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Tue 15 Jan 2008 04:46 PM

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Silverjet denies it is 'likely to fail'

British business class-only airline hits back at broker's 'sell' note, says it is in strong financial position.

British airline Silverjet has dismissed a broker’s report that stated the business-class-only airline was "likely to fail" and gave its shares a target price of 0 UK pence.

In a statement to ArabianBusiness.com on Tuesday, Silverjet said the research published by Daniel Stewart contained numerous material mistakes and inaccuracies.

Silverjet said the company was in a strong financial position and would be generating cash from the end of March.

“The directors remain confident that Silverjet will achieve its first month of profit before tax in the current financial year ending March 31, 2008. Cash flow will be broadly neutral over the remainder of its current financial year ending March 31, 2008 and the business is expected to be cash generative thereafter," the airline said.

“The airline is in a strong financial position having just raised 22 million pounds ($43 million), 12 million pounds from existing investors and 10 million pounds from the Reuben Brothers as well as securing two new aircraft which will be delivered by March this year."

Silverjet’s shares plunged 28% to a low of 35.5 pence compared with the May float at 112 pence, after the broker’s sell views were published on Monday.

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, with its aircraft only 53% full in December.

He expected the company to continue to make a loss after its year-end in March.

“Eventually, we expect the cash to run out again.The fate of the business will then depend upon shareholders’ willingness to put up more equity,” Stoddart said.

Silverjet currently operates twice-daily flights between London Luton and New York, and a daily service to Dubai.

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