• 

  bowraven said,

  Silverjet rescue mission prepares for take-off

  By David Prosser, Deputy Business Editor
  Monday, 9 June 2008

  Silverjet, the business class-only airline that was forced into administration last month, is on the verge of an unlikely return to the skies, with a rescue deal set to be announced as early as today.

  Lawrence Hunt, the founder and chief executive of the airline, spent the weekend locked in talks with Begbies Traynor, its administrators, and three groups that have expressed an interest in acquiring Silverjet.

  One of those interested parties, the Swiss investment group Heritage, said yesterday that it had tabled a formal bid for Silverjet through Kingplace, an Ireland-registered company that it manages. “We are excited by the prospect of acquiring Silverjet and resuming operations as quickly as possible with the existing staff,” said Ian Illsley, chairman of Heritage. “We will be investing in the future development and success of the brand. We will make a further announcement in due course.”

  However, sources close to the talks said that at least one other bidder had also made a firm bid for Silverjet, while the third potential saviour was still considering its options yesterday.

  The identity of the two parties that could potentially trump Kingplace’s offers has not been made public, though it is understood that at least one major airline has held talks with Begbies Traynor. Simon and David Reuben, the property investors, who are believed to be Silverjet’s largest unsecured creditors, owed up to £10m, have also been linked with a deal.

  Mr Hunt said he hoped the airline would be able to pick up where it had left off last month very quickly. “I am delighted to confirm that Kingplace is in conversation with Begbies Traynor about Silverjet resuming operations in the near future,” he said, though the administrator said it had yet to determine which of the interested parties would represent the best deal for the airline’s creditors.

  The level of interest in Silverjet will surprise the airline industry, which had expected the company to disappear without trace. While the company has won plaudits for the quality and value-for-money of its daily services from London’s Luton airport to Dubai and New York, attracting around 90,000 passengers in its first year, a combination of soaring jet fuel prices and an economic slowdown left the airline in dire financial straits.

  Last month, Silverjet announced it had won $25m of emergency funding from Viceroy Holdings, an investment group based in the United Arab Emirates, only for the deal to fall through at the last moment. Just days after Silverjet warned that a $5m loan from Viceroy had failed to materialise, the airline suspended all operations and appointed administrators. It was the third business class-only airline to cease trading this year, following Eos and Maxjet – both launched, like Silverjet last year, to substantially undercut the business class fares charged by established carriers – out of the market. Neither Eos or Maxjet has since been able to attract a buyer or additional investment.

  However, Silverjet’s rescue is very unlikely to produce any cash for shareholders, who are set to lose their investments. The company’s shares were trading at 13p on suspension but had been as high as 175p last summer. It is thought to owe creditors around £40m but bidders are expected to pay as little as £5m for the company.

  A spokesman for Begbies Traynor said the potential buyers of Silverjet would want to hire as many of its 300 staff as possible, but was unable to say exactly how many were likely to get their jobs back.

  It is also unclear whether a relaunched Silverjet would be able to resume all of the services it previously offered. It had been running four flights a day between Luton and New York and two services daily between Luton and Dubai.

  News reported by The Independent

• 

  bowraven said,

  Silverjet sacks entire workforce

  There had been hopes of a rescue deal for Silverjet Business airline Silverjet has sacked its 420-strong workforce after talks over a rescue deal broke down.

  Investment firm Kingsplace had been in talks to acquire Silverjet and earlier this week said it expected Silverjet to be flying “in a matter of weeks”.

  But Silverjet’s administrators said “unusually complex negotiations with third parties” meant Kingsplace could not acquire Silverjet.

  Hit by soaring oil prices, Silverjet ceased operations in May.

  ‘Disappointed’

  Begbies Traynor, Silverjet’s administrator, said the entire workforce was made formally redundant on Friday.

  “We are extremely disappointed to have had to make these redundancies, which we have been working hard to prevent,” the Begbies Traynor statement said.

  Silverjet to re-launch services “in a matter of weeks”

  The airline employed 370 pilots and cabin crew and 50 administrative staff in Luton.

  The administrators said they would continue to negotiate the sale of Silverjet’s assets for the airline’s creditors.

  Before talks with Kingsplace, Silverjet had pinned its hopes on a $25m (£13m) injection from a Middle East investor.

  But a deal failed to materialise, affecting the travel arrangements of some 10,000 customers flying from London Luton to New York and Dubai.

  Shares in the carrier were suspended in May.

  Airline worries

  Several airlines have been affected by the spiralling cost of fuel which reached a peak of more than $139 a barrel last week.

  Additionally, consumers cutting down on non-essential spending and an increase in competitive pressures have meant many airlines now either charge customers for services that were previously free – such as baggage check-in – or have gone into administration.

  US business-class airlines Eos and Maxjet recently collapsed when their finances dried up.

  Eos filed for Chapter 11 bankruptcy in April due to “insufficient costs”, while Maxjet succumbed to funding pressures in December after failing to raise capital.

  News reported by BBC

Add A Comment