300 jobs lost as Silverjet deal fails

All 300 staff at collapsed business-class airline Silverjet were laid off today after a rescue deal by Irish shelf company Kingplace Ltd fell through.

Kingplace is registered in Ireland and managed by Heritage, a Geneva-based investment trust and had provisionally agreed to take over the Luton Airport-based carrier after it fell into administration a fortnight ago.

However, administrator Begbies Traynor today said that, due to "unusually complex negotiations" with third parties, Kingplace was "no longer in a position to acquire Silverjet as a going concern".

Begbies partner Mark Fry told The Irish Timesthat the deal had been subject to approval from regulatory bodies including the Civil Aviation Authority (CAA).

"I am not entirely sure at this stage of what the issue was but it appears that the capital adequacy requirements sought by the CAA were higher than had been expected. Following discussions with the CAA, the interest of Kingplace in the deal waned," he said.

Mr Fry said while there were ongoing talks with other "interested parties" he said the sale of the airline as a going concern looked increasingly unlikely.

Asked whether the corporate structure of Kingplace had added to the complexity of the negotiations, Mr Fry replied: "I shouldn't think so. They have structured a number of deals this way".

Mr Fry had estimated that an investment of more than £50 million (€63.1m) in debt and equity was necessary to allow the airline resume operations.

Silverjet started flying in January last year as an all-business carrier and flew to New York and Dubai from London Luton. It employed 260 pilots and cabin crew and 40 administration staff.

The airline ceased operations 13 days ago as record oil prices and tighter credit conditions hit its working capital and left it with limited reserves. At the time of its collapse it had almost 10,000 bookings.

Mr Fry said the airline's assets inlcuding the leases on its three Boeing 767 planes and slots at Luton were now likely to be sold off to raise money for creditors.

Mr Fry said: "We are extremely disappointed to have had to make these redundancies, which we had been working hard to prevent.

"We continue to negotiate the sale of Silverjet's assets for the benefit of the company's creditors and will provide an update as soon as we are able."

Kingplace director and Heritage chairman Ian Ilsley had spoken earlier this week of hoping to resume flights within weeks.

Mr Ilsley could not be contacted for comment this afternoon.

Additional reporting PA