ATLANTA (AP) — When Eos Airlines Inc. launched its first flights in 2005, the startup carrier named for a Greek goddess came with enthusiastic business travelers looking for more space who didn’t mind hefty fares for premium service across the Atlantic.
The airline reconfigured Boeing 757s meant for 220 passengers with 48 seats that could extend into a fully flat bed. Flights served wine, champagne, cocktails and gourmet foods. There were individual DVD players, and helicopter rides to the airport were offered to some travelers.
The price for the New York to London flights, which it offered twice a day, ranged from $3,500 to $9,000 roundtrip.
The high-flying luxuries came to an end Sunday as Purchase, N.Y.-based Eos ceased operations after filing for bankruptcy protection, the latest casualty of a credit crunch and a money-losing airline industry that has been hit hard by high fuel prices.
There have been a handful of small carriers to file for Chapter 11 or go out of business in recent months. One of Eos’ main rivals in the all-business-class niche, MAXjet Airways, stopped flying in December. At the time, analysts questioned the viability of all-business-class airlines.
The smaller carriers face stiff competition from deeper-pocketed large airlines that offer business-class service along similar routes. While business class service can be very profitable, it’s also a very thin market, airline experts have said, noting that any loss of market share can be devastating to a carrier that only offers business class.
Larger carriers, meanwhile, are looking at combinations to protect their futures. Delta Air Lines Inc. announced earlier this month its intention to acquire Northwest Airlines Corp. in a stock-swap deal. Both carriers have a trip through bankruptcy under their belts.
“It’s no surprise,” Calyon Securities airline analyst Ray Neidl said of Eos’ downfall. “We saw it happen with other smaller, undercapitalized airlines. Basically, there are too many airlines. We’re in a period of consolidation. The weaker guys, with $120-a-barrel oil, are finally succumbing.”
Eos’ main problem was cash to keep it going.
The privately held airline, founded by former British Airways executive David Spurlock, secured $85 million in startup financing in June 2004 from several investors, including private equity firm Golden Gate Capital. It later received additional financing.
The carrier was expected to close this Thursday on $50 million in additional financing from an undisclosed investor, but the deal fell through, according to a statement Sunday from Eos. That triggered Saturday’s bankruptcy filing.
“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,” Chief Executive Jack Williams said. “That leaves us with insufficient cash on hand to continue operations.”
Eos operated its final flights Sunday from London’s Stansted Airport to New York’s John F. Kennedy International Airport, after which it planned to cease operations. The airline plans to immediately eliminate the jobs of most of its 450 employees.
The bankruptcy filing in New York listed $70.2 million in assets and $34.9 million in debts. Servisair LLC, which provides ground services at airports, was listed as the holder of the largest unsecured claim against Eos — $744,000. Atlanta-based Delta holds the fourth-largest unsecured claim at $363,692.
Golden Gate Capital is listed as the company’s largest shareholder, holding a 47 percent stake. Rizon United Corp. holds a 24 percent stake, court records show.
The company said in a note to passengers that they should seek other arrangements for travel and should contact their credit card companies or travel agents for information about how to obtain a refund for unused tickets. It said its frequent-flier program would no longer redeem points, adding that any value related to membership will be determined by the bankruptcy court.
British all-business-class carrier Silverjet said Sunday that it would offer a special rate to Eos customers that allows them access to a limited number of seats on Silverjet’s New York area to London route for the same price as their Eos ticket. Silverjet operates twice-daily service from Newark Liberty Airport in New Jersey to London Luton Airport and daily service from London to Dubai.