Oil prices and the credit crunch take out another one: Eos Airlines is abruptly shutting down today. Here's the announcement.
Eos operated at the top end of the all-business-class niche, using 757s configured with just 48 lie-flat seats to fly between Kennedy airport in New York and London Stansted Airport.
It's the second of the all-business-class startups to go out of business. MaxJet ceased operations last December.
On Dec. 24, when MaxJet folded, Eos issued a statement saying it was doing very well. "Industry failures, rising oil prices, a weakened economy and planned reductions in corporate travel have neither diminished travelers' enthusiasm for Eos ... nor hindered the company's march toward becoming an unqualified business success," that statement said.
Eos had 44 weekly flights between Kennedy and London Stansted, and was planning an ambitious expansion.
As part of that expansion, Eos had announced an additional daily route between Stansted and Newark that was scheduled to start May 5. Eos had also announced a new route between London and Dubai starting July 6.
Here’s the bankruptcy court filing Eos made yesterday.
The bankruptcy filing also notes that there are between 1,000 and 5,000 (unsecured) creditors.
But at the very end of the filing, after all those "whereas's" and "resolved's," the top 20 unsecured creditors are listed. The biggest unsecured claim in the top 20 is $744,000 and the smallest is $127,594 -- for a total of about $5.7 million. So there's a long way to go to get to the $34.8 million in debts claimed. My guess is that somehow, some people who bought tickets and hadn't flown yet are being counted as unsecured creditors -- though that still couldn't add up to anywhere near $34.8 million. And it would seem that the ticket dough in hand could also be regarded as an asset.
It's a curiosity, having twice the claimed assets as debts and filing for bankruptcy -- while at the same time maintaining, as Eos does, that it has no intention of continuing operations. (Or at least, commercial airline operations).
As usual, there is a need to look hard at airline numbers.
Anyway, here's some Wikipedia background on Eos.
Meanwhile, Silverjet, the all-business-class startup that flies 767s between Newark and London Luton airport, is offering to accommodate some Eos passengers.
Silverjet's own status is uncertain, although the airline insists its passenger loads are satisfactory.
Silverjet founder and CEO Lawrence Hunt tells me today that a "fundamental problem" Eos had was that it wasn't able to offer a "price advantage," once major-airline competitors like Delta, American and Continental brought transatlantic business class discounts down to Eos's level in the $3,500 to $4,000 round-trip range. Silverjet's roundtrip fares average around $2,000, he said.
The famously aggressively competitive American Airlines also hit Eos hard when it started a New York flight to and from Stansted last October, and added a second one last month, at negotiated fares that were undercutting Eos prices.
Hunt said that Silverjet has been in talks with several buyout "investment companies," none of whom are airlines.
"We get approaches all the time. A couple of them are quite serious in the last couple of months, but there's nothing to announce yet," he said. "Since the markets turned last year we've been looking for a long-term strategic investor who would continue to finance our expansion."
He added, "The fuel price obviously is hurting everybody, including us, and the general economic climate is not great" on the hotly competitive transatlantic routes. The Dubai route, he said, continues to do well.
Among Silverjet's current investors are the Reuben brothers, the billionaire London entrepreneurs, who have lent the airline over $20 million.