Skymark rescue package likely to be blocked by Airbus and Intrepid Aviation

Back on the 28th January this year, Tokyo-based Skymark filed for bankruptcy protection having failed to carve a profitable niche in Japan’s competitive low-cost flight market. The filing for bankruptcy protection was as a result of defaulting on their six-aircraft Airbus A380 order stage payments and Airbus’ subsequent actions in initiating proceedings against the airline. Since then ANA (All Nippon Airways), together with the institutional investor Integral Corp, the Development Bank of Japan (DBJ) and the Sumitomo Mitsui Banking Corp (SMBC), have put forward a rescue package which would see Skymark receive a JPY18 billion (US$144m) cash injection, after which the intention was to see the carrier put up for an initial public offering at some point in the future.
Initially Airbus were keen to support the deal put together by ANA, but only on the basis that the commitment to Airbus remained in place. The debt owed by Skymark to Airbus and A330 lessor Intrepid Aviation currently stands at US$1.6bn. However Skymark made their position regarding Airbus abundantly clear immediately after filing for bankruptcy protection by stating that they would stop flying Airbus planes at the end of January. Skymark spokesperson Takashi Ide said that “Our first step is to eliminate things that are too costly. If we can negotiate a much lower leasing fee [for the A330s], we may consider it again.” Since the end of January Skymark have scaled back operations considerably and have concentrated on the local and domestic market by using its fleet of 27 Boeing 737-800 planes.
In view of the current situation with Airbus and Intrepid Aviation being the two principal creditors, they are in a position to block the deal put forward by ANA, principally because it is not in their financial best interests to see it go through. Their stance would likely change if a guarantee was given to continue to maintain the Airbus fleet. It is understood that the deal put forward is also subject to approval from the Tokyo District Court, which is anticipated within the forthcoming weeks.