Struggling Silverjet in takeover talks

Struggling airline Silverjet has revealed it is in takeover talks which has sparked fresh concerns about the airline industry.

Yesterday, Oasis Hong Kong Airlines announced it will stop flying and has applied for a voluntary liquidator. US carriers including ATA Airlines, Aloha Airgroup and Skybus Airlines have all ceased trading since the end of last month.

Following the news, shares in the business class airline soared 38%. Silverjet is based at London’s Luton Airport and flies to New York and Dubai and said the talks may or may not lead to a formal takeover offer.

Last week, Silverjet was scheduled to have reported its first monthly profit but investors were disappointed when it admitted it had failed to break even.

Without fresh equity, Silverjet hasn’t got a future, according to Mike Stoddart of investment bank Daniel Stewart. The airline raised £21 million last November to increase its working capital.

Mr Stoddart, who is an aviation analyst, added we are not a fan of the business model and we think that without major changes, the company will run out of equity funds soon.

Back in January, Silverjet’s shares crashed after Mr Stoddart said it would run out of money because of the continuing increase in fuel costs.

Silverjet did not name its suitor. easyJet has been rumoured as a potential suitor since Silverjet appointed Amir Eilon, a former board member of EasyJet and a close friend of easyJet’s founder Stelios Haji-Ioannou, as a non-executive.

Silverjet was established in January 2007 and operates three planes. The airline claims to be the world’s first carbon neutral airline.

The airline industry appears to be diving into its most serious downturn since the post 9/11 crisis in 2001 and 2002. In addition, British Airways said profits may decline by £250 million this year while Ryanair and easyJet have issued warnings.

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