Monday, August 11, 2014

The Rise of Airbus

What happens when your key PR promotion threatens to nearly destroy your company? Ronn Torossian says Japan’s Skymark Airlines may be about to find out
According to Businessweek, about four years ago Skymark decided it wanted to own a fleet of the world’s largest airplanes. Ambitious for a small budget airline? Certainly. Good for PR? Absolutely. With the purchase, Skymark declared its intention to become a major player in the international, premium air travel industry.
But once the buzz dies down, sometimes the reality sets in. When they made the order, industry insiders were highly critical, and now it looks like they may have been right. This past month, Airbus canceled Skymark’s order citing negotiations that have become, in a word, contentious. While two jets have already been built, Airbus is now concerned Skymark may not be able to pay for them. And they must be VERY serious about it. After all, these jets have already been outfitted to Skymark’s specs, which might make them difficult to sell to anyone else.
Even worse, Airbus will probably keep the cash – about $260 million – that Skymark has already paid, and then assess additional fees and penalties. As you might expect, investors responded very negatively to this news, and Skymark’s stock plunged. Further troubling, the airline announced it was already losing money and would be canceling some routes to compensate.
So, what’s the PR lesson here? For starters, when you try to “level up” in business, expect to get called on it. The competition at a higher level has no obligation to make it easy for you to grow your business, and, in most cases, they will do what they can to keep you out of their market level and away from their market share.

Now, consider what would have happened if Airbus has called Skymark out and the company has responded by showing ample ability to pay full freight. Not only would their standing have been reaffirmed – and their planes delivered – their Public Relations and likely their stock price would have skyrocketed. Instead, because they got called out for being in over their heads and could not answer that call, Skymark may finish 2014 as just another warning for other would be ladder climbers. 

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