Friday May 30, 07:33 PM
British airline Silverjet enters administration
LONDON (AFP) - The business-class airline Silverjet (LSE: SIL.L - news) said Friday it had suspended operations and entered administration, leaving it on the brink of collapse, after running into serious funding problems amid soaring fuel costs.
Silverjet, less than 17 months old, had agreed a loan facility with United Arab Emirates investment fund Viceroy Holdings earlier this month.
However on Friday the British airline said it had failed to secure the new funding and was forced to close for business.
"Further to the announcement earlier today that Silverjet had suspended its operations, the board of Silverjet announces with deep regret that it has appointed administrators," the company said.
"The administrator will be undertaking a review of Silverjet's assets. The board does not believe that there is likely to be any value realised for shareholders," it added.
The cash-strapped airline's shares were suspended last week on the London stock market.
Silverjet follows US peers Maxjet and Eos which both collapsed in recent months because of rocketing fuel prices, intense competition and slowing consumer demand amid a slowing global economy.
Airlines run on kerosene, refined from crude oil which last week rocketed to record highs above 135 dollars a barrel in international trading.
"Silverjet continues to be in discussions with investors interested in supporting the business of Silverjet, however it has yet to conclude such discussions to its satisfaction," the airline had said on Friday before a further announcement that it was in administration.
"It is with deep regret that the board of Silverjet has therefore decided that it must suspend operations with immediate effect," the statement added.
Silverjet said that Nigel Atkinson from Begbies Traynor has been appointed lead administrator of the airline and its wholly owned subsidiaries, Silverjet Aviation Limited, Skylease Limited and Sky People Limited.
Silverjet's chief executive Lawrence Hunt apologised to customers in an open letter published on the company's website.
"We extend our sincerest apologies to those of you who have travel plans with Silverjet in the future and at present," Hunt wrote.
"We are working actively with new investors who are prepared to inject new funds so we can recommence operations. If we are able to achieve this, we will make an announcement as soon as possible."
Silverjet was launched in January 2007 and was aimed at business class customers, particularly on the lucrative transatlantic route. It enticed customers with fares far lower than those offered by traditional transatlantic carriers such as British Airways (LSE: BAY.L - news) .
The airline's final flight departed on Friday from Dubai to London Luton airport, north of the British capital.
Meanwhile, customers with existing bookings were advised to seek alternative travel arrangements and refunds from their credit card companies or travel agents.
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