All-business class MAXjet to file for bankruptcy

Analysts suggest that flyer loyalty — to bigger carriers — makes the model followed by MAXjet, Eos and Silverjet difficult to sustain.

“The business class challenge is that there’s strong brand loyalty (frequent flyer programs), plus there’s likely some corporate deals that major carriers offer,” Boyd said. “These off-brand all-premium carriers will struggle.”

Eos and Silverjet issued statements Monday that touted their own success in the competitive market for business travelers.

“We are confident our business model works and this sets us apart from other early stage companies,” said Jack Williams, Eos’ president and CEO.

MAXjet’s failure was due, in part, to the airline’s inability to raise cash. The company attributed that failure to a “substantial deterioration in financial market confidence” driven by concerns about rising fuel and operating costs, “competitive pressure and (a) decline in consumer spending.”

Yet both Silverjet and Eos have raised additional capital in recent months to help fund operations. Eos was attractive to investors because it has a more upscale market niche and operates more fuel-efficient aircraft, Mann said. Silverjet serves more airports and offers more routes than MAXjet, he said.

Lawrence Hunt, CEO of Silverjet, said MAXjet’s issues shouldn’t be applied to the rest of the all-business class segment. Silverjet generates about three times as much revenue per plane as MAXjet, for planes of comparable size and configuration, Hunt said. Also, Silverjet has been able to keep its fuel costs nearly 40 percent below MAXjet’s, Hunt said.

“We’re rapidly approaching cash-positive (operational status),” Hunt said.

MAXjet advised customers who had booked tickets to seek refunds from their travel agency or credit card company.

MAXjet said trading in its shares on the London Stock Exchange’s Alternative Investment Market — halted earlier this month “pending clarification of its financial position” — would remain suspended. MAXjet shares last traded at 73.5 pence ($1.45).

Hotel rooms were being booked in London, New York, Las Vegas and Los Angeles through early January 2008.

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