Friday, May 23, 2008
big corporates win again
The Telegraph: British Airways warns oil surge will put a rash of airlines out of business
British Airways believes it can ride out the storm caused by the rocketing oil price by making capacity cuts of only around 2pc this winter.
Posted by sold 2 rent 1 @ 08:49 AM (429 views) Add Comment
7 Comments
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1. jack c said...
Silverjet Shares Suspended After Investment Delay (Update1)
By Tracy Alloway
May 23 (Bloomberg) -- Silverjet Plc, the unprofitable U.K. business-class airline, was suspended from trading in London at the request of the company because it hasn't received part of a pledged investment.
Silverjet asked for $5 million under a loan agreement with Viceroy Holdings LLC and hasn't yet been given the money, the Luton, England-based airline said today in a statement. Shares were suspended from trading on the London Stock Exchange's Alternative Investment Market.
``Silverjet's working-capital reserves are limited and advances under the loan facility are required as a matter of urgency,'' the carrier said in the statement. Viceroy is a United Arab Emirates-based fund that specializes in the luxury industry.
Silverjet has been struggling to become profitable as higher oil prices, a global economic slowdown and competition from network carriers eat into earnings. Two competing trans- Atlantic startups, MAXjet Airways Inc. and Eos Airlines, have filed for protection from creditors and stopped flying in the past five months, leaving just Silverjet operating all-business- class flights between London and the U.S.
``Viceroy still wants to do the deal but they just can't access the funds that they need,'' said Fiona Noblet, a spokewoman for Silverjet. The airline will keep flying in the interim, she said.
The U.K. carrier received a pledge on May 2 for $100 million in loans and cash from Viceroy. Before that, the carrier had raised about 72 million pounds ($142 million) through an initial share sale, additional stock offerings and loans.
Bankruptcies
Oil is trading near a record $135 a barrel, compared with about $55 when Silverjet started flying on Jan. 25, 2007. Higher fuel expenses have contributed to the bankruptcy of other airlines in recent weeks, including long-haul budget carrier Oasis Hong Kong Airlines Ltd., Skybus Airlines Inc. and Frontier Airlines Holdings Inc.
``The industry is facing its greatest challenge since the aftermath of the 9/11 terrorist attacks and with crude now at $130 a barrel, expect it to get worse before it gets better,'' Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin, said today in a note to investors.
Silverjet, which flies from London Luton airport to Newark airport near New York and to Dubai, aims to sell business-class tickets for about 1,000 pounds, often about a third of the price charged by network airlines. The airline's service includes private terminals, onboard women-only toilets and gourmet menus designed by London restaurant Le Caprice.
To contact the reporter on this story: Tracy Alloway in London at talloway@bloomberg.net
Last Updated: May 23, 2008 03:39 EDT
2. sold 2 rent 1 said...
Here is yet another speculative bubble that transfers wealth to the big corporations.
In the Great Depression 16,000 banks were bought up by the big boys.
A speculative oil spike now would allow BA and other big airlines to put up prices on routes where their competitors have gone bust.
3. tyrellcorporation said...
A mate of mine has just passed his CPL and is looking for a job as a pilot - Pretty back luck about his timing..
4. Rimmer said...
Tyrel
Yes bad luck for your mate and he will have 10 years to wait now.
As for Big corperations well thats life and they are as much a business as any other and a fact of life ( look at Tescos for example ), expect air travel to contract and get more expensive, those of use that can remember the 70s know a flight to the US was £350 then and its about the same now, in real terms air travel is very cheap now and many would say artificially so.
Not a good plan to have a holiday home overseas any more though as demand will decrease, expect to see Ryan Air and Easyjet contract as well.
5. need-a-crash said...
Airports are far too over-crowded anyway. I wouldn't mind paying for more expensive flights if it meant there weren't flight delays and you didn't have to queue for, well, everything at the airport!
6. drewster said...
s2r1 - Is it a conspiracy or just the way the economy has always worked?
Thanks for your comments this morning on the fear/greed issue, it's an interesting angle.
7. sold 2 rent 1 said...
drewster,
"Is it a conspiracy or just the way the economy has always worked?"
It will be pretty easy to crash this bubble when the NWO want to.
Raise interest rates unexpectantly, introduce oil trading/margin regulations, announce a surprise rise in oil stocks, get OPEC to announce more exports etc.