Eos bankruptcy filing signals end to cheap executive travel
Eos, the premium airline that flew between London and New York, filed for Chapter 11 bankruptcy protection last night, a move that appeared to signal the end of cut-price executive-only flights across the Atlantic. The American carrier’s flights were suspended last night, leaving hundreds of passengers stranded at Stan-sted and John F Kennedy airports.
Eos, the premium airline that flew between London and New York, filed for Chapter 11 bankruptcy protection last night, a move that appeared to signal the end of cut-price executive-only flights across the Atlantic.
The American carrier’s flights were suspended last night, leaving hundreds of passengers stranded at Stan-sted and John F Kennedy airports.
The grounding of Eos follows the collapse of Maxjet last December and the announcement that Silverjet, which operates from Luton, is seeking a bailout from new investors. L’Avion, which flies from Paris to New York, is also thought to be struggling. Last night it emerged that mainstream carrier Continental Airlines had withdrawn from merger talks with United Airlines amid concerns about United’s financial health in the face of high oil prices. Continental is now focused on a possible alliance with British Airways and American Airlines.
All four of the pure business class airlines were launched over the past couple of years to take advantage of a boom in business-class travel between Europe and the United States. They hoped to take on the established transatlantic carriers such as British Airways and Virgin by offering services tailored to business-class travellers.
However, sustained high oil prices have pushed up operating costs while the worsening economic environment has reduced demand for premium air travel and the new carriers struggled to compete with better-capitalised rivals.
Eos occupied the top end of this niche market and flew only 48 passengers on its Boeing 757s, styling itself a budget-first class service. Silverjet, the last of the British all-business-class carriers, flies 100 passengers on its larger 767 aircraft and charges from £999 for a business-class return – about a third of a typical BA business-class fare.
None of the three premium-only carriers that operated from Britain has ever made a profit. In regulatory filings in America, Eos said that it had lost $37 million (£18.6 million) in the first nine months of last year on revenue of $53 million. Silverjet was losing about £1 million a month and its share price has fallen from a peak of £2.09 last March to 14p.
A spokesman for Silverjet said: “We are a different model to Eos and we remain very confident of continuing to fly.”
Eos, which was founded by David Spurlock, a former British Airways executive, was the first of the low-cost business operators to launch, starting flights in October 2005, and it raised $212 million from private equity groups and individual investors. Eos had begun to edge its way into the City’s favours and is thought to have been included on the preferred airline lists of a number of big institutions. However, it still needed additional financing and approached its original investors seeking more money this month. When that move failed, Eos approached rival airlines, including BA and Virgin, to propose a takeover. It found no interest.
Jack Williams, the chief executive of Eos, said: “There are times when even though you execute your business plan, external forces prevent you from controlling your own destiny.”
Rising oil prices are causing havoc in the airline industry and Eos is the seventh carrier in two weeks to seek bankruptcy protection or go bust.