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Sun 1 Jun 2008 08:57 AM

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Analysts blamed for Silverjet collapse

Critical analysts slammed by former CEO for destroying confidence in business class airline.

Critical City analysts are to blame for the collapse of UK-based business class airline Silverjet and not the soaring cost of fuel, its former chief executive said in comments published on Sunday.

Silverjet on Friday called in administrators and grounded its fleet after failing to get an emergency $5 million loan to keep the business afloat, becoming the third business class airline to collapse since December.

The collapse of the airline, which flies from Luton to New York and Dubai, has left as many as 10,000 customers either stranded or out of pocket, according to the UK's Civil Aviation Authority.

The demise of rivals Eos and Maxjet, and now Silverjet, have been blamed on fuel costs, the economic downturn in the US and UK, and what some have described as an unviable business model.

However, CEO Lawrence Hunt placed the blame squarely at the door of bearish comments by analysts, which he said cost the airline 7 million pounds ($13.9 million) in lost sales over the past six months.

"It's not the oil price, its confidence," Hunt told the UK's Telegraph newspaper. "When you have analysts who know nothing about our business writing what they write, it becomes self-fulfilling. It's the analysts that have killed us."

Silverjet has seen its share price nosedive from 1.50 pounds last summer to 13 pence before its shares were suspended on May 23 after the airline announced the first part of a $25 million rescue package from Abu Dhabi-based Viceroy Holdings failed to materialise.

Silverjet’s shares plunged 28% in January after a broker said the airline was "likely to fail" and gave its shares a target price of 0 pence.

Mike Stoddart, of Daniel Stewart Securities, said in an analyst’s note that Silverjet’s fares structure had failed to generate enough passengers to make money.

However, Hunt insisted its business model was viable. "Our business model is resilient to oil. We have been able to lift our prices by 20 pence in the past few weeks," he said.

Administrators are now in talks with several potential buyers and hope to sell the company early this week, according to a report in the UK's Sunday Times newspaper.

Airline sources say Viceroy might be one of the bidders, along with a group of former managers at the airline.

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