November 20, 2024
As it prepares for its SPAC merger, start-up Volato has filed financials and other details with the Securities and Exchange Commission.
Volato, which launched in 2021 and recently announced a SPAC IPO, revealed details of its business via an S-4 filing with the SEC late Friday.
The 1,735-page document describes private aviation as a “static industry, with little innovation,” which “presents opportunities.”
The company’s core target is flyers on missions under 1,000 miles with four passengers or less.
It has positioned the HondaJet as a more efficient aircraft against Phenom 300 options to serve that market, pitting it against operators such as NetJets, Flexjet, Nicholas Air, Airshare, and GrandView Aviation, which all offer fractional or membership programs on the top-selling Embraer light jet.
The filing points out Volato’s fractional and jet card programs offer several tangible innovations.
In going public, Volato is following Wheels Up, Blade, and Jet.AI going public with its SPAC IPO and Surf Air, which recently completed a direct listing.
All are trading below their listing day prices.
FlyExclusive is currently on the verge of completing its SPAC IPO.
Directional’s Flexjet, Inc., which includes Sentient Jet, FXAir, and PrivateFly, announced an IPO last year but shelved it earlier this year.
Volato says, “A lack of innovation in the industry has contributed to low asset utilization, poor operational and commercial technology, high operational complexity, and antiquated commercial practices, all which stifle efficiency and scalability. This leads to a lack of downward pressure on prices. Through Volato’s unique business model, Volato believes there are significant opportunities to take advantage of the growth in the market and its current lack of innovation, low customer satisfaction, and underutilization.”
Despite delays, cancelations, and service issues, price is by far the top reason subscribers to this website say they are considering switching programs.
Volato breaks its business into three main components: Its different take on fractional ownership (you can fly as many or few hours per year as you like), aircraft management, and charter revenue, which includes owner flights, jet cards, and on-demand.
The aircraft ownership program is “an asset-lite model” whereby Volato sells each fleet aircraft to a limited liability company.
The LLC, owned by third-party owners, leases the aircraft back to Volato for management and charter operation on behalf of the LLC under 14 C.F.R. Part 135.
Each program participant separately contracts with Volato for charter on Volato’s HondaJet fleet on preferred terms, generally including a set monthly management fee and preferred charter rates.
Robb Report named Volato to its 2023 Best of the Best issue for its Stretch Jet Card, which provides flight credits when flyers are willing to accommodate Volato by moving departure time and even airports.
Last year, it introduced a second, zone-based jet card under the Insider label.
Volato’s jet cards are as-available.
So, how’s the company doing?
According to its SEC filing, Volato’s financials show:
Revenues were impacted by deliveries of its core HondaJet fractional airplane in H1.
It has 25 on order.
Three of the VLJs set to be delivered in Q4.
For 2024, Volato has previously said it expects to take 11 HondaJets and four Gulfstream G280s.
The company only recognizes aircraft sales revenues when it takes delivery of tails.
Fractional customers make non-refundable deposits and start to fly them before delivery.
Volato is not giving a forecast, according to its Co-founder and CEO Matt Liotta.
However, he did provide Private Jet Card Comparisons data from Argus TraqPak showing from January to June of this year, Volato moved from the 11th largest light jet operator to the sixth spot.
NetJets is first, followed by Flexjet, Nicholas Air, Wheels Up’s Mountain Aviation unit, and Airshare.
Fleet operators are known to get volume discounts from OEMs, selling shares to fractional owners at retail – it’s a key way they make money.
Volato is paying $79 million for the quartet of super-midsize G280s, meaning $19.75 million per unit.
For its most recent HondaJet, the filing shows Volato paid $5.5 million.
(Editor’s note – After publication, Liotta contacted us, writing, “The price cited in your article doesn’t accurately reflect the total delivered cost. It omits additional expenses and options not included in the base price. Our fleet’s standards surpass those of the basic aircraft configuration.” He also noted Volato will receive four G280s next year. We had reported it was two.)
After the criticism of executive compensation at money-losing Wheels Up, critics may be happy to see Liotta was making $160,000, although that now bumps to $310,000.
Keith Rabin, the CFO, who was made President on May 1, 2023, is being paid $300,000 per year.
Some pundits may criticize that Volato employs a number of Liotta’s family members, including his wife, who is VP-Legal.
However, in addition to disclosing the information and compensation, it’s probably worth noting that a lot of the customers served in the private aviation market are owners or second-generation managers of successful family businesses.
They may, in fact, find that appealing.
The filing also shows Volato paid $1.85 million for its March 2022 acquisition of Gulf Coast Aviation, Inc.
The acquisition supports maintenance, provided a Houston base, and was the foundation for its growth into aircraft management.
Liotta previously said he believes being a public company will provide potential customers more transparency than other providers.
That’s certainly true, although, for others that have gone public, the transparency hasn’t worked out very well so far.
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