KBRA affirms BB- VistaJet, XO parent Vista Global rating

Vista’s ‘current liquidity position is healthy with a considerable cash balance, sizable untapped revolving credit facility,’ KBRA says.

By Doug Gollan, February 27, 2024

VistaJet and XO parent Vista Global’s BB- rating was affirmed with a stable outlook, according to Kroll Bond Rating Agency, or KBRA.

KBRA’s scale runs from A to CCC.

Earlier this month, Fitch Ratings affirmed its Long-Term Issuer Default Rating at B+ with a Stable outlook.

Vista Global scrutiny

The privately held flight provider’s finances have been intensely scrutinized since a Financial Times article last year.

The report was based on its oversubscribed $500 million 2023 bond offering.

It found the company had increasing debt, a net loss for the previous four years, and a significant deficit between cash and prepaid jet card deferred revenues.

Vista has also been the subject of several articles in German business media.

More recently, Bloomberg and The Wall Street Journal focused on a drop in its bond price.

Executives have countered that the debt is part of its fleet growth strategy.

The net losses, they say, are based on how it depreciates aircraft.

Its cash position before the $500 million bond was a snapshot from December 31, 2022.

Founder and Chairman Thomas Flohr told CNBC that the cost-per-sales-dollar to fulfill flights is in the low 20-cent range.

They see the negative slant and release of their financials by a third party as being driven by an unhappy competitor seeking to undermine consumer confidence.

KBRA on Vista Global

KBRA’s outlook was rosier, writing:

Vista Global has satisfactory financial flexibility to address upcoming maturities and diversified access to funding, banks, and capital markets. Vista Global has grown increasingly comfortable raising capital across various debt markets, even during episodes of market volatility.

In January 2022, Vista Global raised $1 billion of 6.375% unsecured notes due 2030 with the proceeds used to redeem the existing 10.5% $700 million senior unsecured notes maturing in 2024.

In April 2022, Vista Global issued an additional $500 million in unsecured notes due in 2027 to part finance the acquisitions of Air Hamburg and Jet Edge.

In May 2023, Vista issued an additional $500 million in unsecured notes due in 2028.

Vista also completed three EETC issuances between 2020 and 2022, raising $1 billion across three issuances with the proceeds used to part-fund new aircraft deliveries and address maturing facilities.

As of September 30, 2023, 75% of Vista’s debt was fixed rate, with an overall weighted average cost of funding of approximately 7.3%. The majority is USD-denominated, with only 5% of Vista’s total debt are euro denominated, limiting its exposure to FX movements.

Debt maturity schedule is well staggered with limited amount of debt due in the near term, with approximately 7% of debt repaid annually through Vista’s $250 million-$270 million of annual scheduled amortization.

Critics of Vista and Flohr have said the company’s financials, which are not public, showed a deteriorating position.

In its report, KBRE stated:

Vista’s financial performance strengthened through September 30, 2023, with LTM revenues increasing 6% to approximately $2.6 billion in 2023 and from $2.5 million in 2022, supported by 6.1% growth in on-fleet revenue, which was offset by 22% reduction in marketplace revenue.

Vista actively converted its highest quality member base across its XO product to Vista’s program segment.

The contractual nature of Vista’s Program product, along with XO’s scalable network and highly flexible variable cost structure, allowed the company to continue to generate stable earnings with adjusted EBITDA of $813 million for the LTM September 30, 2023, down from $844.7 million in 2022 but up from $451.7 million reported in 2021. The adjusted EBITDA decline reflected temporary increase in administrative costs as the group worked to integrate back-office functions post-acquisitions.

Vista’s business model is centered on yield optimization and fleet efficiency, which in turn drive EBITDA and free cash flow.

Vista focuses on maximizing the live yield generated and minimizing associated ferry flight lengths. For LTM September 30, 2023, Vista’s yield per hour was $10,700, or $8.6 million in revenue per aircraft, with each aircraft flying approximately 800 hours a year.

Direct operating and semi-variable costs totaled $4.8 million per aircraft a year, resulting in $3.8 million in EBITDA per aircraft annually.

Vista’s focus going forward is to increase aircraft utilization from the current 800 hours a year to 900 hours that should generate a further $170 million in incremental EBITDA, providing the company with additional liquidity and potential deleveraging.

KBRE continued, “Vista Global’s leverage, as measured by total debt to adjusted EBITDA, was 5.5x as of September 30, 2023, up from 4.7x as of December 31, 2022. Vista’s total debt increased $188 million to $4.1 billion, while adjusted EBITDA declined $31.7 million to $813 million, reflecting a decline in marketplace revenue and a temporary increase in administrative costs from the integration of the previous acquisitions. KBRA expects leverage to decline in 2024 through scheduled amortization combined with EBITDA expansion on Vista’s platform through increased fleet utilization.”

It added, “Vista Global’s current liquidity position is healthy with a considerable cash balance, sizable untapped revolving credit facility capacity, and long-dated maturities. Liquidity is expected to remain sufficient to fund debt service and maintenance capex. The company has $250 million-$270 million of annual scheduled amortization of aircraft financings with the nearest meaningful maturity in 2027 when $500 million in unsecured note matures.”

READ: What happens to your jet card and private jet membership deposits?

VistaJet and XO

Also of interest is the transition of jet card flyers from XO to VistaJet.

XO dropped its fixed-rate Elite Access membership in 2022.

KBRE reports an additional 260 VistaJet program members, closing September 2023 with a total of 1,060, a 23% year-over-year increase.

At the same time, XO’s membership declined 29% in 2023.

READ: Here’s what you need to know about VistaJet before you buy

Related Articles

Visit DG Amazing Experiences

Find the perfect solution for your private aviation needs

Make the right decision

If you want a program-by-program comparison of more than 250 products from more than 50 companies covering 65 points of differentiation and over 40,000 data points.