Silverjet, the business-class airline, collapsed into administration yesterday hours after grounding all its jets.

The company said that there was little prospect of shareholders getting any value out of the business, which began operating only last year.

Mark Fry, an administrator with Begbies Traynor, which was appointed as lead administrator, said there had been a number of early approaches from private equity, industry and wealthy individuals, and believes the business model could work despite City concerns.

Mr Fry said that the business was carrying at least £10 million in debt from private investment and its three aircraft were leased, so the value to buyers would come from goodwill in the business, the routes it operated and its airline licence.

The decision to ground all flights came after Silverjet failed to secure a $5 million (£2.5 million) loan from a Gulf investor. Thousands of passengers have been left stranded or needing to change travel plans by the operator, which flies from Luton to Dubai and New York. The Civil Aviation Authority estimated that 7,000 UK and 2,500 nonUK customers have been affected and they are not covered by the air travel industry’s insurance scheme.

Silverjet has told passengers to contact their credit card companies or travel agents to try to recover their money.

The airline has been battling for survival for the past week after it said it needed an immediate cash injection to keep flying. Its AIM-listed shares were suspended last Friday. Yesterday it said it was continuing to talk to investors that might support the venture.

But Justin Bates, analyst at Daniels Stewart, said it was unlikely that Silverjet’s shares would be relisted. He said that the difficulties the broker saw in the business model have been exacerbated by “the meteoric rise in the oil price”. Mr Bates said: “We now estimate that it costs more than £44,000 in fuel for a round trip to New York on a Silverjet B767, up from £28,600 at the time of the November 2007 fundraising.”

Silverjet substantially undercut the price of other airlines’ business class fares but struggled with occupancy levels along with soaring fuel costs.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive