SkyMall, known for in-flight catalogs, lands in bankruptcy

By Reuters

Jan 23, 2015 10:07 PM EST

SkyMall, whose in-flight shopping catalogs have long been a staple of airline travel, has filed for bankruptcy protection, blaming changing consumer habits and the loss of contracts from two major carriers, Delta and Southwest.

Xhibit Corp (XBTC.PK), SkyMall's parent, on Friday said it hoped to sell its main assets, including the SkyMall online retail business, in April through a court-supervised auction, and then complete an "orderly wind-down" of its affairs.

It also said it suspended its retail catalog operations on Jan. 16, laying off 47 of its 150 employees.

Xhibit and SkyMall filed for Chapter 11 protection from creditors on Thursday night in the U.S. bankruptcy court in Phoenix, their hometown. The debtors, including several affiliates, face $12 million of creditor claims.

Founded in 1989, SkyMall said it sold more than 30,000 products it calls "cool stuff," including novelty items ranging from personalized socks to dog beds to a $2,499 football helmet signed by Notre Dame players and coaches. It says it reaches 650 million air travelers a year.

But in a court filing, Chief Financial Officer Scott Wiley said financial strains grew as travelers spent less time in the air browsing catalogs and more time on their smartphones and laptops, and amid increased competition from online rivals such as Inc(AMZN.O) and eBay Inc (EBAY.O).

Wiley also said Delta Air Lines Inc (DAL.N) ended its contract with SkyMall on Nov. 30, and Southwest Airlines Co (LUV.N) planned to stop carrying the catalog on April 1.

SkyMall revenue totaled $33.7 million in 2013, but only about $15.8 million in the first nine months of 2014, a court filing shows.

The case is In re: SkyMall LLC, U.S. Bankruptcy Court, District of Arizona, No, 15-bk-00679.

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