British All-Business Airline Lays Off Workforce As Buyer Negotiations Broken Off

Hopes to revive SilverJet, an all-business class airline based in England, were dashed Friday as talks with a crucial source of funding fell apart.

As reported by ANN, the airline received an offer on June 10 from Kingplace, an Ireland-based investment company managed by Geneva-based management company Heritage Cie SA, to buy and relaunch the airline.

Talks broke down with the investor Friday as problems arose over raising enough cash to satisfy the regulator, the Civil Aviation Authority (CAA).

The Irish Times reports the CAA required Kingplace to prove it could provide more than £25 million of funding for the airline over the next six months.

Also thought to contribute to the collapse of the deal were negotiations over leases on the SilverJet aircraft.

Kingplace had hoped to have the airline flying again within weeks, retaining its entire staff.

SilverJets joint administrator Mark Fry said, "As a result of the unusually complex negotiations with third parties, Kingplace is no longer in a position to acquire SilverJet as a going concern."

"As a consequence, we have today (Friday) had to make the entire workforce formally redundant, in line with our legal obligations as administrator."

As a result of the breakdown, all 420 workers at SilverJet were immediately laid off.

Rules that stipulate jobs must go unless a buyer can be found within two weeks of a company entering administration forced the administrators to make the announcement of the immediate job losses.

Fry added negotiations would continue in an effort to sell off SilverJet assets to repay company creditors.

Fry noted Kingplace still had interest in the airline, though it chose not to fund SilverJet's wage bill. Additionally it was revealed other parties were still interested in buying the airline, though unlikely a successful sale would now be happen.

"There's a very short window of opportunity but as every day goes by it gets more difficult," he said.

Most likely the airline will go into liquidation with assets such as contracts on aircraft and departure lounges attracting some interest. The SilverJet brand may also be sold. All funds will repay the airline wage bill.

As a result, funds from the possible sales will make no difference to creditors or shareholders.

On May 30, SilverJet ceased operations and was put into administration after suspending shares the week prior.

SilverJet was thought to be losing about £1 million a month last year and this was thought to have doubled before it entered administration.

FMI: www.flysilverjet.com