SilverJet (Merged 30/05)
New aircraft and November loads
4 December, 2007
Operational update and November Passenger and Traffic Statistics
Silverjet plc (“Silverjet”), the British airline offering a private jet experience at a fraction of the price, today announces that it has entered into an agreement to acquire two further Boeing 767 Extended Range aircraft and announces another record set of traffic statistics for November 2007.
New aircraft
Silverjet has secured two further Boeing 767 Extended Range aircraft from Thomsonfly Limited for delivery in March 2008. The aircraft have been owned and operated by Britannia Airways (now Thomsonfly) since new.
Both aircraft have the more powerful variant of General Electric CF6 engines, enabling greater take off performance and therefore range allowing Silverjet to operate on most long haul routes from its excellent base at London Luton Airport.
These aircraft have an operational range of over 9,600 kilometres (6,000 miles) from London Luton Airport, Silverjet’s base. In addition to New York Newark and Dubai, the aircraft will be capable of operating, for example, to Delhi, Johannesburg, Mauritius, Shanghai and Los Angeles carrying 100 passengers.
In keeping with Silverjet’s existing fleet, the new aircraft are fully certified for Extended Twin Engined Operations (“ETOPS”) to 180 minutes, meaning they can fly on the shortest available route over stretches of water being 180 minutes from the nearest diversion airport. This enables Silverjet to reduce flying time, for example between London and New York by up to 45 minutes compared to airlines without ETOPS, and significantly reduce fuel costs.
November 2007 Passenger and Traffic statistics
1st–30th November 2007
Available seats 13,500
Revenue seats¹ 7,459
Load factor 55.3%
On time departures² 81.75%
¹ ‘Revenue seats’ represents the number of seats generating commercial revenue and also passengers on non-refundable tickets that have not flown.
² ‘On time’ is defined as departure within 15 minutes of scheduled departure time.
The airline is pleased to announce another record set of passenger figures.
Silverjet’s London Luton to Dubai service, which makes Silverjet the first commercial airline to use Dubai’s private executive terminal, launched successfully on 18 November and figures for this route are included in the traffic statistics. Yields and load factors on this route are already exceeding expectations.
Lawrence Hunt, Chief Executive of Silverjet, said:
“We are delighted to have completed the purchase of two further high quality long range aircraft on highly attractive terms relative to current aircraft prices, and to have announced another record set of traffic statistics.
“Yields continue to strengthen which is further testament to the market endorsement of our product. We are seeing very high numbers of repeat customers and New York sales in November was the best month to date.
“The launch of our Dubai service has exceeded management’s expectations and feedback from customers and the media has been outstanding, in particular the reaction to our private terminal experience and revolutionary 30 minute check-in.
“Yields continue to strengthen and forward bookings remain strong. Despite the well publicised economic uncertainty, we believe that Silverjet is well positioned to take advantage of business travellers desire to reduce their travel budgets. Silverjet’s fares are from £999 return, representing a typical 50% discount off competitor business class fares.
“We are seeing an increasing number of enquiries from corporate customers and registrations for our frequent traveller programme, the Silverjet Set, introduced last month have exceeded 500 companies.”
Operational update and November Passenger and Traffic Statistics
Silverjet plc (“Silverjet”), the British airline offering a private jet experience at a fraction of the price, today announces that it has entered into an agreement to acquire two further Boeing 767 Extended Range aircraft and announces another record set of traffic statistics for November 2007.
New aircraft
Silverjet has secured two further Boeing 767 Extended Range aircraft from Thomsonfly Limited for delivery in March 2008. The aircraft have been owned and operated by Britannia Airways (now Thomsonfly) since new.
Both aircraft have the more powerful variant of General Electric CF6 engines, enabling greater take off performance and therefore range allowing Silverjet to operate on most long haul routes from its excellent base at London Luton Airport.
These aircraft have an operational range of over 9,600 kilometres (6,000 miles) from London Luton Airport, Silverjet’s base. In addition to New York Newark and Dubai, the aircraft will be capable of operating, for example, to Delhi, Johannesburg, Mauritius, Shanghai and Los Angeles carrying 100 passengers.
In keeping with Silverjet’s existing fleet, the new aircraft are fully certified for Extended Twin Engined Operations (“ETOPS”) to 180 minutes, meaning they can fly on the shortest available route over stretches of water being 180 minutes from the nearest diversion airport. This enables Silverjet to reduce flying time, for example between London and New York by up to 45 minutes compared to airlines without ETOPS, and significantly reduce fuel costs.
November 2007 Passenger and Traffic statistics
1st–30th November 2007
Available seats 13,500
Revenue seats¹ 7,459
Load factor 55.3%
On time departures² 81.75%
¹ ‘Revenue seats’ represents the number of seats generating commercial revenue and also passengers on non-refundable tickets that have not flown.
² ‘On time’ is defined as departure within 15 minutes of scheduled departure time.
The airline is pleased to announce another record set of passenger figures.
Silverjet’s London Luton to Dubai service, which makes Silverjet the first commercial airline to use Dubai’s private executive terminal, launched successfully on 18 November and figures for this route are included in the traffic statistics. Yields and load factors on this route are already exceeding expectations.
Lawrence Hunt, Chief Executive of Silverjet, said:
“We are delighted to have completed the purchase of two further high quality long range aircraft on highly attractive terms relative to current aircraft prices, and to have announced another record set of traffic statistics.
“Yields continue to strengthen which is further testament to the market endorsement of our product. We are seeing very high numbers of repeat customers and New York sales in November was the best month to date.
“The launch of our Dubai service has exceeded management’s expectations and feedback from customers and the media has been outstanding, in particular the reaction to our private terminal experience and revolutionary 30 minute check-in.
“Yields continue to strengthen and forward bookings remain strong. Despite the well publicised economic uncertainty, we believe that Silverjet is well positioned to take advantage of business travellers desire to reduce their travel budgets. Silverjet’s fares are from £999 return, representing a typical 50% discount off competitor business class fares.
“We are seeing an increasing number of enquiries from corporate customers and registrations for our frequent traveller programme, the Silverjet Set, introduced last month have exceeded 500 companies.”
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Just in case anyone is wondering, and as it is not made clear, the above was from a Silverjet press release that came out today.
It would be interesting to know who flies London-New York on non-ETOPS twins.
It would be interesting to know who flies London-New York on non-ETOPS twins.
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The press release is just spin to make sure the investers do not notice that on average each 767 only had 55.3 pax, down from 58.5 pax last month.
The have told investors a few times about the "new" 767s. Its a bit like the government keep using the same "new" money.
The have told investors a few times about the "new" 767s. Its a bit like the government keep using the same "new" money.
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I assume the load factor in October was based on 2 x daily EWR. If Nov they launched a new route to DXB, it is not obvious that the average LF would drop as new routes can take months to bed in..??
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They will have done 135 sectors. About 114 will be EWR and 21 to Dubai. If there are 30 on each Dubai sector then that leaves about 60 for each Newark one.
That would a up from the 58.5 to Newark in October. Dubai could be better or worst but overall the numbers would not be great.
The CAA data should show us the real spit when it comes out
That would a up from the 58.5 to Newark in October. Dubai could be better or worst but overall the numbers would not be great.
The CAA data should show us the real spit when it comes out
The bit about ETOPS plumbs new depths even for standard press release bolleaux.
The load factors are poor and worsening, and as was pointed out can't be explained away by a new route. I would even argue that they should expect a spike in demand on launching a new route as I would expect many C regulars with established carriers to give them a go, before returning to the allure of frequent flyer miles.
Not good.
The load factors are poor and worsening, and as was pointed out can't be explained away by a new route. I would even argue that they should expect a spike in demand on launching a new route as I would expect many C regulars with established carriers to give them a go, before returning to the allure of frequent flyer miles.
Not good.
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Some very negative comments here especially from befree who is clearly on a mission.
In the last couple of months the airline has doubled capacity on one route and introduced another route. The knockes seem to think that loads should already be around 80%. Some people here need to get real and accept that the company’s airline fleet has tripled almost overnight.
In the last couple of months the airline has doubled capacity on one route and introduced another route. The knockes seem to think that loads should already be around 80%. Some people here need to get real and accept that the company’s airline fleet has tripled almost overnight.
Last edited by King Pong; 8th Dec 2007 at 10:17.
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I couldnt agree more!
As someone who actually works for Silverjet (not management either!!) I can safely say whenever I fly the loads are always sixty plus, more so the case in the high eighties. The new Dubai route in getting some great feedback from customers too and with our private lounge access we are definately on to a winner there. If anyone has ever flown into DUBAI International you will understand where I am coming from.
On top of all that there is a great buzz within the company. I have never worked with such a wonderful, positive and enthusiastic group of people. Yes there have been hick-ups along the way and I am quite sure there will be more to come, but all things considered when you fly with us you will see for yourself its a pretty special product!
As someone who actually works for Silverjet (not management either!!) I can safely say whenever I fly the loads are always sixty plus, more so the case in the high eighties. The new Dubai route in getting some great feedback from customers too and with our private lounge access we are definately on to a winner there. If anyone has ever flown into DUBAI International you will understand where I am coming from.
On top of all that there is a great buzz within the company. I have never worked with such a wonderful, positive and enthusiastic group of people. Yes there have been hick-ups along the way and I am quite sure there will be more to come, but all things considered when you fly with us you will see for yourself its a pretty special product!
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Loads in the 80%s.......? 
Quote e-tid:
Passenger figures for November.
"Silverjet flew 7,459 revenue seats out of a total of 13,500 available, giving it a load factor of 55.3% last month."
Stoney
Quote e-tid:
Passenger figures for November.
"Silverjet flew 7,459 revenue seats out of a total of 13,500 available, giving it a load factor of 55.3% last month."
Stoney
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.
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.
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Pprune is a free speech website and that what endears it to most of us.
I for one though, do feel rather uncomfortable when it becomes absolutely clear that one or more contributors have one clear objective - to make an effort to bring about the demise of a business; in this case an Airline. Their endeavors almost certainly have no effect, but the mere fact that they try so hard I find rather distasteful. This is people's jobs and lives that we are talking about.
I have no doubt that the 'facts' they spout are correct - but like politicians, they only spout the bits that support their own particular cause. The whole story might well reveal something very different.
So, I find Befree and the rest to be rather sad individuals who probably lead rather sad lives. I hope to God that I never have to work or drink with any of them.
BS
I for one though, do feel rather uncomfortable when it becomes absolutely clear that one or more contributors have one clear objective - to make an effort to bring about the demise of a business; in this case an Airline. Their endeavors almost certainly have no effect, but the mere fact that they try so hard I find rather distasteful. This is people's jobs and lives that we are talking about.
I have no doubt that the 'facts' they spout are correct - but like politicians, they only spout the bits that support their own particular cause. The whole story might well reveal something very different.
So, I find Befree and the rest to be rather sad individuals who probably lead rather sad lives. I hope to God that I never have to work or drink with any of them.
BS
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Its the free speech element that makes this site useful. I don't think people are trying to pull an airlines down but they are making valid points and observations about the all-business class model
Silverjet has an almost identical business model to MaxJet but costs are probably higher because of 'product differentiators' like the dedicated lounges/terminals (call them what you like!) Its evident the model requires substantial amounts of cash to keep it alive long enough to generate critical mass.......and generating the mass merely increases cash burn. Take a close look.....SJ demand extra financing everytime they introduce a new [old] aircraft and two more are pending in MAR 08.
The Reubens aren't in this for fun - they are serious businessmen - and they are unlikely to behave like some infinite money pump; I think they are having a punt with SJ. The probable scenario is that they let it continue expending the cash generated in the last round of financing, hope it survives long enough for the brand to develop some real value (goodwill on the books) and then and then pick it off cheap (share price only going one way at the moment), take it private and leave Round 1 and 2 investors with nothing. If that doesn't happen then they have spent some pocket money and the business will go the same way as Maxjet (whatever that proves to be) and, no doubt, EOS will follow at some point. By the way, as a US corpration I believe MaxJet will have the benefit of Chapter 11 even though the last round of funding was raised in the UK; ironically, this gives them an advantage over UK airlines.
For the all business class model to work, they need to keep costs low. SJ and Max have appear to be spending fortunes on PR (freebies for journos, award givers and 'influencers'?) and marketing (TV adverts, loads of internet advertising, magazines and airport and roadside hoardings etc.) to develop a brand in the vain hope of adding enough value to attract a buyer before cash exhaustion.
All Business Airlines offering low fares need to embrace the tricks employed by proper LoCo airlines such as Ryan and Easy. LoCo airlines do not differentiate; they drive down cost and maximise revenue - passengers expect less when they pay less. At the moment costs are increasing rapidly for airlines, mainly due to fuel, but the fares at the all business class airlines don't seem to be keeping pace with those increases - in fact they are now under pressure to reduce them from the legacy carriers (BA have an offer for £1200 Club World return to NY at the moment).
LoCo models rely on LF (equivalent to volume sales in discount supermarkets).......but LF is not the panacea to success in an airline so don't read too much into the monthly load figures. Anyone can sell £1 for 50p or in the case of the all business class model anyone call sell a £2000 seat for £999. If the product is as good at it is alleged by then it should warrant a premium or be capable of price matching, it should not require a heavy discount. Something has to - revenue or cost!
Maxjet and Silverjet are wholly comparable (EOS to a lesser degree because of their higher fares and top end target market) and therefore it does not bode well for SJ. Its a shame but the all business class model appears to be fundamentally flawed. I wish them all well..... but I fear for them.
That said, what is happening to MaxJet should be a wake up call for SJ and EOS and L' Avion in France - hopefully their management teams will act upon it before its too late!
The only advantage I see for SJ if Maxjet does cease operating is that it might generate some aircraft for expansion (assuming they can afford it) but it might mean accepting different engines.
Its the free speech element that makes this site useful. I don't think people are trying to pull an airlines down but they are making valid points and observations about the all-business class model
Silverjet has an almost identical business model to MaxJet but costs are probably higher because of 'product differentiators' like the dedicated lounges/terminals (call them what you like!) Its evident the model requires substantial amounts of cash to keep it alive long enough to generate critical mass.......and generating the mass merely increases cash burn. Take a close look.....SJ demand extra financing everytime they introduce a new [old] aircraft and two more are pending in MAR 08.
The Reubens aren't in this for fun - they are serious businessmen - and they are unlikely to behave like some infinite money pump; I think they are having a punt with SJ. The probable scenario is that they let it continue expending the cash generated in the last round of financing, hope it survives long enough for the brand to develop some real value (goodwill on the books) and then and then pick it off cheap (share price only going one way at the moment), take it private and leave Round 1 and 2 investors with nothing. If that doesn't happen then they have spent some pocket money and the business will go the same way as Maxjet (whatever that proves to be) and, no doubt, EOS will follow at some point. By the way, as a US corpration I believe MaxJet will have the benefit of Chapter 11 even though the last round of funding was raised in the UK; ironically, this gives them an advantage over UK airlines.
For the all business class model to work, they need to keep costs low. SJ and Max have appear to be spending fortunes on PR (freebies for journos, award givers and 'influencers'?) and marketing (TV adverts, loads of internet advertising, magazines and airport and roadside hoardings etc.) to develop a brand in the vain hope of adding enough value to attract a buyer before cash exhaustion.
All Business Airlines offering low fares need to embrace the tricks employed by proper LoCo airlines such as Ryan and Easy. LoCo airlines do not differentiate; they drive down cost and maximise revenue - passengers expect less when they pay less. At the moment costs are increasing rapidly for airlines, mainly due to fuel, but the fares at the all business class airlines don't seem to be keeping pace with those increases - in fact they are now under pressure to reduce them from the legacy carriers (BA have an offer for £1200 Club World return to NY at the moment).
LoCo models rely on LF (equivalent to volume sales in discount supermarkets).......but LF is not the panacea to success in an airline so don't read too much into the monthly load figures. Anyone can sell £1 for 50p or in the case of the all business class model anyone call sell a £2000 seat for £999. If the product is as good at it is alleged by then it should warrant a premium or be capable of price matching, it should not require a heavy discount. Something has to - revenue or cost!
Maxjet and Silverjet are wholly comparable (EOS to a lesser degree because of their higher fares and top end target market) and therefore it does not bode well for SJ. Its a shame but the all business class model appears to be fundamentally flawed. I wish them all well..... but I fear for them.
That said, what is happening to MaxJet should be a wake up call for SJ and EOS and L' Avion in France - hopefully their management teams will act upon it before its too late!
The only advantage I see for SJ if Maxjet does cease operating is that it might generate some aircraft for expansion (assuming they can afford it) but it might mean accepting different engines.
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I cannot make silverjet fail. It will fail as it costs £2000 to provide a service it sells for £1000. It needs to be able to charge a more but have lower costs.
A large number of pax are jurnos or trade going for free.
There may be room for a nich player but not for 3.
A large number of pax are jurnos or trade going for free.
There may be room for a nich player but not for 3.
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Befree I guess you will be celebrating if Silverjet did fail. Now tell me Befree, as you are clearly an expert in running an airline. Can you name a single airline that made a profit in its first year of operations? The truth is you know nothing.
The fact is that the airline has been earning revenue for less than one year but paying staff and bills for considerably longer. All that revenue has come mainly from one aircraft. Now they are expanding and revenue streams will grow considerably while costs will fall.
I seem to remember BA making massive losses not that long ago but what's this, they are still trading. According to the laws of Befree they should be dead a buried.
The fact is that the airline has been earning revenue for less than one year but paying staff and bills for considerably longer. All that revenue has come mainly from one aircraft. Now they are expanding and revenue streams will grow considerably while costs will fall.
I seem to remember BA making massive losses not that long ago but what's this, they are still trading. According to the laws of Befree they should be dead a buried.
Last edited by King Pong; 9th Dec 2007 at 12:29.
Paxing All Over The World
Within two years, I expect that SJ, Max + Eos will be merged into one. These mergers will not be at the choosing of the carriers. I say that with no pleasure, simply observing commercial operations - irrespective of them being airlines or departments stores.
The market cannot take three specialist carriers and the investors know that - they hope to be able to ride the switchback to the point where mergers and acquisitions take place. If one of the carriers was in Scotland or Manchester it might make it easier for themselves but three of them so close together? No.
Factors against the three newbies:
The market cannot take three specialist carriers and the investors know that - they hope to be able to ride the switchback to the point where mergers and acquisitions take place. If one of the carriers was in Scotland or Manchester it might make it easier for themselves but three of them so close together? No.
Factors against the three newbies:
- LH proved the concept but did so with an extension to their product and did not have to start from scratch.
- Other majors are now going to open their own 'Privat Air' operations.
- A nasty recession in the UK + USA is now upon us.
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King Pong
Airlines making a profit in the first year are something of a rarity
...............the failure of airlines requiring £70m to get 3 aircraft flying is much more common-place.
Airlines making a profit in the first year are something of a rarity
...............the failure of airlines requiring £70m to get 3 aircraft flying is much more common-place.