Three Middle East companies are in talks with British business-class airline Silverjet for a complete takeover, said Chief Executive Lawrence Hunt. The move comes a week after the carrier announced a $100 million (Dh367m) pledge from a UAE investor.
"We have had a number of discussions with a number of investors in the Middle East and Asia for a potential takeover. Of this, three Middle East companies have approached us for a complete takeover," Hunt told Emirates Business in a telephone interview.
While he did not divulge names of the bidders, industry sources indicate the deal could come through within the next couple of months.
The loss-making carrier, which launched its Dubai operations in November last year, yesterday, said it has secured a $25m fund injection from the UAE's US-based development fund, Viceroy Holdings.
"Viceroy Holdings will lend Silverjet as much as $16.6m. The loan, maturing May 2011, will pay interest of two per cent more than benchmark rates," it said in a statement. As a part of the deal, the London Stock Exchange-listed airline will obtain $25m through debt and equity from Viceroy in return for a 28 per cent stake.
"A signed agreement also includes intent by Viceroy to provide a further $75m to help it expand operations in the Middle East, Asia and Africa using the Middle East as a regional hub," it said in the statement. "This investment means that Silverjet is now well placed, both financially and strategically, to exploit the opportunities, which exist in the airline and the business class market," Hunt said.
Silverjet, which lost about 90 per cent of its market value owing to escalating fuel prices and a deteriorating credit market, is one of the last remaining all-business class carriers after US carriers – Eos Airlines and MAXjet – ceased operations on April 26, 2008 and December 24, 2007, respectively.
All three carriers – Silverjet, MAXjet and Eos – started all-business class services from London to New York in 2006, have struggled at the hands of fuel costs besides not being able to sell enough seats.
Silverjet, meanwhile, said last month, it failed to make an operating profit as targeted in the financial year ending March 2008.
"The future of Silverjet hangs in the balance of being able to raise more equity. In order to survive, the carrier requires fairly urgent injection of equity," said Tim Coombs, a UK-based aviation analyst with Aviation Economics.
"Niche airlines cannot survive without serious capital injections, as is planned for Silverjet. Or they must be able to stay in their niche with no competition, like Paris-based L'Avion. Or they must have a huge customer base like Private Air has with Lufthansa. Without somebody to help cover their risk, they are doomed," said Addison Schonland, an aviation consultant with California's Innovation Analysis Group (IAG).