Maxjet Halts Flights, Files For Chapter 11
Tuesday, December 25, 2007
Maxjet Airways, the all-business-class carrier based in Dulles, yesterday ceased operations -- canceling flights on Christmas Eve -- as it filed for bankruptcy protection.
The company blamed the shutdown on the high cost of fuel, competition from rival airlines and the credit crunch, which left it without adequate financing.
"We are forced to take this drastic measure," William D. Stockbridge, Maxjet president and chief executive, said in a statement addressed to customers posted on the company's Web site. "Our top priority is to assist our customers, particularly those who already have begun their travel with us, in securing alternative flight accommodations."
The tiny airline has struggled almost from its start in 2005, when regulatory hurdles and the rising cost of fuel delayed its launch for several months. Billing itself as a niche carrier for the business traveler, Maxjet offered gourmet meals, deep-reclining leather seats and on-demand entertainment for about $2,000 a ticket, compared with $4,000 or more for a seat to London on a legacy carrier.
But Maxjet's bottom line has been undermined by rising fuel and operating costs as well as concerns about the economy, the company said in regulatory filings. In addition to seeking Chapter 11 bankruptcy protection, the company announced the resignation of non-executive chairman Ken Woolley and two non-executive directors, Paul Kehoe and Roger Flynn.
Maxjet said Kehoe and Flynn stepped down because the company no longer needed directors with "United Kingdom public-market expertise" after failing to find alternative financing. Woolley resigned because of potential conflicts of interest as a creditor of the company under the Chapter 11 process, Maxjet said.
To help accommodate customers awaiting a return flight between New York and London, the company prepaid Eos Airlines, another business-class airline, to provide about 500 seats. Maxjet said passengers traveling among London, Los Angeles and Las Vegas will be contacted about making other arrangements. In a separate statement, Continental Airlines said it would allow Maxjet ticket holders to fly stand-by on flights between London Gatwick Airport and Los Angeles, Las Vegas and Newark through Jan. 6.
Maxjet also said it paid for 450 hotel rooms in London, New York, Las Vegas and Los Angeles through early January for customers whose travel plans have been disrupted. Maxjet said it was also seeking to authorize more funds for hotels and airfare for customers through a motion with U.S. Bankruptcy Court.
"I sincerely apologize to our shareholders, employees, customers and suppliers," Stockbridge said in a regulatory filing. "Our efforts to raise additional capital have been unsuccessful. . . . I deeply regret any inconvenience caused."
Maxjet canceled operations out of Dulles in October. Its most profitable route, from New York to the suburban London airport Stansted, has faced increased competition from American Airlines, said Robert Mann, an airline consultant.
American Airlines has "20 flights a day, they have a very strong frequent flier program and they have a lot of corporate contracts," Mann said. "It is just real difficult for an upstart to compete on that basis."