Fitch Ratings has assigned Vista Global Holding’s $500 million notes due 2027 a final ‘BB-‘ rating with a Recovery Rating of ‘RR3’

Saying Vista Global is “likely to outperform” the sector, rating agency Fitch gives a final BB- and RR3 to $500 million in notes. They are due in 2027.

The notes are jointly issued by XO Management Holding Inc. and VistaJet Malta Finance P.L.C. They are guaranteed by Vista Global and XO Group Holding Limited and VistaJet Group Holding Limited.

Companies in the group include VistaJet, XO, XOJet, Red Wing Aviation, Apollo Jets, and Talon Air.

According to a release from Fitch, proceeds will be used to finance acquisitions of Air Hamburg and Jet Edge. Both are expected to close this quarter.

The rating is aligned with the company’s outstanding unsecured $1 billion notes due 2030.

Fitch said, “Vista Global’s operations, measured by hours flown, fully recovered to pre-pandemic levels in 2H20. We expect the company will continue to benefit from the strong growth in the private aviation industry, boosted by continued health concerns over air travel through crowded airports and prolonged disruption to commercial flight networks before the pandemic subsides. We believe the pandemic will also fuel rising demand from first-time users as they acknowledge affordability and productivity gains, comfort, and safety.”

It added, “Vista Global’s asset-light business model is well-positioned to capture demand from light private jet users who choose not to have full ownership.”

It also predicted, “[E]xpanding member base supports sufficient utilization as a higher number of customers are served per aircraft.”

Fragmented Market

Fitch said it sees more growth for Vista. “The global private-aviation market is highly fragmented, providing further growth opportunities for Vista Global, whose market share is less than 3%, despite being one of the leading operators.”

Vista is currently the fourth largest player in North America based on fractional and charter flight hours. It trails Berkshire Hathaway’s NetJets, Directional Aviation’s Flexjet, and Wheels Up Experience.

Earlier this month, VistaJet took delivery of its 10th Bombardier Global 7500. At the time, Chairman and Founder Thomas Flohr said he was contemplating accelerating deliveries this year from seven to 10.

A BB rating indicates vulnerability to default risk in adverse changes in business or economic conditions. However, according to Fitch, business or financial flexibility exists that supports the servicing of financial commitments.

RR3-rated securities historically recover 51%-70% of current principal and related interest in default. RR1 is the highest, and RR6 is the lowest on the Fitch scale.

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