Jet Republic, the upstart business jet company, is on the brink of collapse after failing to secure crucial funding, which has forced it to suspend operations.
“It is with great regret that I announce that Jet Republic appears to be technically insolvent,” Jonathan Breeze, founder and chief executive, told his 84 employees in an e-mail sent on Wednesday.
“The business expected to receive funds that have not arrived, nor do we expect them to arrive in the immediate future. We needed these funds in order to continue as an operation. As such, we must stop trading immediately.”
Jet Republic has suspended operations at its Portuguese base but its holding company, with headquarters in Switzerland, remains solvent and the company said on Thursday it would work with shareholders to protect clients, employees and suppliers.
The dramatic collapse comes just weeks after the company launched an ambitious recruitment drive, pledging to hire 1,000 people over five years.
In his e-mail Mr Breeze, told employees that the company would “place no more orders with suppliers; we will accept no more revenue from customers; we will solicit no more business from potential customers.”
Jet Republic was launched at the end of 2008, and won the backing of investors including Mexico’s Grupo Salinas, led by Ricardo Salinas Pliego, and a consortium of clients from the European American Investment Bank, an Austrian private bank.
It quickly grabbed headlines with an enormous order for 110 Learjet 60XR mid-size jets from Bombardier, the Canadian company, worth up to $1.5bn, making it one of the biggest business jet orders ever placed in Europe.
Bombardier was scheduled to deliver the first aircraft to Jet Republic in September but has now terminated the purchase agreements.
Jet Republic intended to challenge the European market leader, NetJets Europe, owned by Warren Buffett’s Berkshire Hathaway. Mr Breeze is a former commercial director of NetJets Europe.
But it chose a difficult time to enter the market. Demand for executive jets has started to slow due to the financial crisis and global recession.
Jet Republic said on Thursday: “Until very recently, we remained very confident of meeting our objectives, but the aviation asset finance market has completely dried up.”
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