Maxjet in Big Financial Trouble 0
Maxjet Airways, one of the all-business transatlantic carriers trying to carve out their niche, requested that their shares stop trading on the London Stock Exchange today, pending the “clarification of its financial position.” Yikes! I’m no financial wizard, but when you ask for your stock to be suspended, it probably mean you are in a little bit of a financial pickle.
The numbers back this up, with Maxjet reporting major losses of $31.9 million during the first six months of this year. For the full year 2006 Maxjet threw an amazing $79 million down the tubes, it was their first year of operation. Most new airlines expect to make losses while they get their operations going and achieve some scale, but I doubt they expected to lose that much.
So what is their explanation for being so deep in the red? From the Financial Times:
It has faced mounting losses in the face of surging fuel prices and lower than expected fare yields. Higher
maintenance costs for its ageing fleet of Boeing 767 aircraft have also depressed financial performance.
Guess what guys, the rest of the world has had record fuel prices and aging fleets to deal with too. It seems Maxjet may have overestimated the demand for discount business class service over the Atlantic, and are in big trouble because of it now. If this were truly the case, you would think the rest of this category of airlines would be in trouble too. Quite the contrary though, as Silverjet has just announced it will expand its current current fleet of 767s.
For the time being operations and reservations go on as normal while executives scramble to secure fresh financing. I haven’t has the pleasure of trying Maxjet out myself yet, but here’s to hoping the airline will still be around when I do get that opportunity!