US-based all-premium carrier Eos has ceased operations and has filed for Chapter 11 bankruptcy protection, after failing to secure a new financing package in time to head off a cash-flow crisis.
The airline had been operating 48-seat Boeing 757-200s from London Stansted to New York JFK and was preparing to open new routes to Newark and Dubai.
Eos had been preparing to obtain a $50 million capital injection from one of its investors by 1 May but the carrier says that the transaction has not closed.
“After overcoming [an] extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action,” says Eos chief Jack Williams.
“We had been clear, since closing on our last round of financing, that we would need additional capital. As difficult as it is to raise funds in the current environment, investors believe in our business model and we were on the verge of success.
“Unfortunately, just as we were working toward closing on an investment that would have carried us to corporate profitability in 2009, some issues arose that we could not overcome.”
Eos has not elaborated on the nature of these issues. It will begin winding down its operations today but will cancel all flights from tomorrow. The airline says it will “immediately implement” a reduction in its workforce, eliminating the positions of “most of its employees”.
The company has already filed for Chapter 11 protection with New York’s southern district bankruptcy court.
“It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed,” says Williams. “That leaves us with insufficient cash on hand to continue operations.
“There are times in business when, even though you execute your business plan and even though your employees do their jobs beautifully, external forces prevent you from controlling your own destiny.”
Eos had been competing against UK all-premium operator Silverjet in the London-New York market. Silverjet also operates to Dubai, a market which Eos was planning to enter this summer.
Its collapse comes just four months after another all-premium transatlantic carrier, Boeing 767 operator Maxjet, went out of business.
Source: Air Transport Intelligence news
Source: Flight International