Silverjet opts for cessation of Flyjet charter flights

Silverjet plc has decided to cease its wholly-owned subsidiary Flyjet Limited’s charter flights operation from 31 October this year. (8/10/2007)The exclusively business class, long-haul airline stated that it does not intend to secure further aircraft when the leases on the two Boeing 757 aircraft operated by Flyjet expire. In an official statement, the airline stated: “The charter airline industry is undergoing a challenging year due to the ongoing consolidation of the big four tour operators, the decline of the traditional package holiday market and excess capacity from the low cost carriers. The core business of Silverjet is its all business class service and the Directors see insufficient returns from continuing to offer a service in the charter market.” The Directors estimate that the cost of withdrawing from the charter business will amount to approximately 300,000 in addition to the cost of the aircraft C-checks required on the scheduled return of the Boeing 757’s to the leasing company. Silverjet acquired Flyjet in October last year, securing the use of a leased Boeing 767-200. The acquisition enabled Silverjet to successfully commence commercial flights to New York in January 2007, just nine months from flotation and six months earlier than would otherwise have been possible, which the Directors estimate has brought forward net revenues in excess of 3million. Flyjet’s Boeing 767 is leased significantly below current market rates and the Directors estimate Silverjet will save 3million over the duration of the lease compared to current market lease rates. As part of the acquisition Silverjet also acquired its Air Operators Certificate, operating licence and a world wide route licence, avoiding significant set up and operating costs, including wet lease costs estimated in excess of 10million over a 3 year period. In addition to the Boeing 767 aircraft, Flyjet leased two Boeing 757 aircraft until November 2007 and January 2008 respectively, which are chartered to various tour operators until October 2007. Shares in Silverjet nose-dived on Wednesday after the AIM-listed business-class-only airline said it’s withdrawing from the charter flights business. The shares fell sharply in early trading and at 10am were almost 22 percent or 24p lower at 86.5p, a new low. The shares first floated at 112p a share in May 2006.

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