Airline's shares suspended amid funding crisis

Shares in business class airline Silverjet were suspended today after the group revealed that a vital cash injection had failed to come through.

The group, which started in January 2007 and flies from Luton to New York and Dubai, said it had not received money agreed under a £12.7m (€16m) deal recently signed with a Middle Eastern investor.

Silverjet stressed that it was continuing to fly, but was now in critical talks to raise alternative funding “as a matter of urgency”.

The company is also continuing discussions with the investor, Viceroy Holdings - an international luxury development fund based in the United Arab Emirates and the US.

A Silverjet spokesman said: “Viceroy Holdings are still committed to investing in the airline, but they have not been able to access the funds required to give to Silverjet.”

Silverjet asked Viceroy for around $5m US (€3.17m) as an initial instalment earlier this month.

The airline has been hit by soaring fuel costs as the price of oil reaches unprecedented levels.

Willie Walsh, chief executive of British Airways, yesterday warned that airlines would go out of business as oil prices topped 130 US dollars a barrel.

Silverjet said last month, on unveiling the debt-and-equity deal with Viceroy, that it would need to find funding urgently if the investment did not come off, with its working capital and residual reserves suffering amid the tough market conditions and soaring cost pressures.

Shares had rocketed 26% in one day on news of the funding agreement as investors breathed a sigh of relief that Silverjet’s future could be secured.

Transatlantic business-class only carriers have faced difficult times since the surge in oil prices and a number have already been grounded.

American all-executive class airline Eos, which flew between London and New York, filed for Chapter 11 bankruptcy protection late last month, just four months after its rival Maxjet collapsed in the face of rising oil costs and a stalling economy.

Silverjet was hoping that the investment from Viceroy would not only repair its working capital, but help fund expansion into new areas, such as the Middle East, Far East and Africa.

It has also been in talks over a takeover of the airline since early April and has not ruled out a sale, with the group still in an offer period.

“Silverjet continues discussions with other parties, which have confirmed an interest in investing in the company,” the group said today.

Silverjet, founded by chief executive Lawrence Hunt, made its first commercial flight in January 2007.

It achieved its highest ever monthly revenues in April, with more than 10,500 revenue-generating seats.