April 30 (Bloomberg) -- Silverjet Plc rose 17 percent in London trading after the business-class carrier, which has had 86 percent of its value erased by high fuel prices and half-full planes, received a $100 million investment pledge.

The airline will obtain $25 million through debt and equity from a United Arab Emirates-based investor, in return for a 28 percent stake, the Luton, England-based carrier said today in a statement. A signed agreement includes ``intent'' by the unidentified investor to provide a further $75 million.

Silverjet, which first sold stock to the public in May 2006, has declined from a peak of 209 pence in March 2007 to 17 pence today. Analysts have questioned whether there is sufficient demand for Silverjet's services, and higher oil prices have restrained earnings. Another business-class carrier, Eos Airlines, filed for Chapter 11 bankruptcy protection four days ago, and MAXJet Airways Inc. did the same last December.

``Silverjet's working capital has deteriorated and its residual reserves are limited,'' the airline said in the statement. ``In the unlikely event that these agreements are not completed, Silverjet will have to source alternative means of funding as a matter of urgency.''

Silverjet's gain today gave the carrier a market value of 11 million pounds ($21.6 million). The equity portion of the initial $25 million investment will be about $8 million priced at 17 pence a share.

Oil Price

Oil is trading near $116 a barrel, compared with about $55 when Silverjet started flying on Jan. 25, 2007. Higher fuel expenses have contributed to the bankruptcy of other airlines in recent weeks, including long-haul budget carrier Oasis Hong Kong Airlines Ltd., Skybus Airlines Inc. and Frontier Airlines Holdings Inc.

Silverjet, which flies from London Luton airport to Newark airport near New York and to Dubai, aims to sell business-class tickets for about 1,000 pounds, often about a third of the price charged by network airlines. The carrier raised about 72 million pounds through its initial share sale, additional stock offerings and loans to fund startup costs and expansion.

Profit Approaches

``We're not profitable yet, but we're not far away,'' Chief Executive Officer Lawrence Hunt said today in a Bloomberg Television interview. ``This cash injection really is to fund our expansion plans both in the U.K. and potentially in other territories.''

The airline said in January it may create a Dubai franchise to serve markets in India, China and South Africa. The airline is also looking at potential new routes to the West Coast of the U.S., South Africa or India, Hunt said today.

Four all-business-class airlines have started in recent years. Of those, only Silverjet and closely held L'Avion, with flights between Paris and New York, are still operating. None has made a profit, leading some analysts to speculate that the all-business-class model is flawed. Still, PrivatAir Group has been operating trans-Atlantic business-class flights on behalf of Deutsche Lufthansa AG since 2002.

``Today's news does not change anything about Silverjet's economic fundamentals; it just confirms how bad they are and means that they will have more time to continue making losses,'' Mike Stoddart, an analyst at Daniel Stewart in London, said in a note to investors today.

Pessimism

Stoddart sent Silverjet's shares to a record decline on Jan. 14 when he initiated coverage of the airline with a ``sell'' recommendation. Silverjet was likely to go bankrupt, Stoddart said at the time because the company wasn't selling enough tickets to cover costs.

CEO Hunt said today that the airline needs to fill about 65 of the 100 seats on its three Boeing Co. 767 aircraft to break even. The airline reached that target last month and April is ``looking pretty much O.K.,'' he said.

``The primary issue we've had is a lack of confidence in the sector, but this $100 million investment should restore that confidence,'' the CEO said. ```We've had a lot of travel agents and companies holding back from booking with us until our future is secure and this investment obviously secures that future.''

Silverjet's service includes women-only toilets, private terminals and meals designed by London restaurant Le Caprice. The company said earlier this month that it's in takeover talks after failing to reach its own target of a first month of operating profitability in March.

Silverjet will update investors on the discussions ``as soon as practicable,'' the airline said today.

To contact the reporter on this story: Tracy Alloway in London at talloway@bloomberg.net

Last Updated: April 30, 2008 13:25 EDT