| Eos Airlines files for Chapter 11 |
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| Written by Adrie van der Luijt | |
| Monday, 28 April 2008 | |
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Business-only Eos Airlines has filed for Chapter 11 bankruptcy protection and laid off most staff.
The petition was filed 26 April 2008 in the US Bankruptcy Court in the Southern District of New York. Filing for Chapter 11 protection will protect the airline from its creditors enable the company to conduct an orderly liquidation of assets and resolution of claims. In Chapter 11 the firm will be subject to the oversight and supervision of the bankruptcy court and will be governed by its existing board of directors. Eos said it would immediately implement a reduction in its workforce, eliminating the positions of most of its employees, and ceased operations entirely from 27 April 2008. Jack Williams, Eos’ CEO, pointed out that the firm had just negotiated terms for a round of refinancing despite an “extremely challenging economic and credit environment”. “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,” he added. Williams said that some issues arose that Eos could not overcome just as it was working toward closing on an investment that would have carried it to corporate profitability in 2009. “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. That leaves us with insufficient cash on hand to continue operations,” Williams said. Eos operated flights between New York JFK and London Stansted, with Boeing 757s that offered 48 passengers seats that converted to flat beds. The airline was launched two years ago and had hoped to capitalise on the “Open Skies” agreement that opened the lucrative transatlantic routes to new airlines. Eos’ rival business-online airline MaxJet filed for Chapter 11 in December, troubled by rocketed fuel prices and a poor punctuality record. Business-only airline Silverjet become embroiled in a furious row with City-based investment bank Daniel Stewart & Co after a report told investors to sell shares “at any price” because the airline was “doomed to fail”. Related articles
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