newswatcher
26th Jun 2002, 14:30
Troubled carrier Hokkaido International Airlines Co.(Air Do) sought court protection from creditors yesterday, becoming the first victim of price competition in Japan's aviation industry, officials said.
"We filed with the Tokyo District Court today for court protection from creditors," said a spokesman for the company, based in Sapporo, some 800 kilometres north of Tokyo. Further details of the action were not available, but the company's liabilities were expected to be about five billion yen ($41 million), Jiji Press News agency said.
It was the first failure by an airliner since the government opened up the industry controlled by Japan Airlines Co. Ltd. and All Nippon Airways Co. Ltd. (ANA) to newcomers in the late 1990s.
ANA said discussions were under way with Air Do over its rehabilitation. ANA and Air Do signed a memorandum to begin talks on a comprehensive alliance aimed at improving income and rationalising costs at both airlines, ANA said in a statement. By filing with the Tokyo District Court for protection from creditors under Civil Rehabilitation Law, Air Do will start anew with assistance on the operations side from ANA, the nation's second largest airline company said.
Air Do has secured enough operating capital to stay in business until September, news reports said. The ailing carrier began operating flights between Haneda airport in Tokyo and New Chitose Airport in Sapporo, Hokkaido in northern Japan, in late 1998. It offered discounted airfares to compete with major airlines, which later followed the move and intensified price competition. As a result, Air Do started to post a loss on an ongoing basis because of rising personnel and aircraft maintenance costs.
"We filed with the Tokyo District Court today for court protection from creditors," said a spokesman for the company, based in Sapporo, some 800 kilometres north of Tokyo. Further details of the action were not available, but the company's liabilities were expected to be about five billion yen ($41 million), Jiji Press News agency said.
It was the first failure by an airliner since the government opened up the industry controlled by Japan Airlines Co. Ltd. and All Nippon Airways Co. Ltd. (ANA) to newcomers in the late 1990s.
ANA said discussions were under way with Air Do over its rehabilitation. ANA and Air Do signed a memorandum to begin talks on a comprehensive alliance aimed at improving income and rationalising costs at both airlines, ANA said in a statement. By filing with the Tokyo District Court for protection from creditors under Civil Rehabilitation Law, Air Do will start anew with assistance on the operations side from ANA, the nation's second largest airline company said.
Air Do has secured enough operating capital to stay in business until September, news reports said. The ailing carrier began operating flights between Haneda airport in Tokyo and New Chitose Airport in Sapporo, Hokkaido in northern Japan, in late 1998. It offered discounted airfares to compete with major airlines, which later followed the move and intensified price competition. As a result, Air Do started to post a loss on an ongoing basis because of rising personnel and aircraft maintenance costs.