Silverjet, the business class-only airline that pledged to change the face of air travel, became the latest casualty of rocketing oil prices today when it ran out of cash and grounded its planes.

It suspended all flights, leaving hundreds of passengers stranded and 350 staff in severe uncertainty, after promised emergency funding from a Middle Eastern investor failed to arrive.

The group, which started in January 2007 and flew from Luton to New York and Dubai, has been trying to obtain £12.7 million under a deal agreed with Viceroy Holdings.

The airline said it had asked to draw down £2.5 million from Viceroy to stay in business but had received no answer. The final flight left Dubai for Luton at 7.30 this morning.

Investors including Standard Life, the Reuben brothers and Chris Foyle of the bookshop, are nursing losses of many millions of pounds.

Silverjet shares were suspended a week ago at 13p, 90% down on the float price. It becomes the third business class-only airline to cease operations this year following the failures of Maxjet and Eos.

Although rising oil prices have hit the industry, some analysts doubt the business model could have worked under any conditions. Mike Stoddart, the Daniel Stewart analyst who said the shares were worth zero back in January, said: "They couldn't make ends meet at the fares they were charging."

The company recently said it was losing more than £1 million a month, which can only have got worse as fuel prices soared. The airline said: "Sil-verjet continues to be in discussions with investors interested in supporting the business. However, it has yet to conclude such discussions to its satisfaction."

A note on the company website, flysilverjet.com, from chief executive Lawrence Hunt apologised to customers. "We pledged to change the face of air travel," writes Hunt. "We extend out sincerest apologies to those of you who have travel plans with Silverjet in the future. You are advised to make alternative arrangements."

Although it is not yet technically bust, Silverjet's lack of capital means it cannot fly again without an injection of funds. Customers who have already paid for tickets are advised to seek repayment from either their credit card company or the travel agent they used to book.

Hunt has not yet given up hope of taking to the air again. "We hope to be able to bring you our very 'sivilised' flying experience again," he writes on the website.