MAXjet Airways Files For Chapter 11 Bankruptcy

DOW JONES NEWSWIRES
December 24, 2007 8:17 a.m.

By Marietta Cauchi
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--MAXjet Airways PLC (MAXJ.LN) said Monday it has filed for Chapter 11 Bankruptcy, blaming rising fuel costs and an increase in competition for business-class travelers for its inability to raise necessary funding.

The transatlantic business-class only airline listed just six months ago on AIM, London's alternative market.

The company said it had been trying to secure additional funding since early November but without success.

"With unfavorable market conditions, coupled with rising fuel costs, increased competition, consumer confidence and other macroeconomic factors, the financing round was unsuccessful," the company said in its statement.

"The directors, therefore, have authorized bankruptcy protection to preserve and maximize the value of the business for the benefit of the Company's creditors," it added.

MAXjet suspended trading of its stock Dec. 7, as a result of an inability to clarify its financial position. At that time, the company was in advanced discussions on a financing round for working capital and growth in 2008 that it expected to close before year-end.

The company said that the shareholders are unlikely to receive any value following the bankruptcy and shares will remain suspended.

The airline's shares last traded at 73.5 pence having reached a high of 131.5 pence just following flotation in June.

In a later statement, the company said that its non-executive chairman, Ken Woolley, as well as non-executive directors Paul Kehoe and Roger Flynn had resigned with immediate effect.

"After a vigorous period of assisting the management team to find alternative financing means, Kehoe and Flynn are resigning as the company no longer requires non-executive directors with U.K. public-market expertise," the company said.

The company added that Woolley was resigning because of potential conflicts as a creditor of the company under the Chapter 11 process.

U.S.-based MAXjet, which started operations in late 2005, operates flights from London's Stansted Airport to New York, Los Angeles and Las Vegas.

The U.S. incorporated company, based in Dulles, Virginia, listed on AIM to avoid the U.S.' complex and costly listing requirements. It raised around GBP50 million on its IPO.

Business-class only airlines face competition from mainstream carriers as well as the increasing number of players in the specialist sector, experts say.

MAXjet competes with rival premium-only carriers Eos Airlines of the U.S. and U.K.-based Silverjet PLC (SIL.LN).

Airline industry analysts have warned that premium-class only carriers like MAXjet may get hit by an economic slowdown as companies force more staff to travel coach class. High fuel costs are also hitting the earnings of all carriers.

Although MAXjet may beat them on price, established carriers like Virgin Atlantic Airways Ltd. and British Airways PLC (BAY.LN) offer travelers many more flights a week and have more extensive airport lounges.

MAXjet also had problems specific to the company, with the late delivery of its fourth and fifth aircraft meaning that the company had to rebook passengers in premium cabins with other carriers.

http://online.wsj.com/article/BT-CO-...2.html?mod=air

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A real shame.