Demand for private jet flights, which has been at record levels since last June, will continue through 2023, according to Thomas Flohr, Chairman of Vista Global Holding. His comments came days after the Dubai-based provider of jet card memberships and on-demand charter flights saw a rating boost from two credit agencies.
On January 20, Vista priced an offering of $1 billion of Senior Unsecured Notes due 2030 by two of its subsidiaries, VistaJet Malta Finance PLC and XO Management Holding, Inc. According to a press release from the company, the offering was more than five times oversubscribed.
Vista Global Holding Chairman Thomas Flohr predicts demand for private jets to remain strong through … [+]
It is expected to close on or around January 31, 2022, subject to customary closing conditions. Proceeds of the offering will be used to redeem Vista’s existing Senior Notes due 2024 and pay fees and expenses related to the offering. The remaining net proceeds will be used for general corporate purposes and provide Vista with additional liquidity. BofA Securities, Inc. and Jefferies LLC acted as Joint Physical Book-Running Managers, with Barclays and Credit Suisse as Co-Managers. Latham & Watkins L.L.P. acted as legal counsel for Vista.
“The accelerated completion and upsizing of our unsecured bond is transformational, demonstrating the clear and strong investor confidence in Vista and providing us with a strong platform to deliver our exciting vision and ambitions,” Flohr said in a statement. He also predicted “thriving” demand for private aviation will not change for at least the next 12 to 18 months.
According to reports issued by Moody’s and Fitch, Vista Global’s revenues increased by $700 million in 2021 to around $1.6 billion. Group holdings include global charter operator VistaJet, large U.S. charter brokers XO Global and Apollo Jets, plus stakes in U.S. operators XOJet Aviation, Red Wing Aviation and Talon Air.
Last year, the group added 30 private jets and now operates a fleet of over 200 aircraft available for charter. Included are new Bombardier Global 7500s and Challenger 350s joining the VistaJet fleet and used light and midsize aircraft being refurbished and added to Red Wing’s U.S. operations and a new XO-branded fleet in Europe.
Vista Global is battling competitors on three fronts. Globally its VistaJet unit competes for flyers who hop between Continents with the likes of Qatar Executive, the largest operator of Gulfstream G650ERs. Both offer one-way pricing with guaranteed availability. That means you don’t pay for repositioning flights.
In the U.S. and Europe, VistaJet faces off against Berkshire’s Hathaway’s NetJets and Directional Aviation‘s Flexjet, both having significant super-midsize and large-cabin fleets, but using a model where customers buy fractional shares of aircraft. VistaJet offers a jet card-like option it markets as the Program.
The group’s XO Global brokerage offers flyers guaranteed availability memberships with both fixed one-way rates and dynamic pricing. Apollo Jets, which was acquired last year along with Talon Air, sells about $250 million in on-demand charter. Those are flights booked on a one-off basis.
While Directional has been moving into Europe, buying jet card and on-demand broker PrivateFly in 2018 and launching a fractional share program there in late 2020, Vista last year brought its XO brand to Europe, offering memberships and expanding with smaller jets.
XO’s European push means Vista Global now competes and cooperates with a host of European operators. In addition to its fleet, XO books clients on third-party operators.
Vista Global has also been expanding its digital footprint following its 2019 acquisition of JetSmarter, including crowdsourcing flights and selling seats on scheduled private jet shuttles. Vista said 84% of flights XO flights last year were booked online through its marketplace.
Both XO and Wheels Up Experience have been battling to digitalize the arcane charter market, where despite claims by some brokers, confirming flights still entails emails and phone calls behind the sexy apps.
Besides Wheels Up, key U.S. competitors for XO include Directional’s Sentient Jet, a broker which exclusively sells jet cards, and large operators such as FlyExclusive, Jet Linx Aviation and KKR-back Jet Edge, which all have been aggressively expanding their fixed-rate membership programs.
Flohr noted, “We have delivered all-time record-breaking figures as a result of the huge demand for our subscription, membership and on-demand offerings. There is clearly a paradigm shift in the global client’s view of private aviation and Vista’s world-leading position has enabled clients across the globe to experience its benefits as a critical mobility solution. Vista’s shared economy, asset-light and subscription strategy are accelerating this trend.”
As the backlog at OEMs builds and the market of used private jets remains thin, expect more mergers and acquisitions as various players seek to increase capacity needed to handle continued demand.
Earlier this month, Elevate Holdings, parent of broker Private Jet Services, bought Keystone Aviation, which it described as “the first of many.”
In a report released this morning by the International Aircraft Dealers Association, Andy Toy, an IADA-accredited dealer from Axiom said, “The current market is very strong right now, but six months from now, the demand will still be strong, but there will not be many aircraft available for sale…We are now seeing what happened in the real estate market with bidding on the aircraft is becoming the norm.”