Silverjet, the business-class only airline, was fighting for survival last night after a $25 million (£12.6 billion) rescue package appeared to have collapsed.

In a sign of how tough the market has become, a cash lifeline arranged with a Gulf investor only three weeks ago has failed to materialise.

Shares in the airline were suspended yesterday and the company gave warning that it needed a cash injection “imminently” if it was to keep flying.

The Luton-based carrier, which offers business-class flights to New York and Dubai for about one third the price of a British Airways ticket, is seeking finance this weekend but analysts believe it is close to collapse.

BA and Virgin Atlantic are understood to be preparing contingency plans to help stranded passengers should Silverjet be grounded.

David and Simon Reuben, the property billionaires, are also thought to be preparing a plan should the company go bankrupt. The Reubens invested £10 million in Silverjet last year and could lead a creditor buyout to gain control of the carrier’s assets, which include three Boeing 767 aircraft.

It is also rumoured that Silverjet has been asked to start paying for its fuel in cash, which may require its pilots to carry tens of thousands of dollars on flights to pay for the return trip.

At the start of this month the company announced that Viceroy Holdings, a subsidiary of the Viceroy Fund, a hedge fund run by investors from the United Arab Emirates, would invest $25 million in return for a 28 per cent stake in the AIM-listed carrier. Lawrence Hunt, the chief executive, said that a further $75 million would be made available to expand the airline, which listed 18 months ago. It employs about 110 staff.

However, Silverjet attempted to draw down $5 million of the promised investment and has so far been unable to do so. Sources close to the carrier said that it appeared Viceroy had pulled the plug on its package.

Silverjet said yesterday that it was in discussions with “other parties” and its operations would continue. It has continued to take bookings but now faces a new threat as passengers become wary of the airline and its prospects for survival.

The carrier, along with the rivals Maxjet and Eos, was founded in an attempt to tap the rapidly growing business travel market. However, the new start-up carriers struggled to match the frequency of flights offered by larger rivals and other perks such as air miles. Both Eos and Maxjet filed for bankruptcy protection this year.

Silverjet said last year that it was losing about £1 million a month and this is rumoured to have doubled in recent months. Its share price has fallen from 120p at flotation to 13½p before its stock was suspended.

Andrew Fitchie, aviation analyst at Collins Stewart, said: “Silverjet has been doomed to failure for a long time and the oil price has precipitated that.”

Another airline feeling the pressure from rising oil prices is bmi, formerly British Midland. The privately held company said yesterday that its pretax profits had halved to £15 million on revenue up 12 per cent to £1 billion, partly as a result of rising fuel costs.

However, the carrier has included its Heathrow landing slots as an asset for the first time and was able to increase its net value by £770 million. This gives it a total asset value of £800 million, which analysts believe is an attempt to price the carrier ahead of a potential sale. It is expected that Sir Michael Bishop, the controlling shareholder, will auction his 50 per cent stake this year.

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge