BUSINESS class-only airline Maxjet has filed for Chapter 11 bankruptcy in the United States, citing tough market conditions.
The airline, which flies from New York, Los Angeles and Las Vegas to London, said on Christmas Eve it was looking to liquidate all or part of its assets after high fuel costs and competition from rivals such as newer market entrants Silverjet and Eos forced it to cease trading.
It said it had been unable to raise further funds as expected after it suspended trading of its stock on 7 December.
The company, launched in November 2005 and boasting a fleet of five aircraft, said: "The board has no choice but to inform that the company cannot continue to operate."
The company said its shareholders were unlikely to realise any value and that its shares would remain suspended.
Chief executive William Stockbridge said: "With today's fuel prices and the resulting impact on the credit climate for airlines, we are forced to take this drastic measure."
He added: "Our management team and directors vigorously explored alternative courses but sadly determined that a bankruptcy filing would best protect our customers and creditors."
In a statement, Maxjet added that, in addition to rising fuel prices, other unforeseen costs, such as increased crew salaries and airport services and catering had also impacted on the situation.
The carrier, which floated on AIM earlier this year, added it had contracted and prepaid rival Eos Airlines for about 500 seats to accommodate passengers awaiting a return flight between New York and London.
It said it had also contracted and prepaid for 450 hotel rooms in London, New York, Las Vegas and Los Angeles through early January 2008 for those whose travel plans had been disrupted.
In a note to passengers published on the company's website, Stockbridge added: "We are extremely saddened to discontinue a service that we so passionately believe in, and we thank our loyal flyers who helped build Maxjet ."
Last month, rival Silverjet was handed a 22 million lifeline after reporting losses in its first year of trading.