Credit agencies Moody’s and Fitch both upgraded the outlook for Vista Global Holding, VistaJet, and XO Management Holding, in updates released yesterday.
“The outlook change to positive reflects Vista Global’s strengthened operating performance, which materially improved during 2021 on the back of higher flight activity, increased aircraft utilization rates, and the contribution from additional aircraft added to the fleet combined with the contribution from recent acquisitions,” according to Moody’s.
Revenue, Moody’s estimates, jumped to $1.6 billion in 2021 from $900 million in 2020. It pointed to “a steep increase in membership figures for both VistaJet and XO brands.”
The agency noted some revenue growth is attributed to acquiring operator Talon Air and broker Apollo Jets.
It added, “Profitability increased on the back of higher revenue combined with improved aircraft utilization rates and the operational introduction of Global 7500 aircraft. Based on preliminary results, Moody’s adjusted EBITDA increased to $375 million in 2021 from $181 million in 2020. Moody’s adjusted EBITDA margin increased to 23.5% in 2021 from 20.3% in 2020.”
There is more clear air ahead, Moody’s predicts. “Higher aircraft utilization rates and additional aircraft, further upsizing the group’s fleet size, will lead to Moody’s adjusted EBITDA margin improving towards 27% in the next 12-18 months.”
Fitch reported, “Vista Global’s operations, measured by hours flown, fully recovered to pre-pandemic levels from 2H20, and we anticipate it to have surpassed pre-pandemic levels by more than 15% in 2021.”
VistaJet’s Program members grew 49%, and that of XO deposit members grew 169% from end-2019, Fitch said. The retention rate was around 90%.
It upgraded Vista Global Holding Limited’s Long-Term Issuer Default Rating (IDR) to ‘B+’ from ‘B’. The Outlook is Stable. It assigned the company’s planned $800 million notes an expected ‘BB-(EXP)’ rating with a Recovery Rating of ‘RR3’, the proceeds of which will mostly be used to fully prepay existing notes.
Fitch Ratings says, “The ‘B+’ rating reflects Vista Global’s global market position, albeit in a highly fragmented market, diversified operations by geography and by customer across the company’s asset-light services range and fairly stable cash flows with a sizeable share of contracted revenue. The rating also takes into account the company’s niche, small scale, dynamic changes in the business profile through M&A, some volatility embedded in on-demand services, and a weak leverage profile.”
In terms of liquidity and debt structure, Fitch says, “Vista Global had short-term debt obligations of around 2x cash balance at end 3Q21, which were mostly lease payments. In 4Q21, the company raised $526.1 million through its second enhanced equipment trust certificates transaction secured by 29 aircraft. This issuance addressed the majority of its existing lease maturities until 4Q23. The company has so far been successful in refinancing as needed for bullet payments, and we expect this to continue.”
