Whats the agenda Capability, that article was posted over 2 months ago. Here is one from one month ago.
First, let’s take a look at the Reuben Brothers’ decision not to take shares in the airline. The two options open to them on 11 February were exchanging their £10m for 18.3 million shares, then priced at 24p, or carrying on with the loan until December 2009, when it is repayable at an attractive rate of LIBOR plus 2%. Converting to shares would have instantly valued their investment at £4.4m. Yes, there’s the potential future upside but it’s not something most share dealers would agree to do easily.
I think the most significant thing to come out of it is that the brothers have not asked for repayment of their loan. If they were truly worried about its future, they would have foreclosed. Indeed, at the time of the decision, the brothers said: “We continue to believe the company has a sound business model and excellent prospects for the future to become a major player in the global aviation business.”
Secondly, let’s take a look at the competition from Eos. I personally think that the passengers that the two airlines attract are very different. Eos is essentially a traditional first class product which is called business class only to make companies feel comfortable about sending their business travellers on it. Silverjet, on the other hand, is a business class product through and through but at far lower fares than the traditional carriers.
Most business travellers I have spoken to about Silverjet cannot rate it highly enough. There’s the odd grumble about having to go to Luton but the service, both on the ground and on the plane, are impeccable.
Some people may be concerned about the airline’s viability. Despite the share price, the airline must have plenty of cash, amassed from the loan, a £12m share issue and a successful January sale. I suspect a certain amount of mischief-making in the current wave of rumours about the airline but I personally think there’s little to worry about at the moment. I could be proven wrong – and I hope I am not because Silverjet brings much needed choice to the business travel sector – but I believe that the airline has a rosy future.