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Apr-28-2008UPDATE: Eos Airlines, All-business Carrier, Will Close Operations(topic overview)
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In the latest airline industry event caused by the U.S. credit crunch the Eos Airlines announced this weekend that it has filed for Chapter 11 bankruptcy protection and said that it would totally stop operations on Sunday or as late as Monday. The all business class transatlantic airline is the fourth carrier in the United States to go out of business this month, blaming the surging fuel prices, tight credit markets and the slowing economy, which are pretty much destructive for smaller companies. Airlines including Aloha AirGroup Inc., ATA Airlines Inc. and Skybus Airlines Inc. saw themselves forced to cease operations because they could not withstand the economical challenges. Eos plans to operate its last flights between London's Stansted Airport and New York's Kennedy Airport on Sunday after the company was forced to file a voluntary petition for Chapter 11 bankruptcy. The closely held Eos, based in Purchase, NY, previously this month said that it was expecting to receive around 50 million dollars in new capital from an investor, but unfortunately the financing process failed to take place, so that the company saw the impossibility of continuing operations because it did not have enough cash. The airline reported that it would probably lay off most of its employees. [1] The privately held airline, founded by former British Airways executive David Spurlock, secured $85 million in startup financing in June 2004 from several investors, including private equity firm Golden Gate Capital. It later received additional financing. The carrier was expected to close this Thursday on $50 million in additional financing from an undisclosed investor, but the deal fell through, according to a statement Sunday from Eos. That triggered Saturday's bankruptcy filing. "It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed," Chief Executive Jack Williams said. "That leaves us with insufficient cash on hand to continue operations." Eos operated its final flights Sunday from London's Stansted Airport to New York's John F. Kennedy International Airport, after which it planned to cease operations. The airline plans to immediately eliminate the jobs of most of its 450 employees.[2]
"Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome. "It is regrettable that, even though investors continue to be enthusiastic about our business model, we were unable to close on the financing we needed. That leaves us with insufficient cash on hand to continue operations." Eos issued advice for customers saying it could not pay refunds and advising them to contact their credit card company or travel agent, and contact other airlines to make alternative travel arrangements. Luton-based Silverjet - which has now seen two of its main competitors collapse - immediately said it would offer Eos passengers a limited number of seats on its London to New York route for the same price. Chief executive Lawrence Hunt said: "The airline industry is hugely competitive and this has been starkly illustrated by today's announcement."[3]
NEW YORK and LONDON, April 27 /PRNewswire/ -- Silverjet, the award-winning British exclusively business class airline, announced today a special rate offer to EOS customers following news that EOS has filed for bankruptcy. The offer allows EOS passengers booking with Silverjet access to a limited number of seats on the airline's New York to London route for the same price as their EOS ticket. "Our commitment first lies with ensuring our own passengers enjoy Silverjet's seamless stress-free experience, but we hope that this offer will provide some peace of mind to EOS passengers," said Silverjet CEO Lawrence Hunt. "The airline industry is hugely competitive and this has been starkly illustrated by today's announcement.[4] NEW YORK (Reuters) - Eos Airlines, which offers business class flights between New York and London, said it has filed for Chapter 11 bankruptcy protection, becoming the latest carrier to fail in the face of record fuel prices and a softening economy. Eos said it would stop operations entirely on April 27, cutting most of its work force.[5] Eos Airlines became the latest carrier to say it will shut down. The company filed for Chapter 11 bankruptcy and said it will end its operations today. Eos had offered all-business-class service between London Stansted and New York JFK. The BBC says "Eos will operate its final flights between London's Stansted Airport and New York's Kennedy Airport on Sunday. Its Sunday flights in the opposite direction have been cancelled."[6] PURCHASE, N.Y. (AP) — Eos Airlines has filed for Chapter 11 bankruptcy and will cease operations by Monday, it said Sunday. The business class-only airline is planning to operate its final flights between London's Stansted Airport and New York's Kennedy Airport on Sunday. The Purchase-based company intends to eliminate most of its work force.[7]
The "challenging economic and credit environment" forced the company to file a voluntary petition for Chapter 11 bankruptcy," chief executive Jack Williams said in a statement late Saturday night. The airline's flights between London's Stansted Airport and New York's Kennedy Airport Sunday will be its last. The Purchase, N.Y. -based company intends to eliminate most of its work force.[8]
The Premium Class New York-London carrier EOS Airlines is forced to shot down flight operations, but the planned investment does not close. Eos Airlines, the premium class New York to London carrier, which has become known for its operational excellence and uncrowded Guest experience, announced today that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code.[9] Eos Airlines, the loss-making U.S. all-business class carrier flying between London and New York, collapsed into bankruptcy and ceased operations on Sunday.[10]
Williams said that the airline was "working toward closing on an investment that would have carried us to corporate profitability in 2009. we were unable to close on the financing we needed. That leaves us with insufficient cash on hand to continue operations." In December, MAXJet, a rival business class transatlantic airline, filed for bankruptcy protection and ceased operations on its routes between London and New York, Las Vegas and Los Angeles.[8] Aloha Airgroup Inc., ATA Airlines Inc. and Skybus Airlines Inc. ceased operations earlier in April and Frontier Airlines Holdings Inc., filed for bankruptcy protection but continues to operate. Closely held Eos, based in Purchase, N.Y., earlier this month said it expected to receive $50 million in new capital from a current investor, "financing needed to take us to corporate profitability in 2009," the company said at the time.[11] Aloha Air, ATA and Skybus are the other notable carriers to abruptly end operations during the past few weeks. Another, Frontier, filed for bankruptcy but has not faced any operational disruptions. The Journal adds Eos had announced earlier this month that it "expected to receive $50 million in new capital from a current investor, 'financing needed to take us to corporate profitability in 2009,' the company said at the time.[6]
Eos said other carriers are under no obligation to honor unused Eos tickets. The company filed its bankruptcy petition in U.S. Bankruptcy Court in New York, listing $70 million of assets and debt of $35 million.[11] Rizon United Corp. holds a 24 percent stake, court records show. The company said in a note to passengers that they should seek other arrangements for travel and should contact their credit card companies or travel agents for information about how to obtain a refund for unused tickets. It said its frequent-flier program would no longer redeem points, adding that any value related to membership will be determined by the bankruptcy court. British all-business-class carrier Silverjet said Sunday that it would offer a special rate to Eos customers that allows them access to a limited number of seats on Silverjet's New York area to London route for the same price as their Eos ticket.[2] Silverjet'''s passenger numbers continue to climb each month, with a 23% increase in passenger traffic recorded in March alone. The airline operates a daily service from Dubai to its base at London Luton and a twice daily service from London Luton to New York. EOS customers wishing to take advantage of this offer need to call Silverjet on 800 044 0224.[12]
Eos was one of a handful of airlines that popped up in recent years to offer all-business class service between the United States and Europe, mainly from New York to London. One of its competitors, MAXjet Airlines, parked its airplanes and filed for bankruptcy Dec. 24, 2007.[13] 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.[14] The first of a new breed of start-ups hoping to challenge the dominance of BA and Virgin Atlantic, Eos filed for Chapter 11 bankruptcy this weekend after failing to finalise an eleventh-hour bailout package. Its final flight, a Boeing 757 to New York's JFK airport, took off from London Stansted at 6.30pm last night.[15]
Eos said it would operate two flights on Sunday from London Stansted Airport to John F. Kennedy International Airport in New York, but cancel all other flights and cease operations thereafter. Eos officials in a statement blamed the shutdown not on skyrocketing jet fuel prices, but instead on a failure to close a planned investment, saying that it had executed its business plan and investors believed in its business model.[16] The entire airline industry has been battling surging fuel prices, competitive pressures and declining consumer spending, particularly in the U.S. and UK. Eos will operate its final flights between London's Stansted Airport and New York's Kennedy Airport on Sunday. Its Sunday flights in the opposite direction have been cancelled.[17] Eos said it planned to operate two flights Sunday from London's Stansted Airport to New York's John F. Kennedy International Airport and then shut down. It advised passengers to contact their credit-card companies for refunds and to contact other airlines directly to make alternate travel plans.[11]
The New York based carrier says it will cease all operations by Monday. The company plans to operate its final flights between London's Stansted Airport and New York's Kennedy Airport on Sunday.[18]
Eos, which began flying between London Stansted and New York JFK airports in October 2005, is the second all-business class airline to fail within a few months following the collapse of Maxjet Airways, another U.S. start-up, in December.[10] Eos was launched two years ago, flying between New York's JFK airport and the UK's Stansted. Its collapse follows the demise of rival Maxjet last December.[17]
Eos was an improbably candidate for success in the airline industry. It flew one route, from New York's JFK to London. It was an all-business-class carrier.[19] Eos Airlines launched round-trip service only for business travelers going from New York to London in 2005, being named after the Greek goddess of the dawn.[1] Eos Airlines has filed for Chapter 11 bankruptcy, leaving hundreds of executives stranded in New York and casting doubts about the future of business class-only airlines.[15] REPRINTS Eos Airlines To Cease Operations APRIL 26, 2008 -- All-premium-class transatlantic carrier Eos Airlines on Saturday filed for Chapter 11 bankruptcy and said it would cease all operations Sunday, becoming the fourth U.S. carrier to shut down in less than one month.[16] On April 26, 2008, Eos airlines planned to operate Flight 6 (8:30pm) from JFK to STN. On April 27, 2008, Eos plans to operate Flights 3 (1:00pm) and 7 (6:30pm) from STN to JFK. Flight 5 from STN to JFK and all flights from JFK to STN on April 27, 2008 are canceled. Eos airlines will immediately implement a reduction in its workforce, eliminating the positions of most of its employees, and will cease operations entirely after April 27, 2008. Jack Williams, Eos''' CEO, said: '''After overcoming today'''s extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action.[9] Chief executive Jack Williams said the announcement was "particularly regrettable" after the airline had succeeded in negotiating terms for a round of financing despite the "extremely challenging economic and credit environment". "Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome," he added.[17] Chief Executive Officer Jack Williams said in a statement that the "challenging economic and credit environment" forced the company to file a voluntary petition for Chapter 11 bankruptcy.[7] The all-business-class carrier had needed, and was unable to secure, additional capital in "today's extremely challenging economic and credit environment," the carrier's chief executive officer, Jack Williams, said in a statement. The company said it was close to agreeing on an investment that would have enabled its operations to turn profitable in 2009, but "some issues arose that we could not overcome."[20]
Here's the word from Eos CEO Jack Williams. After overcoming today's extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action.[13]
"Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome. It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed. That leaves us with insufficient cash on hand to continue operations." Eos' shutdown not only follows the recent disestablishments of Aloha Airlines, ATA Airlines and Skybus, but also the Christmas Eve demise of all-premium-class transatlantic competitor Maxjet, after which Eos officials defended its business model as higher-end, more efficient and more corporate-focused than Maxjet.[16] Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome. It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed. That leaves us with insufficient cash on hand to continue operations. There are times in business when even though you execute your business plan and even though your employees do their jobs beautifully, external forces prevent you from controlling your own destiny.[13]
Dubai, United Arab Emirates Silverjet, the exclusively-business class British airline, has today announced it is to offer a special rate to EOS customers following news that the premium class transatlantic carrier has filed for bankruptcy. Lawrence Hunt, CEO, Silverjet, commented: '''Our first priority is ensuring our own passengers enjoy Silverjet'''s stress-free experience, however we hope that this special offer will provide some peace of mind to EOS passengers in light of today'''s announcement.''' Silverjet'''s private terminal and 30 minute check-in have proved hugely popular with UAE business passengers, and the airline remains confident in its business model despite industry challenges. '''The airline industry is extremely competitive and this has been clearly demonstrated by today'''s announcement. [12] The smaller carriers face stiff competition from deeper-pocketed large airlines that offer business-class service along similar routes. While business class service can be very profitable, it's also a very thin market, airline experts have said, noting that any loss of market share can be devastating to a carrier that only offers business class. Larger carriers, meanwhile, are looking at combinations to protect their futures. Delta Air Lines Inc. announced earlier this month its intention to acquire Northwest Airlines Corp. in a stock-swap deal. Both carriers have a trip through bankruptcy under their belts. "It's no surprise," Calyon Securities airline analyst Ray Neidl said of Eos' downfall.[2]
Eos Airlines Inc., a trans-Atlantic, all-business-class airline, filed for bankruptcy protection over the weekend and said it planned to shut down by Monday, becoming the fourth U.S. carrier to go out of business this month.[11] U.S. business-class airline Eos has filed for Chapter 11 bankruptcy protection and said it will cease operating flights by Monday.[17] All-business class airline Eos will cease operations on Monday after filing for bankruptcy protection in the U.S. The airline was making its last flight today and said most of its workforce would lose their jobs immediately.[3]
The high-flying luxuries came to an end Sunday as Purchase, N.Y. -based Eos ceased operations after filing for bankruptcy protection, the latest casualty of a credit crunch and a money-losing airline industry that has been hit hard by high fuel prices.[2] 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.[14] 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.[14] Forbes.com says Eos' collapse -''' coupled with the December demise of all-business class carrier MAXjet '''- raises "questions about the viability of smaller transatlantic carriers who are fighting rising fuel costs while trying to win market share from much bigger rivals." Other niche airlines still offering all-business-class service on trans-Atlantic routes are French carrier L'Avion and Britain's Silverjet.[6]
Lawrence Hunt, Silverjet's founder and chief executive, insisted the collapse of Eos would benefit his airline. "This is very good news for us as it leaves us as the only operator. It's very sad that they've gone but their business model was always going to struggle in a downturn as they weren't offering any major price advantage."[15] 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. It still needed additional financing and approached its original investors seeking more money this month.[14] Last August, the young airline struggled to arrange a fourth round of financing before securing $50 million of additional equity from institutional and private capital, with one unnamed investor, thought to be from Dubai, said to account for 70% of the total.[8]
Last-ditch efforts to raise $50m from one of the group'''s existing investors failed, and the airline said it did not have sufficient cash to continue operations.[10]
The New York-based business class-only airline says it has filed for Chapter 11 bankruptcy and will cease operations Monday.[2] UNITED STATES -- Another U.S. airline has filed for bankruptcy. This time it's business class-only Eos Airlines.[18] ATLANTA -- When Eos Airlines Inc. launched its first flights in 2005, the startup carrier named for a Greek goddess came with enthusiastic business travelers looking for more space who didn't mind hefty fares for premium service across the Atlantic. An Eos Airlines jet sits on the tarmac at Stanstead Airport in England in this undated photo.[2] Late Saturday night, premium service airline Eos Airlines announced that it was filing for bankruptcy, laying off most of its people and stopping all flights as of Sunday.[13]
Eos Airlines, the all business class transatlantic airline, has become the latest casualty of the credit crunch.[8] 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.[14]
The airline launched round-trip service for business travelers from New York to London in 2005. It was named after the Greek goddess of the dawn.[8] It may also call into question BA's decision to launch its own business class-only service from London City Airport to New York next year.[15]
The price for the New York to London flights, which it offered twice a day, ranged from $3,500 to $9,000 roundtrip.[2] The filing leaves Silverjet still flying all-premium flights between New York and London, and L'Avion flying the New York-Paris route.[13]
Eos's last flight was due to take off at 6.30pm on Sunday from Stansted to New York JFK on the route the airline has been operating for two years.[3]
Our unique relationship makes it all the more difficult to share with you the news that Eos has filed for bankruptcy in the U.S. Bankruptcy Court in the Southern District of New York.[9] The bankruptcy filing in New York listed $70.2 million in assets and $34.9 million in debts.[2]
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. [14] Coming just four months after rival Maxjet went bankrupt, the demise of Eos looks set to increase the pressure on Aim-listed Silverjet, the only remaining business class-only airline.[15] Silverjet's private terminals and exclusive lounge facilities that allow customers to arrive as little as 30 minutes prior to departure have proven to be extremely popular with business passengers. EOS customers wishing to take advantage of this offer are asked to call Silverjet toll-free at 877 FLY SILVERJET (877-359-7458).[4] Electronic proof of the ticket price paid to EOS is required. This offer applies to EOS customers booking with Silverjet before 7 PM EST on May 10, 2008.[4]
With our unique proposition and very reasonable prices, passengers can look forward to continuing to fly with Silverjet and enjoying the calm and intimate experience that we offer." Silverjet continues to increase its passenger numbers, with a 23 percent growth last month alone.[4]
Rival airlines including Silverjet and Virgin Atlantic were scrabbling to put in place special fares for stranded Eos passengers.[15] MAXjet, Aloha Airlines, ATA Airlines, Skybus Airlines and now Eos have filed for bankruptcy and ceased operations.[13] The announcement on Saturday evening was made after Eos was unable to complete negotiations over a financing deal to raise more cash. It becomes the second business-class airline to go bust in four months, following rival Maxjet, which collapsed at Christmas.[3] As recently as last week, it insisted that it was "hopeful" of securing the necessary funding. Industry sources said that Eos' bankers contacted major airlines such as Virgin Atlantic and BA in recent weeks in a desperate attempt to drum up an emergency cash injection or a rescue bid.[15]
Eos, based in Purchase, N.Y., is the latest of several U.S. and foreign airlines that have closed shop because of high jet-fuel costs, difficult credit markets, tough competition, and wavering consumer demand.[20] Clearly, even in today's challenging economic and credit environment, investors believe in Eos.[9] As difficult as it is to raise funds in the current environment, investors believe in our business model and we were on the verge of success," said Eos CEO Jack Williams in a statement Saturday night.[16] 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."[14]
There have been a handful of small carriers to file for Chapter 11 or go out of business in recent months. One of Eos' main rivals in the all-business-class niche, MAXjet Airways, stopped flying in December.[2] This puts two of the three startup all-business class carriers out of business in the last four months (MaxJet folded in December), leaving Silverjet the only remaining contender. At least they tried to run a few flights after officially shutting down operations.[21] The carrier operated Boeing 757 planes outfitted with just 48 seats that converted to lie-flat beds. Prices, in the range of $2,700 to $3,400 round trip, were much lower than business class on larger competitors.[11]
Rising fuel prices, tight credit markets and the slowing economy are wreaking havoc on all U.S. carriers.[6]
Eos joins a number of other carriers to shut down in recent weeks, including Aloha Airlines, Champion Air, ATA Airlines, Skybus Airlines.[5] An Eos Airlines jet sits on the tarmac at Stanstead Airport in England in this undated photo.[7] The airline now operates a twice-daily service from Newark Liberty Airport to London Luton and a daily service from London to Dubai.[4]
Many believed that it was the end for Silverjet when EOS announced flights to Dubai and Newark from London. Luckily for Silverjet this competition from EOS will never take off.[14]
Eos issued a statement saying it was filing for Chapter 11 bankruptcy, which gives companies protection from creditors, and can be used to keep a firm operating.[3]
SOURCES
1. Eos Airlines Files For Chapter 11 Bankruptcy
2. All-business-class niche airline Eos folds
3. Eos goes bust - Travel Trade Gazette
4. Silverjet plc :: Silverjet Launches Seat Offer to EOS Passengers
5. Eos Airlines files bankruptcy | Reuters
6. Eos Airlines to shut down - Today In the Sky - USATODAY.com
7. The Associated Press: N.Y.-based business class airline Eos to cease operations
8. Last Dawn For Eos Airlines - Forbes.com
9. EOS Airlines The Latest Casuality Of Credit Crunch Filing For Bankruptcy
10. FT.com | Eos Airlines collapses into bankruptcy
11. Eos is Fourth U.S. Airline To Shut Down This Month - WSJ.com
12. Silverjet Launches Seat Offer to EOS Passengers
13. AIRLINE BIZ Blog | The Dallas Morning News
14. Eos bankruptcy filing signals end to cheap executive travel - Times Online
15. Eos Airlines files for bankruptcy - Telegraph
16. Eos Airlines To Cease Operations
17. BBC NEWS | Business | US business airline Eos goes bust
18. News 10 Now | 24 Hour Local News | ALL NEWS | Eos Airlines files for bankruptcy
19. Eos: Another airline goes under - BloggingStocks
20. UPDATE: Eos Airlines, All-business Carrier, Will Close Operations
21. Eos Airlines files for bankruptcy - Gadling
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