SkyMall Files for Bankruptcy

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Airplane Screens
“With the increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalog,” SkyMall's Chief Financial Officer Scott Wiley said. "New technology and the cost of getting the magazine on planes “made the traditional in-flight SkyMall catalog increasingly unattractive to the airlines,” he said. Photographer: Brent Lewin/Bloomberg

SkyMall LLC, the in-flight catalog company that sells exercise bikes that double as desks and automated ball-launchers for dogs, filed for bankruptcy as air travelers spend more time on their mobile phones and Amazon.com.

The seat-pocket marketer of more than 30,000 products reached 650 million travelers a year, according to its website. Phoenix-based SkyMall, which suspended its catalog and fired 47 employees from its call centers Jan. 16, said in a court filing that it hopes to keep up barebones operations while seeking a buyer.

Idle fliers could browse the catalog for novelty items such as an Ultrasonic Barking Dog Deterrent that looks like a birdhouse, for $49.95, or a replica of a 16th-century Italian globe based on nautical maps that doubles as a liquor cabinet, for $189.

Lately, however, more carriers are offering in-flight Internet access and regulators have let passengers use smartphones and tablets during take-offs and landings, depriving SkyMall of its captive audience.

“Now, even if you’re not connected, you can at least have your phone in front of you for the entire flight,” Brett Snyder, an aviation consultant and founder of CrankyFlier.com, said in a phone interview. “There’s just not that same draw that there used to be to go pull some reading material out of the seatback pocket.”

‘Increasingly Unattractive’

“With the increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalog,” Chief Financial Officer Scott Wiley said in court papers. He listed Amazon.com Inc. and EBay Inc. as among competitors with greater resources and more customers. New technology and the cost of getting the magazine on planes “made the traditional in-flight SkyMall catalog increasingly unattractive to the airlines,” he said.

Delta Air Lines Inc. and SouthWest Airlines Co. had already notified the company that they would cease to carry its magazines, according to court filings.

Financial disclosures by SkyMall’s publicly traded affiliate, Xhibit Corp., had also caused vendors to reduce credit limits and refuse to ship products without prepayments, the company said. The company works as a distributor, without maintaining its own inventories.

Shares of Xhibit, which also filed for bankruptcy, have plunged 96 percent in the past 12 months.

The company and its affiliates listed as much as $50 million in liabilities and as much as $10 million in assets in Chapter 11 filings in Phoenix Thursday.

Online Experiment

The business generated $33.7 million of revenue in 2013, according to court filings. In early 2014, the company had tried to remake itself as an online retailer but ran out of cash to pay employees and vendors before it could learn whether the experiment was working.

Retailers of novelty goods and gadgets have struggled to survive the changing retail environment. Sharper Image Corp., which reached customers with its catalog and chain of retail stores, wound down in a 2008 bankruptcy. Offerings such as $299.99 air purifiers and “man cave” accessories like $119.99 custom bobble heads are still available online after liquidators bought the rights to the Sharper Image brand and licensed it.

Brookstone Inc., which sells $2,999 massage chairs and Das Horn, a $24.99 drinking vessel shaped like an animal tusk, reorganized in a 2014 bankruptcy through a $173 million sale to Hong Kong-based Sailing Capital Overseas Investment Fund LP and retailing conglomerate Sanpower.

SkyMall has proposed an auction be held around March 24.

The case is In re SkyMall LLC, 15-00679, U.S. Bankruptcy Court, District of Arizona (Phoenix).

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