MaxJet goes bust

[elmcitymaven 9,712]

From today's Financial Times. Frankly, having flown them once before and been treated the worst I've ever been treated on any airline, I'm surprised this didn't come earlier. If anyone's already booked with them, the MaxJet website gives information on how to get a refund, etc.

Maxjet collapse leaves hundreds stranded

By Kevin Done, Aerospace Correspondent

Published: December 27 2007 02:00 | Last updated: December 27 2007 02:00

The collapse into bankruptcy of Maxjet Airways, one of the new breed of all-business-class long-haul airlines, left hundreds of passengers stranded in the midst of holiday journeys.

The US airline, which was only floated on the London stock exchange in July after raising £43m, said on Christmas Eve it had been forced by deteriorating finances to file for Chapter 11 bankruptcy in the US, leading to a sale or liquidation of assets.

The demise of Maxjet is one of the strongest signs yet of the difficult financial climate for the airline sector, which has been hit hard by surging fuel prices and weakening demand for air travel. As a recent start-up business, the US carrier was especially vulnerable.

The Maxjet board said it did "not currently believe that there is likely to be any value realised for shareholders". Trading in its shares on London's Alternative Investment Market would remain suspended.

Maxjet flights have ceased from London Stansted airport, its main base. The airline started flying in November 2005 between Stansted and New York JFK airports, as one of two pioneers offering all-business class travel. It had since added routes between Stansted and Los Angeles and Las Vegas.

It had a fleet of five Boeing 767s equipped with 102 business seats and flew 74,760 passengers in the first 11 months this year.

The group first revealed that it was in financial difficulties two-and-a-half weeks ago, when it was forced to suspend trading in its shares. It had been seeking more funds since November.

Bill Stockbridge, Maxjet chief executive, said efforts to raise additional capital had been unsuccessful and a bankruptcy filing "would best protect" the customers and creditors, the biggest of which is listed as Israel Aerospace Industries.

Mr Stockbridge said: "I recognise that discontinuing service during the holiday season may create significant disruption for some passengers."

The company said it had contracted and prepaid Eos Airlines and 450 hotel rooms in London, New York, Las Vegas and Los Angeles to accommodate passengers.

Other new all-business-class start-ups have entered the market such as Eos of the US and Silverjet of the UK, while American Airlines, the world's biggest carrier by traffic volumes, has entered the London Stansted/New York market for the first time with twice- daily flights.

Maxjet said rivals had increased capacity and were competing strongly on price, particularly in the New York market.

In spite of tougher conditions in financial markets, rival Silverjet secured £22m in fresh funding three weeks ago, including £12m in a share placement and £10m in a convertible loan from TFB (Mortgages), a company of the Reuben brothers, the UK property developers.

Copyright The Financial Times Limited 2007

Edited December 27, 2007 by elmcitymaven

[Lansbury 19]

Quite a few have tried a US/Stansted service and not made it work. Continental have tried it twice and gave up. Wouldn't be surprised to see AA pull out after a suitable time in the hope no-one thinks they tried ti kill MaxJet off.

[Peikko 1,575]

Bizarely, I saw trailers for this story on the news, but not the actual story. For a few days I imagined the newscasters just made a mistake, but now I know it's a real story, so thank you.