US small airline crisis escalates - Eos Airlines now sixth airline to shut shop

29 April 2008

The latest victim of the small airline crisis in the US, Eos Airlines has become the second all-business-class carrier and the fifth US-based airline to declare bankruptcy in the past month. It announced Saturday that "some issues arose" that prevented potential investors from following through, informing shareholders that bankruptcy was the only option.

Eos operated its final two flights from London Stansted to New York JFK on Sunday.

Last week the JFK,New York-based airline had announced that it had secured a term sheet for $50 million in additional financing that would help it reach profitability next year. No reasons were offered for the funding pullout.

"After overcoming today's extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action," CEO Jack Williams said. "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."

But according to Williams, just prior to closing "some issues arose that we could not overcome," and there was not sufficient cash to continue operations.

Eos Airlines was an American, all-business class, airline based at John F. Kennedy International Airport, New York. It operated six 48-seat 757-200s between JFK and London Stansted and had announced plans to launch services to Newark and Dubai from London, and to Paris from JFK this year.