Silverjet grounded amid cashflow crisis

Silverjet stopped flights on Friday after failing to secure a $5m loan. (DENNIS B MALLARI)

Britain's Silverjet said it stopped flights on Friday after failing to get a $5 million (Dh18.5m) loan from Abu Dhabi-based investors, becoming the third London to New York business class-only airline to run out of cash.

Silverjet, which along with Eos and MAXJet tried to steal away business class customers from larger carriers such as British Airways and Virgin Atlantic with cheaper tickets, more space and quicker check-ins, said its fleet of three aircraft will be grounded after the last flight landed at London from Dubai on Friday.

Silverjet needs an emergency injection of cash or it will follow now-bankrupt Eos and MAXJet out of business. All three focused on the lucrative market of business people jetting between meetings in London and the US.

Silverjet is talking to investors about a rescue package but had "yet to conclude such discussions to its satisfaction".

Douglas McNeill, transport analyst at Blue Oar Securities, said: "The climate for attracting capital into the airline industry has never been worse. There was speculation Lufthansa showed an interest but if they were going to do something, they'd have done it by now."

The airline, based at Luton airport in the north of London, said Abu Dhabi-based fund Viceroy Holdings had failed to give it the first $5m of an £8.4m loan facility it had reached initial agreement over.

"It is with deep regret that the board of Silverjet has decided that it must suspend operations with immediate effect," it said in a statement.

Shares in the airline were suspended last week after the company said it had not received the loan from Viceroy that was meant to guarantee its future in a tough economic climate.

On Thursday, Silverjet urged shareholders to vote against an allotment of shares to Viceroy Holdings because of what the airline says is a breach of their loan agreement.

Because of a "fundamental breach of the loan facility agreement'', Silverjet has decided to change its recommendation for its shareholders to vote in favour of resolutions to authorise its shares to Viceroy, the company said today in a Regulatory News Service statement.

Silverjet also required the consent of the Civil Aviation Authority and TFB (Mortgages) for the subscription agreement to become unconditional, it said.

Consent had not as yet been received, and the company said it did "not believe any such consent would be forthcoming'', according to the statement. (Agencies)


BA takes delivery

British Airways, Europe's third-biggest carrier, ordered two of Airbus's smallest planes to provide business class-only flights from London City Airport to New York starting next year. BA will outfit the aircraft with far fewer seats than the typical 107 in order to give business travellers more space, the airline's CEO Willie Walsh said. The carrier considers New York and other US cities like Boston and Chicago to be good markets for business-only flights.


Mihin Lanka runs up $15m debt

Sri Lanka's budget airline has sought a government cash injection and may be merged with the national carrier after running up $15 million (Dh55m) in debt, the firm's chief executive said on Friday.

The state budget airline Mihin Lanka has been dogged by financial problems since it began commercial operations last April.

Its last aircraft, an Airbus A320, was reclaimed by its Bulgarian owners in late April.

"We currently owe SLR1.6 billion to our debtors. We had to give up the plane because we didn't have money to pay the lease," Sajin Vaas Gunawardene told reporters.

The airline has asked the Treasury for an $800,000 cash infusion, which includes two lease installments to secure one 17-year-old Airbus A320 to resume operations, Gunawardene said.

Mihin has also sought Treasury approval to merge with the island's national flag carrier SriLankan Airlines.

"I can't see a problem in merging with SriLankan," Gunawardene said.

"We are owned by the same parent – the government."

 

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