(Asahi: July 16, 2015 – p.8)
Delta, the world-largest airline company, formally announced on July 15 that it will support Skymark currently in the civil rehabilitation proceedings. Delta will support the reconstruction plan by major creditors that are against ANA Holding’s participation. Having a business partner in Japan has been Delta’s long-cherished desire. However, an alliance with Skymark that has no international flight does not much benefit Delta; therefore, the company waited until the last minute to make the decision.
Delta to compete against ANA
In the creditors’ meeting held by Intrepid on July 15, Delta’s Japan branch manager Masaru Morimoto said in reply to a question about the benefit of alliance with Skymark, “There are mutual benefits.” But as Delta has no concrete measures for the alliance, the manager had difficulty articulating his answers from beginning to end.
It was not until the night of July 14 that a final decision for Delta to become Skymark’s supporter was made. Intrepid, which wanted to finalize its business partner prior to the creditors’ meeting (on July 15), shelved the negotiation with Delta over its assumption of the lease of middle-size aircraft (from Skymark). For Intrepid, this was the most important condition, but it was afraid negotiations would bog down because taking over the leases would prove too heavy a burden for the U.S. airline.
In 2009 when Japan Airlines (JAL) was facing bankruptcy, Delta attempted to ally with JAL. The plan was not realized, and next Delta considered an alliance with Skymark.
Currently, Delta’s strategy is to connect U.S. and Asian cities with Narita Airport as the hub. If Delta can secure a business partner in Japan, the company will be able to connect more Asian cities with the U.S. through code-sharing. Furthermore, Delta can gain passengers through the Japanese business partner’s domestic flights.
However, Skymark only flies domestic air routes and the number of its flights is limited. For Delta, the benefit of an alliance with Skymark is less appealing compared with other major airlines. Japan branch manager Morimoto was only able to say, “The alliance this time is for acquiring medium- and long-term benefits.”
Creditors’ meeting scheduled on August 5
Even with Delta’s participation, it is still uncertain whether Intrepid’s plan can gain creditors’ support. Intrepid originally intended to significantly raise the payment rate compared with ANA’s alliance plan by having Delta take over middle-size aircraft (from Skymark). Contrary to Intrepid’s original expectation, now the company can only slightly raise the payment rate.
The focus has shifted to the creditors’ meeting scheduled for August 5. In order for the reconstruction plan to be authorized, two conditions need to be met: 1) support by more than half of the creditors and 2) with more than half of the total credit. Many Japanese companies among the creditors are favorable to the alliance with ANA, so Intrepid’s plan is not likely to meet the two conditions.
Officials of the banks that support ANA anticipate that the alliance with ANA will be approved. However, since Intrepid holds about 38% of the credit, if a large creditor such as Airbus opposes the alliance with ANA, the alliance with ANA will be disapproved.
If the two reconstruction plans are both turned down, parties concerned will have to make a new reconstruction plan, which creditors will deliberate at a meeting within two months. An official associated with Skymark is concerned that “if creditors are unable to come up with a reconstruction plan by summer vacation, the busiest time for airlines, customers may avoid making flight reservations.”