 operating on weekends and holidays (Hokkaido Air System to resume Hakodate - Misawa.), it was dropped again in November.

FY2014 saw HAC record its highest number of annual passengers at 184,000, a 6% increase over the previous year. "We've been concentrating on maintaining safe and stable operations, and we believe that paid dividends," said Mr. Kuwano, who stressed that that emphasis would continue. Passenger numbers plummeted when the tiny regional airline suffered a landing incident and a maintenance mishap in 2011, which were well-covered by local media. Its system-wide load factor for FY2014 was 62.8%. "Most of our customers use us for business travel, so there should still be lots we could tap into in the leisure market," said Mr. Kuwano, eager to improve that figure. HAC intends to boost sales through increasing promotional fares as well as package tours in conjunction with JAL.

From its hub at Okadama, the smaller but more convenient airport near downtown of Hokkaido's capital, HAC currently operates to Hakodate, Kushiro, Misawa, and Rishiri [RIS/RJER], plus a link to Okushiri [OIR/RJEO] from Hakodate, using a fleet of three 36-seat Saab SF340Bs. Its oldest aircraft is now over 17 years old, and HAC will start considering replacement by the end of FY2015. Sister carrier Japan Air Commuter [3X/JAC] also operates 10 SF340s, and Mr. Kuwano said "The successor would be evaluated together with other JAL group companies."

Source: Nikkei Shimbun, April 23rd. (in Japanese)

Thursday, May 7, 2015

ANA's international Boeing 787-9 debuts.

On May 5th, All Nippon Airways [NH/ANA] placed its first long-haul-configured Boeing 787-9 in service on the Tokyo/Haneda [HND/RJTT] – Munich [MUC/EDDM] route. Flight NH217 was operated by JA836A, ANA's third example of the stretched Dreamliner. Powered by two Rolls-Royce Trent 1000-K2 engines, the aircraft is in a 215-seat layout, consisting of 48 business (staggered 1-2-1), 21 premium economy (2-3-2), and 146 economy (3-3-3).

Boeing 787-9 JA836A is pushed back from Haneda for her inaugural flight. (Photo: Aviation Wire)

Having been the first carrier to place the 787-9 into service (ANA takes delivery of first Boeing 787-9.), Japan's largest carrier has been flying 787-9s since August last year (ANA's Boeing 787-9 enters service.), but on domestic routes only with domestic-configured airplanes seating 395 (18 Premium Class and 377 economy). Compared to ANA's smaller long-haul 787-8 (169 seats; 46 buisness, 21 premium economy, and 102 economy), the long-haul 787-9 seats 46 more passengers and carries 1.2 times more cargo. Range has also been increased slightly by 160 kilometers to 14,960 kilometers.

The new variant becomes the first to boast ANA's latest in-flight entertainment product, including ANA SKY LIVE TV, which offers live television programs on passengers' personal monitors throughout the cabin, and ANA WiFi Service (ANA to offer in-flight Wi-Fi for international from March.), which is being offered on their 787s for the first time. Using Panasonic Avionics' product, prices for internet connectivity are set at 6.95 USD for 30 minutes, 16.95 USD for three hours, and 21.95 USD for 24 hours. E-books ranging from magazines to manga are offered, while the ANA Sky Map, which shows the aircraft's flight path, has been upgraded from 2-D to 3-D.

Staggered business class seats in a new 1-2-1 layout. (Photo: Aviation Wire)

ANA has ordered a total of 83 Dreamliners including three 787-10s (ANA orders Boeing 787-10s, 737s, and Airbus A321ceos.), 44 787-9s, and 36 787-8s, of which three 787-9s and 32 787-8s have already been delivered. Fiscal year 2015 will see them add another eight 787-9s, including R2-D2 Jet (ANA reveals Star Wars Project.), and three 787-8s, alongside two additional 777-300ERs, while earlier planned retirement of older 777s have been deferred and three 767-300s are the only wide-body jets that are slated for disposal. ANA's second international destination to see scheduled 787-9 service will be Jakarta/Soekarno-Hatta [CGK/WIII] starting in August.

Source: All Nippon Airways, April 28th. (in Japanese)
Source: FlightLiner, May 1st. (in Japanese)
Source: Aviation Wire, May 5th. (in Japanese)