Air Do (HD, Sapporo Chitose) and Solaseed Air (6J, Miyazaki) have followed through on plans hatched during the pandemic to merge in 2022, announcing on May 31 that they had signed a contract to set up a Tokyo-based joint holding company.
The merger aims to cut the two regional carriers’ operating costs through “more efficient use of resources” such as staff and facilities and by jointly procuring parts. The holding company, to be called Regional Plus Wings Corp., will be established on October 3, 2022, if the shareholders of both airlines agree in votes set for late June.
“The business environment surrounding both companies faces future uncertainties due to the effects of the coronavirus pandemic, the diversification of work styles and lifestyles, changes in consumer values, and market changes due to advances in digital technology,” Air Do and Solaseed Air explained in a joint statement. “The business development of both companies must also undergo major changes in response.”
They will continue, however, to be “airlines rooted in the region, each with its own business licence and unique brand. By 2026, the group will aim for operating income of about JPY100 billion yen (USD783 million) and profit of JPY9 billion (USD70.5 million), the statement said.
Based at opposite ends of Japan, with Air Do on the northern Japanese island of Hokkaido and Solaseed Air on the island of Kyushu in the far south, the two airlines have both the state-owned Development Bank of Japan and ANA Holdings as major shareholders. They have no overlapping routes, the ch-aviation capacities module shows, and operate Boeing fleets.
Details such as the investment ratio for each party and its management team will be revealed at a later date, the carriers’ chief executives told a news conference on May 30, Nikkei Asia reported.
“Each of us is making self-preservation efforts, but there are limits,” Susumu Kusano, president and chief executive of Air Do said, while Kosuke Takahashi, president and CEO of Solaseed Air, added: “We cannot survive unless we strengthen cooperation through a holding company.”
According to Takahashi, within five years the new group will be cutting JPY3 billion to JPY5 billion (USD23-39 million) per year in costs.
The two partners also confirmed a fundraising share issue through third-party allotment to the Development Bank of Japan. Kyodo News reported that Air Do will raise JPY7 billion (USD55 million), and Solaseed Air JPY2.5 billion (USD20 million), by issuing preferred shares both to the development bank and to regional banks.
