Silverjet may fly again as three firms show interest in buying it

Tuesday, June 10, 2008, 21:09 by Aviation Correspondent

Silverjet, the British all-business class airline that suspended operations on May 30, 2008, is  likely to fly again.

The positive development follows the talks which Lawrence Hunt, founder and chief executive of Silverjet, have been holding with the airline’s administrator Begbies Traynor – a Britain-based company specialising in corporate rescue, restructuring and recovery – and three groups that have expressed an interest in buying Silverjet.

Silverjet, based at London’s Luton Airport, had operated two daily services between Luton Airport and Newark Liberty International Airport, Newark, New  Jersey, the United States. It also had operated one service between Luton and Dubai.

Silverjet, which started services in January 2007, was operating 3 aircraft.

BBC reported one of the firms interested in buying Silverjet, the Swiss investment group Heritage, as saying that it had tabled a formal bid for Silverjet.

Ian Illsley, chairman of Heritage, was quoted as saying: “We are excited by the prospect of acquiring Silverjet and resuming operations as quickly as possible with the existing staff. We will be investing in the future development and success of the brand. We will make a further announcement in due course.”

According to BBC, sources close to the talks said that at least one other bidder had also made a firm bid for Silverjet and that the third potential buyer was still considering its options.

Britain’s newspaper Independent said in a report that the airline industry is surprised at the level of interest that companies are showing in Silverjet, “a carrier that most had expected to disappear without trace.”

Silverjet had won widespread acclaim for the quality of its daily services from London’s Luton airport to New York  and to Dubai. Both services had attracted nearly 90,000 passengers in the airline’s first year of existence.

However, exorbitant prices of jet fuel as well as an economic slowdown combined to land Silverjet in the lurch, eventually leading to suspension of operations on  May 30, 2008.

As recently as May 2008, Silverjet had said that had won an emergency funding $25 million of from Viceroy Holdings, an investment group based in the United Arab Emirates. However, the deal could not be consummated, forcing the airline to suspended all operations and appoint administrators.

It may be noted that Silverjet was the third business class-only airline to stop flying in 2008, after Eos Airlines and Maxjet Airways closed shop.

Eos Airlines had offered business-class flights between New York and London. Maxjet Airways, the transatlantic, all-business class airline, was headquartered in the Dulles section of Loudoun County, Virginia, the United States. Both were launched in 2007.

Meanwhile, the website has reported that bidders for Silverjet have to cross a solid financial obstacle put up by the Civil Aviation Authority (CAA), the United Kingdom’s aviation regulator, if they want the airline to fly again from Britain.

Sources close to the talks on the sale of Silverjet were quoted as stressing that the Civil Aviation Authority was likely to demand “a big injection of cash to satisfy its capital-adequacy rules.”

It is the usual practice for the aviation regulator to ask airlines to show that they have cash in the bank equivalent to 6 months’ operating costs before they are allowed to start commercial service.

In the case of Silverjet,” quoted a source as saying, “the CAA can see that the carrier burnt up around £75 million in cash since it was set up, and can use that to put a figure on what a new investor would need to put in up front.”