MAXjet seeks $50m for expansion

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The Independent Online

MAXjet, the business-class-only airline, is in talks with US hedge funds to raise $50m (£29m) to buy more planes and expand further into America and Europe. The US carrier, which has its hub at Stansted, started flying last November and offers flights to New York and Washington Dulles International only.

Gary Rogliano, chief executive, said the group wanted the extra funds to open new routes to the US before looking at launching services from Stansted to mainland Europe. American cities currently being considered include Boston, Orlando, Las Vegas, Chicago or Dallas, and San José.

After it completes its expansion plans, the group said it would then look at a possible initial public offering (IPO). "We would most likely float in two and a half years," said Mr Rog- liano. "I cannot see us being taken over. We have looked at AIM [the UK Alternative Investment Market], but we could list in the US, or both. We're a US company but we want to look and smell like a UK company as well."

MAXjet only offers business-class seats but bills itself as a low-cost provider, with return flights to New York from £854 and to Washington Dulles from £999. Mr Rogliano said both fares were cheaper than those offered by mainstream rivals such as British Airways or Virgin Atlantic.

The company is backed by a number of wealthy individuals and already has financing of around $90m. One of the few known backers is Ken Woolley, who founded the Richmond Ice Cream Company (now Richmond Foods) and has invested in another airline, the US domestic carrier JetBlue.

MAXjet currently has two aeroplanes but intends to have six by the end of this year and then 11 by the end of 2007.

Mr Rogliano claimed that MAXjet, which carried around 3,000 passengers in March, would be able to break even once it had three planes, and said that raising cash from hedge funds was particularly suited to the company's current stage of development. "They can move fast and are getting big in aircraft," he said.

He remained confident that the group would be able to compete with established carriers in the UK and US, as well as the rival business-class-only airline "eos", which offers full-price fares to the US. "We have the right product, service and price point. It's all about the execution and treating the passenger as a customer. We're not just throwing peanuts at them."

MAXjet has 102 seats on each of its two Boeing 767s, which amounts to more seats than eos has on its planes. It does not offer flat beds - unlike eos - but Mr Rogliano said the flights were not long enough to justify them.

MAXjet and eos launched last year amid much publicity, and both are investing heavily in marketing campaigns. However, some industry experts fear that the model will prove hard to sustain in the long term in an era of cut-price, no-frills aviation.

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