Maxjet Hopes to Raise $99M with London Stock Offering

Maxjet Airways, one of the pioneer transatlantic all-business class long-haul airlines, is planning an initial public offering on Aim, the junior market in London, with the target of raising around GBP50m.

Analysts expect the airline to be valued at around GBP100m following the flotation and including the new capital.

It will be the second of the new breed of all-business class carriers to list on Aim following the flotation last year of Silverjet, the UK start-up airline, which began services between London Luton and New York Newark in January.

Silverjet raised net proceeds of GBP25.3m and is in the process of raising a further GBP24.6m in a second share issue.

Along with Eos Airlines, the premium US carrier and the first of the all-business class start-ups which began flying between Stansted and JFK in October 2005, Maxjet and Silverjet are posing a increasing threat to the business class services of the incumbent carriers in the London/US market led by British Airways, Virgin Atlantic, American Airlines and United Airlines.

Maxjet, which began flights between London Stansted and New York JFK airports in November 2005, has since added services between Stansted and Las Vegas. It recently announced plans to expand its network from London by resuming all-year round flights to Washington DC at the end of this month and starting to Los Angeles at the end of August.

Maxjet said proceeds of the flotation would be used to finance its expansion and to pay off some debt. It is being advised by Panmure Gordon.

The airline is developing its network using London Stansted as its main operations base.

It said that following the start of the liberalised US/European Union "open skies" aviation regime at the end of March next year, it intended "in 2008 and beyond" to add services from London to the Middle East, Asia and Africa to complement its London/US services and to build connecting traffic across its London Stansted hub.

Maxjet has built a fleet of five Boeing 767-200s, which are equipped with 102 seats in a single all-business class cabin. Two extended-range 767s among the five were leased in January and are undergoing maintenance and interior overhaul. They are due to begin flying this summer, and the group said it planned to add a sixth 767 in late 2007 and a seventh in the summer of 2008.

The airline has chosen to equip its aircraft with the less costly first generation reclining business class seats rather than the fully flat-bed seats introduced by a growing number of airlines and pioneered by British Airways and Virgin Atlantic.

Instead it has focused on offering some of the lowest business class fares available across the North Atlantic with return fares ranging from GBP599 to GBP2,019 ($1,148 to $4,150) including taxes and fees, which it claims are comparable to flexible economy fares on competing carriers and are often significantly below rivals' business class fares.

Unlike Eos and Silverjet, which are concentrating on adding more daily frequencies on their initial London/New York routes, Maxjet has chosen the strategy of broadening its network as quickly as possible by adding new destinations.

It has also concentrated on direct sales distribution with 85 per cent of its seats booked via the internet and its call centres and only 15 per cent through travel agents up to the end of April.

Maxjet said that it had a turnover of $41.06m in its first full year of operations to the end of December and had carried more than 75,000 passengers on scheduled and charter services since the start of operations in November, 2005.

It said it had filled 75 per cent of its seats last month on the existing Stansted to New York and Las Vegas services. Forward bookings were "strong even with increased flight operations" and it forecast load factors of 74 per cent for this month and 77 per cent in June 2007.

The group's management and board have been substantially restructured since operations began 18 months ago.

In recent weeks Maxjet has announced new appointments as chief financial officer, chief operations officer and vice president people services, and Kenneth Woolley, founder, chairman and chief executive of Extra Space Storage in the US and already a member of the Maxjet board has taken over as chairman. Bill Stockbridge, a former chairman of the airline, replaced Gary Rogliano as chief executive last November.

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