SkyMall, the company behind the ubiquitous in-flight catalogs known for kitschy items, filed for Chapter 11 bankruptcy protection on Thursday following struggles to reach passengers who are now immersed in their smartphones and tablets.
SkyMall, in papers filed with the U.S. Bankruptcy Court in Phoenix, stated that it had evaluated the company's alternatives and determined that the filing was in the best interests of the company and its creditors while it seeks a buyer for the online sales business and other assets.
SkyMall's financial and operational difficulties are a result of the evolving retail industry, as well as technology and business changes, Scott Wiley, acting SkyMall CEO, said in the bankruptcy filing.
"With the increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalog," Wiley said in the documents.
SkyMall generated $33.7 million in revenue in 2013, but just $15.8 million for the first nine months of 2014. On Jan. 16, the company shut down its catalog business and laid off 47 of its 150 employees, according to the documents.
Late last year, Delta Air Lines terminated its contract with SkyMall and Southwest Airlines notified the company it would no longer carry the catalog starting in April. Delta Airlines, American Airlines and U.S. Airways are included in the company's list of creditors holding the 20 largest unsecured claims.
In the petition, the company estimated its assets range from $1 million to $10 million. Debtors said they are owed $12 million.
The in-flight catalog, which reaches an estimated 650 million travelers each year, is well known for selling kitsch items that include Bigfoot Garden Yeti statues, night glow toilet seats and cat litter robots.
The catalog has been referenced in episodes of popular television series such as "Breaking Bad," "Weeds" and "How I Met Your Mother," and catalogued on sites dedicated to commentary on its merchandise.
In 2013, SkyMall lost $3.2 million from May to September 2013, as reported by its parent company, Xhibit Corp., an Arizona marketing firm. Xhibit, which is publicly traded, also filed for bankruptcy protection.
SkyMall has been struggling to deal with the increased use of mobile digital devices on planes, which provide potential customers with other distractions besides its catalog. In 2013, the Federal Aviation Administration eased restrictions on the use of portable electronic devices, allowing passengers to keep smartphones and tablets powered up during takeoffs and landings. Plus, most passengers are able to access wireless Internet access.
In April, SkyMall's then-Chief Executive Kevin Weiss said he was ready to invest more in online sales.
"Like everything else, we have to evolve," he said.
Weiss resigned from the position in November.
FOR THE RECORD
8:59 a.m. Jan. 23: An earlier version of this post said Kevin Weiss is SkyMall's chief executive. He resigned in November.
To increase online sales, the company planned to spend $2.5 million on technology improvements over the next few years, which included an upgraded website as well as an app that would allow readers to point their smartphone camera at an item in the catalog and buy it with their phone.
But, due to operational difficulties, SkyMall's new business strategy was never implemented.
"It is unknown whether full implementation of this strategy would have been successful," Wiley said.