The business-class-only carrier said this morning that it had forced to suspend all of its flights with immediate effect, after running out of cash. The troubled airline had been trying to secure some investment from a Middle Eastern backer, but the deal appears to have collapsed at the eleventh-hour – meaning that Silverjet looks set to follow its former rivals Eos and Maxjet by falling prey to the escalating cost of jet fuel and the problems in the financial markets.
Apparently the announcement came just after its 7.30am Dubai flight took off from Luton. We assume the suspension of flights doesn’t apply to flights that are already in the air, but we can’t help feeling sorry for all those poor businesspeople on board who now have to find a different way back to the UK. Although they should probably have been a bit suspicious when the cabin crew did a whip-round for petrol money while the plane was taxiing for take-off.
The potential demise of Silverjet doesn’t exactly come as a huge shock, given the previous woes of Eos and Maxjet and the fact that it suspended trading in its shares earlier this month. But it could all have been so different. Last month it announced proudly that it had signed a memorandum of understanding with a Middle Eastern investor (later revealed to be Abu Dhabi-based fun Viceroy), which was promising to inject about $25m in debt and equity and ‘participate in the international rollout of the Silverjet brand’.
However, it looks as though Viceroy was all mouth and no trousers. Weeks passed, and for reasons that remain unclear, it doesn’t appear to have stumped up the cash (perhaps it realised what a daft idea it was to invest $25m in a business-class airline wile the world economy is in slowdown and fuel costs are at all an all-time high - especially one based in the less-than-lovely Luton Airport). This eventually left Silverjet running dangerously low on readies, forcing last week’s share trading suspension and now today’s flight suspension.
Silverjet insists that all is not yet lost – ‘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,’ it mumbled shame-facedly today – but with no cash coming in from flight bookings, it’s presumably going to be pretty tough for it to recover.
And given it’s apparently losing about £2m a month, you can’t see many investors riding to the rescue...