TOKYO -- Skymark Airlines regarded freedom from bigger Japanese rivals as its reason for being and brought itself to the edge of ruin trying to defend it.

The competition that Japan's third-largest airline ignited in what had been a tightly regulated industry drove down fares. So highly does Skymark value its independence that even after it filed for bankruptcy protection Wednesday, executives still seemed loath to go under the wing of either Japan Airlines or All Nippon Airways.

Skymark will consider offers of financial support from any airline but, for its part, aims "to remain the third force" in domestic aviation, Chairman Takashi Ide told reporters Thursday.

Late last year, by then running on fumes, Skymark did try to secure an operational tie-up with JAL.

At a hastily convened Nov. 21 news conference, then-President Shinichi Nishikubo revealed that the two carriers would negotiate a code-share agreement. The same day, Japan's lower house dissolved for a snap election. JAL had admonished Nishikubo to choose another day for the announcement so as not to upset the political establishment. He dismissed such advice.

Skymark had also discreetly sounded out the transport ministry's stance on its code-share proposal. Initial indications were not bad. But by the night before the news conference, the airline regulator had let it be known it would allow Skymark to share flights only with ANA or in an arrangement involving all three carriers. Nishikubo, Skymark's top shareholder, saw red.

Time was running out. After suffering its first net loss in five years in the 12 months through March, Skymark was struggling to fill seats and draining its cash. Meanwhile, Airbus was demanding a massive cancellation fee over an ill-timed aircraft order. Rumor in the airline industry had it that Skymark would run out of money by year's end.

Skymark picked JAL as a code-share partner for a reason. The terms of the flag carrier's government-backed bailout circumscribe its new investments. Thus shackled, it would be unable to demand a capital stake in return for a code-share deal, Nishikubo and company figured. Moreover, they reckoned, in its fervor to keep Skymark from allying with archrival ANA, JAL would surely agree to joint fuel procurement and other partnership benefits.

But JAL's warning proved prescient. The transport ministry refused to clear a JAL-Skymark code-share deal for takeoff, out of deference to lawmakers said to have close ties with ANA.

'They're trying to put us out of business'

Skymark set about seeking a compromise. Nishikubo, who had publicly confessed to hating ANA, met with executives from the airline on Dec. 15 to propose a three-way code-share arrangement.

ANA readily agreed. But it played a cannier game than JAL, insisting on subjecting Skymark to due diligence and a safety audit. All the while, Skymark's cash was evaporating.

Working through the New Year's holiday to try to pull out of a downward spiral, Skymark executives began leaning toward the conclusion that they needed aid from ANA. Skymark was preparing to sell off, then lease back, spare engine parts and other equipment. This would raise more than 1 billion yen -- a sum big enough to make all the difference for the desperate airline.

Until the end of last year, its prospective partner for the leaseback transactions had been a trading house affiliated with JAL. Then, after the calendar turned to 2015, Skymark suddenly switched to an ANA group vendor. It seemed only a matter of time before Skymark would forgo its independence.

Then came a fateful meeting in the second week of January. What Skymark executives heard floored them. ANA agreed to code-sharing but not other forms of aid.

"I thought to myself, they're trying to put us out of business," a Skymark executive recalls. "We'd rather defend our third-force status out of spite than be made fools of."

That day began a frantic search for funding. Skymark went hat in hand to the investment funds from which it had unsuccessfully tried to raise capital late last year. But even if they agreed now, the necessary due diligence would take at least two weeks. As it waited for an answer from its remaining prospect Friday, Skymark readied its bankruptcy filing. All hope was lost: the fund declined to make an immediate decision.

Can Skymark emerge from bankruptcy still holding its cherished independence? What moves will JAL and ANA make now? The answers to such questions will come in the next chapter of the saga.

(Nikkei)