- Slug: BIZ-Worsley SkyMall, 450 words
By CARINA DOMINGUEZ
Cronkite News
When Bob Worsley found out last week that SkyMall’s parent company had planned to file for bankruptcy, the state senator said he was very upset.
The Mesa Republican had founded SkyMall, the in-flight catalog known for its quirky products, in 1989. He said it’s difficult to see the company struggle.
Phoenix-based Xhibit Corp. officially filed the paperwork in U.S. Bankruptcy Court in Phoenix on Thursday evening. Worsley called the situation “tragic.”
“It is lamentable to employees who will lose their jobs,” Worsley posted on his Facebook page. “Pray for those folks today, some of them are my friends that I hired over 20 years ago.”
The company laid off 47 employees last week and still employed about 87 when it filed for bankruptcy, according to court documents.
Worsley said SkyMall faced financial difficulties because it didn’t evolve enough to stay relevant.
“I hope this is a reminder to all existing businesses to continue to innovate in order to avoid this demise,” he posted on his Facebook account. “I offered to consult with the current owners during the last couple of years, but they didn’t show interest.”
Worsley was one of four who founded the company to provide domestic passengers a shopping experience in the air. Airlines tucked the catalogs into seat backs and had exclusive agreements with most U.S. airlines, according to Worsley’s biography.
“We felt like 5 million people were on flights and bored,” he said in an interview Friday. “We wanted people to be able to ‘shop til’ you drop.’ ”
After a few initial setbacks, the company quickly became profitable after making changes to the way it delivered products to customers. (At first, they brought the purchases to the gate, but customers didn’t want to carry the items, he said. They realized delivering the products to customers’ homes was more efficient.)
“The uniqueness of the products was mathematic,” he said Friday. “What you see today is an evolution of what consumers wanted.”
Worsley sold SkyMall in 2001 and stayed on while the company transitioned for a couple years.
And then the company began facing challenges: competition from retail providers such as amazon.com and ebay.com increased, passengers began using electronic devices on planes and customers began thinking of SkyMall’s products as discretionary items, not necessities, according to the court documents.
SkyMall generated about $33.7 million in revenue in 2013 and $15.8 million for the first nine months of 2014, the documents said.
Worsley does have hope for the company, saying on Facebook “this is a Chapter 11 so some kind of reorganization is still possible.”
“With a cleaned up balance sheet, there’s opportunity for the company to reemerge,” Worsley said.