Silverjet PLC is in talks to replicate its premium-class model through franchise deals around the world even as it treads cautiously in expanding its core business, the high-end airline's CEO said Thursday.
Chief Executive Lawrence Hunt also said the company has been approached by multiple potential buyers, although the private investment fund that recently injected much-needed cash into the UK carrier is not among them.
"We've not gone out and said we're for sale, but we have been approached by a number of companies," he said, declining to name the suitors.
In a wide-ranging interview, Hunt sought to distinguish Silverjet from former U.S. competitors MAXjet Airways Inc. and Eos Airlines Inc. The three airlines helped pioneer the all-business-class jetliner model, but its rivals' recent bankruptcy filings have left Silverjet as the only remaining luxury airline offering New York-to-London service.
Like mainline carriers such as AMR Corp.'s American Airlines and British Airways PLC, Silverjet continues to struggle with rapidly rising fuel costs, tightening credit markets and a slowing economy. Those factors, along with what some observers said was overly aggressive growth, helped bring down MAXjet and Eos.
Even so, Silverjet is moving ahead with plans to expand its core business. Hunt said the aim is to launch a new route every six to 12 months.
The carrier now flies to New York and Dubai, United Arab Emirates, from its home at London Luton Airport. Possible additional destinations include Los Angeles and San Francisco, as well as cities in South Africa and India.
"We see the opportunity to grow in all sorts of places and all sorts of ways," Hunt said. "The issue for us is not running before we can walk."
While the all-business class niche is popular with business travelers and other passengers who can afford it, the lucrative market is thin and sensitive to economic downturns.
Late last month, Silverjet said it found an investor willing to pump up to $100 million into the cash-strapped carrier. The airline last week identified the investor as Viceroy Holdings LLC, a closely held firm based in New York and Dubai.
Hunt said Viceroy, which injected an initial $25 million in exchange for a 28 percent stake in Silverjet, has not made an offer to buy the company outright. Other would-be buyers have expressed interest, however.
Hunt did not say how many offers are on the table, although he did acknowledge that discussions were ongoing.
"If they make what we think is a sensible offer ... we'll have to take it to shareholders," Hunt said.
Silverjet is filling enough seats to cover its expenses on many flights, but has yet to turn a corporate profit, Hunt said. That has left the carrier looking for ways to grow its brand while keeping costs and risk in check.
One option being considered is a franchise model that would offer Silverjet flights in a number different regions, including booming countries such as India, China and the United Arab Emirates, as well as more established markets like the U.S. and Europe.
"If we don't do it, somebody else will. It's sort of a defensive play," Hunt said.
The carrier is in talks with multiple local investors in the target markets, Hunt said, and aims to have at least one Silverjet franchise up and running within the next 12 months.
Airline consultant Mike Boyd noted that the franchise model is not unique to aviation _ regional carrier ExpressJet Holdings Inc. pays Delta Air Lines Inc. to use the Delta brand in a number of markets, for example _ but it does present difficulties.
"Franchising brings in the issue of product control, possibly across national boundaries," he said.
The problem is compounded, he said, by high fuel prices and other challenges specific to the airline industry.
"Unlike a (McDonald's) franchise, where a site is chosen based on a range of needs that can be met ... there are no gaps in airline service," he said. "Every 'street corner' is occupied, and there's no shortage of premium class seats _ to anywhere."
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