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Silverjet suspends all operations

Written by Lautaro Vargas

Friday, 30 May 2008

Silverjet terminal: The future looks bleak for the Luton airline

The airline industry’s flirtation with luxury long-haul, intercontinental travel from the East of England looks to have ended this morning with Silverjet’s announcement that it has not managed to obtain urgent funding required for its working capital reserves and as a consequence had suspended all operations with immediate effect.

Though the London Luton to New York and Dubai business class airline says it is still seeking other funding avenues, with record high oil prices forcing up the price of aviation fuel, the future looks bleak.

The news tops off a tumultuous week and a dreadful five months for this young industry niche following American Airline’s decision to pull out of Stansted earlier in the week and the bankruptcy of Stansted business class airlines, Eos and MAXjet, in April and January respectively.

The Luton-based airline – the only British one of the four – had suspended trading of its shares last week when it announced it was yet to receive the proceeds of a $5 million drawdown request made under its loan facility with United Arab Emirates investment group, Viceroy Holdings.

This morning a Silverjet statement said that as the airline was yet to receive any of this money and that none of its discussions with other “interested” investors were proceeding satisfactorily, it was “with deep regret” that the board took the decision to suspend operations with immediate effect.

The airline’s last flight was the 7.30 am service from London Luton to Dubai.

It is unclear why the Viceroy money was not forthcoming. Earlier this week Silverjet would only say that the lender was having trouble accessing the funds, but was nonetheless keen to invest.

Silverjet is the last one standing of three transatlantic carriers which launched from the East of England in the last two and a half years.

As a relatively new service trying to establish a foothold in the market place, Silverjet has been hit particularly hard by rising fuel prices and despite increases in passenger figures has failed to turn a profit.

Silverjet has suffered several blows in recent months with major investor HBOS pulling out and the Reuben brothers announcing they would not be converting a £10m loan into a 20 per cent stake in the airline.