Private Jet Card Comparisons - Know Before You Buy

JET CARD INSIDER: What Do The Financial Statements Say About Air Partner?

The private jet charter broker has been the subject of several recent reports from financial analysts

 

Air Partner has been around since 1961 so we know it has some staying power. Plus, the British based private aviation company is interesting to Private Jet Card Comparisons for a couple reasons. First of all, in recent years it has been putting a bigger emphasis in growing its jet card business, and secondly, as a publicly traded company, there is significantly more financial information available than the many other providers that are privately held or a subsidiary. We also like its 10-hour lead time for reservations is near the top of the league and the entry point is only $53,000. You can withdraw your funds at any time, but there is no escrow account, which means taking a closer look at financials makes sense. 

 

Last week there were several financial reports about the company we read. First, from the company, it noted that its CFO Neil Morris bought 4,000 shares of the company’s stock on July 12, 2017. The stock was bought at an average price of GBX 107 ($1.41) per share, for total purchase price of GBP 4,280 or roughly $5,645. The announcement noted Air Partner shares have ranged from GBX 73 to GBX 138 over the past 52 weeks with a 50-day moving average of GBX 115.30. Liberum Capital had increased their price target on shares of Air Partner from GBX 133 to GBX 140 and gave the stock a “buy” rating in a research report back on April 27, 2017.

Sheridan Daily last week released a report titled, “Air Partner plc is showing positive momentum in the technicals.” In the report, Sheridan said, “The latest reading places the stock above the Ichimoku cloud which indicates positive momentum and a potential buy signal for the equity.” The Ichimoku cloud is a technical indicator used primarily in Asian markets.

 

Simply Wall Street added, “If we compare the intrinsic value (of its estimate) of GBP 1.33 to the current share price of GBP 1.254 we find Air Partner is a touch undervalued at a 6% discount to what it is available for right now.”

 

 

So far so good. Interactive Investor had a fairly lengthy report covering why the Share Sleuth column had divested its Air Partner holdings. It wrote, “Air Partner could be a good investment, that’s why I was so reluctant to get rid of all the shares. But I’m not very sure about that. Maybe I just lack the vision or knowledge to have confidence it will succeed.”

 

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The reason for Sleuth’s lack of enthusiasm? “I like to invest in companies that don’t have to change much to prosper. They’ve already hit on a business formula that allows them to earn high returns from customers who favor their products and services and are prepared to pay handsomely in comparison to the cost of providing them. Evolution, not revolution is my mantra.”

 

The outlook, according to Sleuth, is “Air Partner in 10 years’ time may be a very different company from Air Partner now. Not just a bigger company, but a company that earns profit in a different way. That makes it a difficult company to assess.

 

Sleuth says, “Air Partner believes it can profit from busier skies, the pressure on aircraft operators to keep their planes in the air for longer, and increasing regulation, by providing safety audits and training. Since it already charters, leases, and sells planes there are opportunities to provide customers of the (brokering) division with consulting services, for example auditing aircraft operators for them.”

 

The negative from Sleuth? “Brokering charters is a competitive business. Air Partner may be a market leader but it only serves a tiny fraction of the market. The company grew rapidly before the financial crisis of 2008 flying soldiers, aid workers, equipment, and supplies, but once the Government reined in its overseas commitments, Air Partner’s commercial jet brokering division was left competing for business from holiday companies, football teams, and corporations on road shows. Air Partner flew Hillary Clinton’s campaign team during the US election last year. While it’s still earning good returns, they’re ad-hoc and vary considerably from year to year.”

 

Sleuth continues, “Air Partner’s private jet brokering business faces a technological threat in the form of online brokering platforms that allow wealthy individuals to charter a plane using an app or website. Air Partner sees itself as a concierge, declaring in its annual report: ‘In our experience, technology cannot replace people. We invest in technology to improve the customer experience and drive efficiencies, but the key to our success is a genuine 24/7/365 service by our aviation experts for customers who want a bespoke, personal service…We fundamentally believe – and our customers seem to agree – that until technological capabilities have further developed, complex travel scheduling is better handled by people rather than machines.’”

 

We’re not financial folks here at Private Jet Card Comparisons but we were witness to the disintermediation that was supposed to put retail travel agents out of business. Yes, their numbers are reduced from the peak number of agencies in the U.S. during the early 1990s, however, in the luxury segment, agents are perhaps more important than ever, particularly on the high end. Hotels find it is hard to sell signature suites online, and accommodate Ultra High Net Worth customers who need specific connecting rooms and have other requirements. Wealthy travelers don’t want their guide to be in their first week after graduating from guide school. They want professionalism and expertise. Maybe the same guide who took George Clooney or Madonna around? A good travel agent can get that guide, and yes, it may cost more than booking your sightseeing through Expedia.

 

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It’s the opinion of Private Jet Card Comparisons that shopping rate alone in private aviation is a sure way to be disappointed, and private aviation is much more complex than those folks that claim to be the Uber of private jets let on in their press releases. In other words, we agree with Air Partner’s outlook, and while we won’t keep our heads in the sand, we don’t think online technology will replace good brokers who have the personal touch and relationships. In fact, we are quite bullish on human beings. In the travel agency sector, wired Millennials are the fastest growing segment of travel agent users and have been for the past six years.