Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comKey Contacts
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For years, the in-flight catalog SkyMall was synonymous with flying. Times have changed, however, and shifting consumer trends and airline rules have seriously cut into the magazine’s business model.
As a result, the company behind SkyMall recently filed for protection under Chapter 11 of the bankruptcy law, ending 25 years of selling oddball products, according to The Wall Street Journal. The parent company Xhibit Corp. will be seeking a court-supervised asset sale. The company fully suspended its retail catalog operations earlier this month and laid off 47 employees.
“We are extremely disappointed in this result and are hopeful that SkyMall and the iconic ‘SkyMall’ brand find a home to continue to operate,” acting Chief Executive Scott Wiley said in a statement Jan. 23, according to the Journal.
Wiley noted that the retail environment had become crowded and intensely competitive, the news source reported. Perhaps more importantly, people are increasingly using electronic devices on planes for entertainment, some even paying to connect to the Internet, meaning that fewer consumers browse the in-flight catalog. In 2013, SkyMall reported revenues of $33.7 million, but just $15.8 million in the first three quarters of last year. An annualized estimate of these revenues comes to $21.1 million, suggesting an approximate 37 percent decline in revenues year-over-year.
The SkyMall business listed Delta Air Lines, American Airlines and US Airways as its largest unsecured creditors, according to USA Today. At least two of these companies – Delta and Southwest Airlines – have already terminated or begun the process of terminating their contracts with SkyMall. The company reported substantial operating losses in recent years and was approaching a crisis of liquidity in December 2014, raising concerns that it would be unable to pay its employees or continue operations.
Will operations continue?
While Wiley noted that there is no buyer lined up, he hopes that the business will find one, according to The Wall Street Journal. It plans to sustain a scaled-down operation during the sale process until an auction is held on or about March 24. Any sale of SkyMall’s assets will be due to close in April.
The company listed assets of between $1 million and $10 million and liabilities of about $12 million.
SkyMall may find no buyer – many other magazines have been left in the dust by the digital age. If so, however, many flyers will likely be sad to see the back of one of the few successful magazines selling merchandise like the life-size Bigfoot Garden Yeti Statue and the Full Wall Crossword Puzzle.
- Practices: Bankruptcy & Creditors' Rights
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SkyMall Files For Bankruptcy
Author: Joel R. Glucksman
For years, the in-flight catalog SkyMall was synonymous with flying. Times have changed, however, and shifting consumer trends and airline rules have seriously cut into the magazine’s business model.
As a result, the company behind SkyMall recently filed for protection under Chapter 11 of the bankruptcy law, ending 25 years of selling oddball products, according to The Wall Street Journal. The parent company Xhibit Corp. will be seeking a court-supervised asset sale. The company fully suspended its retail catalog operations earlier this month and laid off 47 employees.
“We are extremely disappointed in this result and are hopeful that SkyMall and the iconic ‘SkyMall’ brand find a home to continue to operate,” acting Chief Executive Scott Wiley said in a statement Jan. 23, according to the Journal.
Wiley noted that the retail environment had become crowded and intensely competitive, the news source reported. Perhaps more importantly, people are increasingly using electronic devices on planes for entertainment, some even paying to connect to the Internet, meaning that fewer consumers browse the in-flight catalog. In 2013, SkyMall reported revenues of $33.7 million, but just $15.8 million in the first three quarters of last year. An annualized estimate of these revenues comes to $21.1 million, suggesting an approximate 37 percent decline in revenues year-over-year.
The SkyMall business listed Delta Air Lines, American Airlines and US Airways as its largest unsecured creditors, according to USA Today. At least two of these companies – Delta and Southwest Airlines – have already terminated or begun the process of terminating their contracts with SkyMall. The company reported substantial operating losses in recent years and was approaching a crisis of liquidity in December 2014, raising concerns that it would be unable to pay its employees or continue operations.
Will operations continue?
While Wiley noted that there is no buyer lined up, he hopes that the business will find one, according to The Wall Street Journal. It plans to sustain a scaled-down operation during the sale process until an auction is held on or about March 24. Any sale of SkyMall’s assets will be due to close in April.
The company listed assets of between $1 million and $10 million and liabilities of about $12 million.
SkyMall may find no buyer – many other magazines have been left in the dust by the digital age. If so, however, many flyers will likely be sad to see the back of one of the few successful magazines selling merchandise like the life-size Bigfoot Garden Yeti Statue and the Full Wall Crossword Puzzle.