Eos becomes latest credit crunch casualty – UPDATED

Eos Airlines has become the second US business class-only carrier to fail in less than six months.

The airline, which flew transatlantic from Stansted, filed for Chapter 11 bankruptcy protection on Saturday after failing in a bid to attract $50 million in additional funding.

Operations now have ceased entirely, a statement on the Eos website said.

The final Boeing 757 flight between Stansted and New York was due to run last night at 18.30.

The failure follows that of rival MAXjet which shut down before Christmas and is the latest in a line of airline casualties this year, including low far long haul carrier Oasis Hong Kong Airlines operating from Gatwick. 

Eos CEO Jack Williams said: “After overcoming today’s extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action.

“We had been clear since closing on our last round of financing that we would need additional capital. As difficult as it is to raise funds in the current environment, investors believe in our business model and we were on the verge of success.

“Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome.

“It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed.

“That leaves us with insufficient cash on hand to continue operations.”   

Luton-based low fare business class carrier Silverjet is the only one remaining offering the specialised premium service from the UK.

Silverjet immediately stepped in to offer Eos passengers seats on its New York-Luton  service.

CEO Lawrence Hunt said: “Our commitment lies firstly with ensuring our own passengers enjoy Silverjet’s seamless stress free experience but we hope that this offer will provide some peace of mind to EOS passengers.

“The airline industry is hugely competitive and this has been starkly illustrated by today’s announcement.

“With our unique proposition and very reasonable prices, passengers can look forward to continuing to fly with Silverjet and enjoying the calm and intimate experience that we offer.”

Silverjet saw a 23% growth in passenger numbers last month.

Default and insolvency insurance suppler International Passenger Protection had warned of further airline collapses after the failure of nine in the first 4 months of 2008 compared to five in the whole of last year.

IPP director Paul Mclean said: “Simply, the long standing effect of the credit crunch and the price of oil still continuing to rise means many airlines simply cannot maintain flying operations unless they make drastic price increases.

“Although we predicted several other airlines to come into the same financial difficulties there will sadly be others during this difficult credit crunch and high oil price period. “

by Phil Davies