Silverjet blame analysts for collapse
02.06.08
Critical City analysts who predicted that the airline would fail have been blamed for the collapse of Luton Airport based business class carrier Silverjet. Its former chief executive said yesterday that it was the investment analysts and not the soaring cost of fuel that caused the airline to collapse.
Silverjet called in administrators and grounded its fleet on Friday after failing to receive an emergency $5 million loan to keep the business afloat, becoming the third business class airline operating flights from the UK to collapse since December.
The demise of rivals Eos and Maxjet, and now Silverjet, has been blamed on record fuel costs, the economic downturn in the US and UK, and what some have described as an unviable business model. However, Silverjet founder and CEO Lawrence Hunt, a former BA executive, placed the blame squarely at the door of bearish comments by analysts, which he said cost the airline £7 million in lost sales over the last six months.
He told the Telegraph: ‘It's not the oil price, its confidence. When you have analysts who know nothing about our business writing what they write, it becomes self-fulfilling. It's the analysts that have killed us.’
Silverjet’s shares plunged 28% in January after Mike Stoddart, an analysts at Daniel Stewart Securities, said the airline was ‘likely to fail’ and gave its shares a target price of zero. He said in a note to clients that Silverjet’s fares structure had failed to generate enough passengers to make money and that it was 'doomed'.
However, Mr Hunt insisted Silverjet's business model was viable. He said: ‘Our business model is resilient to oil. We have been able to lift our prices by 20 percent in the last few weeks.'
Administrators for the airline are now reported to be in talks with several potential buyers and hope to sell the company early this week. Sources say Viceroy - the investment fund that failed to provide the promised $5m - might be one of the bidders, along with a group of former managers at the airline.
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