September 27, 2024
After filing its updated proxy statement last week, FlyExclusive is moving forward to its SPAC IPO.
FlyExclusive could be a publicly traded company within five weeks, Founder and CEO Jim Segrave tells Private Jet Card Comparisons.
The fifth-largest private jet operator, which saw flight hours jump 18.7% through June, is a step closer after filing its updated proxy statement last week.
At the same time, it is streamlining its light jet fleet by getting rid of its 10 Citation Encores to focus on the Citation CJ3.
“We’re going to move out of the Encore fleet and standardize to just one CJ3+ (light jet) fleet. We won’t have the Encores long term. We still have them at the moment. We’re going to go through the busy season with them, but the intention is to really transfer that fleet into all CJ3s, and then all the pilots can fly the same light jets, and the customers get the same light jets just standardized, so we will be doing that part of it,” Segrave says.
Earlier this month, FlyExclusive took delivery of its first three of up to 30 CJ3+ types that are being used for its new fractional ownership program.
Segrave says FlyExclusive has sold 24 CJ3+ shares so far.
It was expected to close another five during the National Business Aviation Association conference, which ended on Thursday.
The sales are a mix of sizes, although mainly 1/16th slices.
In terms of the Encore fleet, Segrave says, they were primarily acquired to serve Wheels Up under a guaranteed revenue program.
That deal was terminated by FlyExclusive earlier this year, with FlyExclusive saying Wheels Up had breached the contract.
Wheels Up is suing the Kinston, North Carolina-based operator for wrongful termination and damages.
According to FlyExclusive’s previous financial filings, Wheels Up initially paid $37.5 million in deposits to secure 30 aircraft to use for its customers off-fleet.
Wheels Up is seeking to move the case from U.S. Federal Court to court in New York State.
FlyExclusive wants to keep it in Federal Court or move it to North Carolina.
Regarding the IPO, Segrave says he expects the SEC to come back with any questions within about 10 days from last Tuesday night’s amended proxy statement filing.
Assuming there are no issues, the merger with SPAC EG Acquisition Corp. would close within about three weeks after that, and FlyExclusive would be a publicly traded company on the New York Stock Exchange.
Tuesday’s update from FlyExclusive shows operating revenues for the first half of 2023 jumped from $149.6 million to $177.4 million.
Expenses increased from $152.8 million to $178.2 million.
Loss from operations decreased to $866,000 from $3.2 million.
Starting in Q4, FlyExclusive will be able to record revenues from its fractional share sales, which is timed to taking delivery of the aircraft.
Fractional operators make money selling shares and then via remarketing fees when they buy back those shares at the end of the contract, typically five years.
In the future, FlyExclusive will have to replace revenue from Wheels Up.
The filing shows that during the six months ending June 30, 2023, and 2022, Wheels Up accounted for $67.6 million and $56.6 million of revenues, representing 38% in both periods.
Part of the revenue boost this year is from the Wheels Up deposits.
“As a result of the termination of this program…the company has recognized the remaining deposits as revenue during the six months ended June 30, 2023, and therefore the Guaranteed Revenue Program deposits balance was zero as of June 30, 2023,” the filing notes.
Segrave says he believes FlyExclusive will also see top-line growth from selling MRO services to third parties after receiving approval to do so from the FAA.
During the first half of this year, revenues from external MRO customers increased from $70,000 to $1.8 million.
Membership revenues from its Jet Club jet card program also increased from $1.9 million to $2.9 million.
Members pay $1,000 per month to get guaranteed availability with fixed hourly rates.
Back of the envelope math infers FlyExclusive currently has around 500 jet card members.
As of June 30, 2023, it had $61.8 million in deferred revenues.
That includes deposits from Jet Club members for future flights.
It launched Jet Club in 2020.
Previously, it had focused mainly on the wholesale market.
In 2019, 95% of sales were to brokers and other operators.
According to its Investor Day presentation, wholesale is still expected to be 52% of revenues.
In addition to fleet growth via delivery of new aircraft, Segrave says FlyExclusive is continuing to expand its preowned fleet via triple net leases.
Under long-term leases, FlyExclusive adds WiFi, refurbishes the interiors, and paints the exteriors in company colors at its in-house facilities.
During NBAA, FlyExclusive announced a $30 million grant from the State of North Carolina to build a new pilot training center and headquarters in Kinston.
Since its founding in 2014, the company’s workforce there has grown to over 500 jobs, making it a showcase for how business aviation supports rural communities.
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