Business class-only airline Silverjet has grounded its flights after becoming the latest airline to fall victim to rising oil prices.

The carrier, which started in January last year and flew from Luton to New York and Dubai, said it failed to secure a vital new funding package and was suspending operations with immediate effect.

Its last service left Dubai for Luton at 7.30am today. But with five further flights scheduled for later today, there were fears that hundreds of passengers could be left in the lurch by the sudden stoppage.

The airline had been trying to secure an urgent £2.5 million cash injection from Middle Eastern investment group Viceroy Holdings. It was part of a £12.7 million funding package agreed between the parties last month.

At the end of last month, it said record oil prices and tighter credit conditions had impacted on its working capital and left it with limited reserves. Shares in the airline were suspended last week.

Founder and chief executive Lawrence Hunt apologised to customers today and told them Silverjet would not be able to offer any refunds.

In a message on the airline's website, he said: "Your belief in us was shared by our investors - but regrettably, due to unforeseen circumstances, they were unable to unlock the finance that we needed.

"We extend our sincerest apologies to those of you who have travel plans with Silverjet in the future and at present."

He added: "We are working actively with new investors who are prepared to inject new funds so we can recommence operations. If we are able to achieve this, we will make an announcement as soon as possible."

Two flights were due to leave Luton for New York at 10am and 6pm, with two return flights from New York to Luton due to depart at 7.30pm and 10.30pm. There was also a later 10.20pm departure to Dubai.

Silverjet, whose aircraft were two-thirds full on average last month, said customers should seek refunds of unused segments of tickets from the point of purchase, such as credit card company or travel agency.

The carrier has been hit by soaring fuel costs. Crude reached an all-time high of 135 US dollars a barrel last week, an increase of more than 30% since the start of the year. Prices have since fallen back to about 126 dollars.

Last week shares in the company were suspended after the group said the cash injection from Viceroy had failed to come through.
Silverjet stressed at the time that it was continuing to fly, but was in critical talks to raise alternative funding "as a matter of urgency".

The airline was hoping that the investment from Viceroy would not only repair its working capital, but help fund expansion into new areas, such as the Middle East, Far East and Africa.

Silverjet made its first commercial flight in January 2007. It achieved its highest monthly revenues in April, with more than 10,500 revenue-generating seats.

Transatlantic business class-only carriers have faced difficult times since the surge in oil prices and a number have already been grounded.
American all-executive class airline Eos, which flew between London and New York, filed for Chapter 11 bankruptcy protection late last month, just four months after its rival Maxjet collapsed in the face of rising oil costs and a stalling economy.
UK carriers which operate the same routes as Silverjet said today they would try to help the airline's passengers.
A British Airways spokesman said: "We are looking to help in any way we can."
A spokesman for Sir Richard Branson's airline, Virgin Atlantic, said: "We are introducing special fares for Silverjet passengers which start at £189 one-way to New York and £179 one-way to Dubai."