Silverjet flies higher after £26m placing

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The Independent Online

Silverjet, one of three business-class only airlines flying to New York, yesterday sprung a £26m share placing on its investors barely 11 months after its initial public offering.

The company, which launched its first route in January, found itself short of cash after its flights proved more popular than it had anticipated.

It also had to fund a number of "unexpected" projects, from fitting out its own private terminal at Luton to paying all its fit-out costs for its planes upfront.

The placing of 14.4 million shares at 180p each has been snapped up by its shareholders. The majority was placed with existing investors although a number of private individuals also took the opportunity to take a stake in the company.

Silverjet said that the extra cash would enable it to move into profit earlier that the 2010 target flagged by its brokers. Its shares, which have almost doubled in value since the company was floated, rose 4 per cent to 193.5p yesterday.

Lawrence Hunt, the chief executive, said the over-subscribed fundraising reflected the "ongoing success and strong prospects" of the firm . Travel journalists have raved about the new service, which has set out to become the first "full-frills" airline at rock-bottom prices. It undercuts its business-class only rivals Eos and Maxjet by some margin.

The bulk of the proceeds will be used to cover £11.6m of costs arising from last autumn's acquisition of the charter airline Flyjet. It has to fit out the 767 leased by Flyjet plus two further aircraft it is acquiring from ThomsonFly at around £2m each. Flat beds, ladies-only toilets and a separate quiet zone all come at a cost.

It also had to raise some extra cash to convince the Civil Aviation Authority that it can afford to put on additional routes and to cover the extra "unflown liabilities" that have arisen because it is flying with more passengers than it had expected. It had to find £3.3m to support its air tour operators' licence and credit card facilities, "given its short period of operations, to cover unflown liabilities", it said.

In a trading update yesterday, it said its load factor of 59 per cent was "significantly ahead of expectations". This means its performance in the year to 31 March will beat City forecasts, it added.

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