Strategy

Another One Bites the Dust

Finding no silver lining in spiking fuel costs, Silverjet is the latest airline to shut down.
Stephen TaubMay 30, 2008

Silverjet didn’t cite skyrocketing fuel costs as its reason for ceasing operations Friday, but it didn’t need to be said. If the price of oil doesn’t moderate, soon there may be more airlines grounded than flying.

In a statement on its Website, U.K.-based Silverjet — an all-business-class carrier founded 16 months ago to fly business travelers to New York — cited an inability “to unlock the finance that we needed” due to “unforeseen circumstances.” In a press release, the airline further said it was unable to secure $5 million in funding under its loan facility with Viceroy Holdings.

Silverjet also said its working-capital reserves were limited and that advances under the loan facility were urgently required. It did not, though, close the door on a possible resumption of business. “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,” the company said.

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Silverjet’s last flight, from Dubai to London Luton Airport, departed at 7:30 a.m. on Friday.

Silverjet was the last of three business-class-only operators flying between London and the United States, following the bankruptcies of Eos Airlines and MAXjet Airways. More than a dozen carriers have gone out of business in the past six months, during which the price of oil has surged about 40 percent.

In recent weeks, many other airlines have been scrambling to find ways to save on costs. For example, American Airlines is charging $15 for the first checked bag, JetBlue delayed its order to buy 21 new planes, and US Airways said it will eliminate free snacks (but not soft drinks) in coach class as of June 1.