I don't know befree but I don't think his/her comments are too far wide of the mark. I've just spent ten minutes having a quick look at the numbers and it is not a pretty picture.
First and foremost, there is no doubt that the Silverjet product is very good and that passengers are flying with them in significant numbers. I don't think anyone can question that. However, there is a fundamental difference between being a good airline and being a good business. Their customers are paying far less for the service than it costs Silverjet to provide it.
Note 5 to its most recent set of accounts (to 30 September 2007) shows that the scheduled operation had revenue of £12.15m and made a loss of £11.74m.
If you go back through the reports, in the six months to 30 September they had carried 24,603 passengers at a loadfactor of 70% (capacity of 35,300 seats). It means that the average fare per passenger was £493 (£12.15m divide by 24,603 pax).
To break even, its revenue would logically need to have been £24.05m (the existing revenue of £12.15m plus the loss of £11.74m). Divide that by the average fare of £493 and you'd need to carry 48,700 passengers. It means that their break-even loadfactor is 137% based on current yields. Bit tricky to achieve that.
Alternatively, if you carried the same number of passengers, the average fare to break even would need to increase from the current £493 one-way to £977 one-way. Will the customer pay double the current fare to still travel with them?
Even if you assume that the loadfactor increases to 80% and you perhaps get the yield up by 20% (probably not outrageous assumptions) then it's still only earning £16.7m and then making a loss of £7.3m for six months. Still not sustainable.
The comments yesterday about MaxJet were pretty outrageous. The Silverjet press release makes it sound like MaxJet has ceased operations, which (as at today) it hasn't. I think MaxJet could have a serious go at Silverjet for predatory behaviour.
There is another glaringly idiotic statement in the Silverjet release. It says that it "anticipates that it will report profits within the financial year ending March 2008". First of all, I didn't think that quoted companies were supposed to give any statements like that unless a profits warning. Secondly, with a £13.1m loss in the first half of the year, the second half will need to show an absolutely stonking profit to get back to break-even and into profit.
Do you see now why some people are saying that this business can never work? It is not being aggressive - it just looks like a simple statement of fact to me. As I said earlier, the product is fantastic, without doubt. The same could probably be said of the other all-Business Class airlines who are undoubtedly in the same boat, but unless the customer is prepared to pay a lot more (i.e. double) for the priviliege of flying with them, it can't last.