BIDDERS for Silverjet face a stiff financial hurdle imposed by the Civil Aviation Authority (CAA) if they want the luxury airline to fly again from the UK.

Sources close to the talks on the sale of the carrier, which collapsed into administration 10 days ago, yesterday confirmed the CAA was likely to demand a big injection of cash to satisfy its capital-adequacy rules.

The aviation regulator usually asks airlines to show they have cash in the bank equivalent to six months’ operating costs before they are allowed to start commercial service.

“In Silverjet’s case, the CAA can see that it burnt up around £75m in cash since it was set up, and can use that to put a figure on what a new investor would need to put in up front,” said one airline executive familiar with the talks.

Silverjet raised £25m when it floated on AIM in 2005, another £25m in a subsequent placement of shares, and another £22m from another share placement and a loan from property tycoons, the Reuben brothers. When it went into administration on May 30, the airline said it did not expect any returns to shareholders.

A source close to the administrators, restructuring firm Begbies Traynor, confirmed yesterday the CAA would apply its capital adequacy rules. “It is up to the new owner to take that it into account with whatever plan they would have for the company,” said the source.

Begbies Traynor is continuing talks with two bidders this weekend. One is Kingplace, a shelf company registered in Ireland and managed by Heritage Cie, a Geneva trust and management company. It is working with Lawrence Hunt, Silverjet’s chief executive and founder. The other, unnamed bidder is thought to be an airline.

A third potential buyer – thought to be the Reuben brothers, the company’s senior creditors – is understood to have made a preliminary approach late last week.

Silverjet flew from Luton to New York and Dubai. High oil prices and the credit crunch have cut a swathe through the ranks of luxury airlines that began flights between the UK and US in the past three years.

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