October 20, 2024
The filing in Malta follows revelations of an alleged plot by AirX and its Chairman John Matthews to damage Vista Global through a covert six-year campaign.
Vista Global Holding is seeking 386 million euros in damages against AirX, its Chairman, John Matthews, and several other executives at the company. It alleges that actions by its smaller European rival of “severely, negatively impacting” Vista’s “business affairs and reputation.”
Vista Global is the parent of VistaJet and XO, two major players in jet cards and memberships.
News of the legal filing was first reported on Wednesday by The Shift, an online news portal based in Malta.
Both VistaJet and AirX are registered in Malta, where the lawsuit was filed.
A Bloomberg report last month, based on documents in an unrelated UK court case, revealed the alleged plot by AirX executives.
Matthews told Private Jet Card Comparisons, “This case has not been heard…It is just an application. You do not need merit. It’s sensational and being used to smear me.”
He noted that the Maltese court rejected Vista’s previous filing in February requesting the preservation of documents.
AirX’s Maltese counsel says their client has yet to be served.
They added, “Fenech & Fenech, however, did confirm that earlier this year, the Maltese courts did turn down a request by Vista Jet to order AirX to preserve the alleged contents to the private WhatsApp chat, which seems to be at the center of VistaJet’s latest fantastical, borderline SLAPP, claim.”
Attorneys representing Vista Global provided the following statement:
We would like to draw your attention to the fact that these proceedings are fully fledged proceedings and the defendants have each got 20 days to respond to such proceedings once they are formally served with the acts of proceedings. A judge has already been appointed to preside over proceedings accordingly.
Please note that the plaintiffs have requested the court to confirm that the conduct of the defendants (as specified in the writ) has caused and continues to cause damages to the applicants and to furthermore liquidate such compensation, to the applicants, as it deems fit, for such damages caused (amongst others).
In the coming months plaintiffs and defendants shall be each allowed to present their evidence and to cross examine witnesses. Following such stage, each party shall be allowed to make its/their submissions, following which the presiding judge shall proceed to give judgment accordingly.
A translation of the filing as provided by Vista’s attorneys, made on April 14, alleges AirX and Matthews “not only manipulated the media against the plaintiffs, and all persons affected, with incorrect, incomplete and/or misleading information (about Vista), but also obtained and disseminated confidential documentation and/or information in breach of applicable laws and/or court orders.”
A full version of the filing’s translation is available at the end.
It continues, “The plaintiffs have recently obtained information, mainly a WhatsApp Group Chat titled ‘Vista Comms,’ showing that the defendants have been doing much more than just normal competitor analysis on (Vista and its Founder Thomas Flohr) and have been conspiring against VistaJet with the intent to undermine them by engaging in a series of illicit and/or unethical activities all designed to inflict harm upon the plaintiffs and all persons and entities connected to the plaintiffs as shall be further explained in this application and throughout the proceedings of the case in question.”
Matthews says the WhatsApp Group Chat transcript has been altered.
In the filing with the First Hall of Civil Court, Vista claimed the negative publicity caused it to lose customers, prospects, financing, and valuation.
“Deposits paid by existing clients (prepaid jet card funds which Vista and others use as operating capital) were also called on following adverse media,” according to the filing, somewhat akin to a run on the bank.
READ: What happens to your jet card and private jet membership deposits?
The alleged campaign caused lenders to exit at “the first available opportunity, increasing financing costs for VistaJet as the replacement cost of the capital was higher.”
“Suppliers changed their payment terms, removed credit limits, and/or, in some instances, VistaJet was requested to make prepayments,” the filing states.
According to the lawsuit, lessors in Germany “sought to pull their aircraft from VistaJet’s fleet” because of the negative articles.
The result was a loss in equity value, according to the court documents.
The public part of the saga started last May when the Financial Times reported about privately held Vista’s growing debt, net losses, and deficit of cash on hand to money it had already received from clients for future jet card flights.
The story, titled “Private Jet Disrupter: the debt-fueled Ascent of Thomas Flohr’s VistaJet,” was countered by Flohr himself. The founder still owns 86% of the shares.
He told CNBC that much of the information in the story was from the prospectus of a sold-out bond offering that generated $500 million, inferring that investors had a different view of the company.
Flohr said the net losses were due to how the company depreciates aircraft and that there was sufficient cash to fulfill member flights.
He said the increasing debt was part of planned growth, including acquiring other operators, principally for their fleets, as well as adding more new private jets.
VistaJet is the largest operator of Bombardier’s flagship Global 7500, which competes with Gulfstream in the ultra-long-range category.
In 2023, Vista Global’s combined operators ranked as the third-largest charter/fractional flight provider in the U.S., trailing only NetJets and Flexjet.
Flohr, who started VistaJet with a single Learjet in 2004, graduated to bigger and longer-range jets over the past decade.
He has positioned VistaJet’s jet cards as an “asset-light” solution for intercontinental travelers.
Its programmatic offerings fill the gap between full ownership, where the cost of a new long-range jet from Bombardier or Gulfstream can reach $80 million; fractional ownership, which means buying a slice of an expensive jet under a five-year contract, and on-demand charter flights that are booked trip-by-trip, which is what AirX sells.
While there is plenty of regional jet card competition in the U.S. and a bit in Europe, VistaJet’s flagship membership, marketed as the Program, offers members the ability to book and cancel flights worldwide at contracted hourly rates with as little as 24 hours’ notice.
Like the fractional programs and other jet cards, it doesn’t charge members for empty repositioning flights, using what’s called one-way pricing.
If there is a mechanical issue, VistaJet provides a replacement aircraft at no additional cost to the client, an advantage over buying one-off flights, where the provider typically requotes your flight, and if you are not a regular, generally at the higher last-minute price.
In return, a client who flies on a large cabin private jet 50 hours a year is prepaying Vista over $1 million for access to its fleet. Its standard contract is three years.
On the XO side, it is one of the few brokers that offers instantly bookable online pricing, in large part due to the scale of Vista’s fleet.
On the flip side, if Vista went bust, customers who prepaid for future flights would be unsecured creditors.
READ: Six reasons not to buy a jet card
Vista, over the years, boosted its profile with plentiful PR and high-profile alliances with celebrity chefs, golfers, and professional auto racing.
Used to glowing write-ups about the lifestyle programs it offers for clients’ pets and kids, the negative press didn’t end with the FT article.
Multiple articles in the German business media followed, also questioning Vista’s finances and how Flohr himself profited from ordering aircraft.
Vista had purchased Air Hamburg, the country’s largest private jet operator, in 2021.
The Bloomberg report in March of this year revealed the alleged coordination by AirX executives. According to documents filed in court, the plot included the dissemination of damaging and confidential information to Vista’s lenders, vendors, and other stakeholders, in addition to reporters.
AirX would benefit from a Vista demise, it is alleged, flooding the market with preowned aircraft and bringing down prices.
Vista has about 280 private jets in its fleet.
In a 2018 interview, Matthews told CityAM, “The aircraft I go for have been repossessed – the bank doesn’t know what to do with them. I’m usually the only buyer. I’m like an ambulance-chasing lawyer in America, but the equivalent for aircraft. If there’s a repossession, we’re on the hunt.”
In a separate interview that year with The Telegraph, he said that buying used and distressed airplanes meant outlaying just “one-eighth of capital cost” compared to buying new jets.
In December 2022, before the covert efforts were revealed, Matthews told Head For Points, “The industry is going to take a massive downturn. There’s going to be a collapse of some large players, and that is where AirX will have the right private equity partner to size and grow.”
Matthews continued in the interview, “To do that, I need a partner with a giant so that at the right time, I can say, ‘I need £400 million, we’re going.’ And for that event, the Noah’s Ark needs to be built by the time the flood starts.”
The WhatsApp group chat that Vista has brought as evidence appears to show Matthews and his team discussing how their efforts with journalists would help in their fund-raising.
The day after the initial FT article in May 2023, the lawsuit alleges Matthews told the group, “This news will help us get more institutional investors. Zeus believes they can bring TowerBrook back in amongst other institutional type lenders. And the more coverage we get not only helps us in our PR, but it also helps us and gain exposure on VistaJet. Part of the due diligence is based upon the market. Helping the market correct… is better than arguing with people who have a different view on the market – not saying we are arguing, but there is one person who is pro-Vista.”
According to the lawsuit, Matthews continued to provide reporters with copies of non-public information, financial reports normally limited to bondholders or available only via non-disclosure agreements.
A January 2024 Wall Street Journal article about Vista’s declining bond price was titled “How One Debt-Laden Company Could Create a Storm for Private Jets.”
It noted, “For now, secondhand jet prices remain sky-high, but some aircraft brokers fear that could soon change.”
It warned, “If, in the worst case, (Vista Global) suddenly collapsed, the impact on the market could be nearly unprecedented. The operator has 94 (Bombardier) Challengers—almost as many as the 109 for sale in the entire secondhand market, data by broker Guardian Jet shows. Its 18 Global 7500s, hard-to-move aircraft with a price tag of $60 million each, would overwhelm the eight currently available.”
VistaJet told the Maltese Court, “The journalists involved can also be considered victims of the defendants’ manipulative plot as they were used as pawns to damage VistaJet’s bond and the stock value of Bombardier solely for the benefit of the defendants and not for the greater good as they will undoubtedly try to also manipulate this Honourable Court into believing their narrative.”
Matthews has cast himself as a truth-teller.
His main targets are what he terms LMOs or debt-fueled Loss Making (Private Jet) Operators and industry reporting he asserts is either superficial, sponsored, or both.
Matthews recently wrote in a self-bylined post on Forbes Business Council, a paid membership site, “I believe that businesses have a responsibility to protect their customers and investors to run an ethical operation. In an industry where that may not be the norm, it’s even more important to stand out as the exception, not the rule.”
He goes on, linking two negative articles about Vista and Flohr, stating, “In my years working in the private aviation industry, I’ve seen the situation go from bad to worse, with the leading companies accumulating billions of dollars in debt and publicity that disgraces the sector, which is made of decent, hard-working professionals.”
Matthews concludes, “Without a doubt, growing any business is a major challenge. With the right attitude, focus, and ethics, you can stand out—even in a troubled industry.”
In the filing, Vista alleges Matthews himself “has a history marked by bankruptcies, regulatory infringements, constant conflicts with business rivals, dissemination of false information and statements and a past occurrence of imprisonment for perverting the course of justice as well, just to name a few.”
In the 2018 interview with CityAM, Matthews discussed his past. He is quoted as saying, “I lost a court case internally and went bankrupt at 27…And to compound the problem even further, obviously, I wasn’t in a great place – I got very drunk, crashed my car, and lied about it. I said it was stolen when it wasn’t. I was arrested for perverting the course of justice and spent 28 days in Brixton on a 10-week prison sentence. It’s an experience I won’t forget in a hurry. The room service was terrible.”
Back in 2018, Matthews told The Telegraph, “We want to raise a good deal of money to consolidate this broken industry.” According to the interview, AirX was targeting to raise GBP 200 million via an IPO.
About the same time, Flohr formed Vista Global as a holding company.
Flohr said at the time, “Vista Global has been my vision ever since I started VistaJet in 2004. I wanted to create something truly new, something that would industrialize and consolidate the fragmented business aviation market across the entire range of flight service offerings.”
Since then, Vista acquired operators XOJet, Jet Edge, Red Wing Aviation, Talon Air, and Air Hamburg, as well as brokers Apollo Jets, JetSmarter, and Camber.
Back in 2018, Flohr had about 70 jets, and Matthews had around 18.
While it’s not clear who Matthews was referring to, he told CityAM back then, “They thought my exit from aviation the first time round was forever – the hatred level of coming back is huge.”
Recently, Bloomberg reported that Flohr was telling investors his stake could be used to raise cash if needed.
Vista, meanwhile, told the court in Malta it “has a proven financial track record of no defaults in payment of its leases or other financial obligations.”
Earlier this month, S&P Global revised its outlook on Vista to negative while affirming its B+ rating.
READ: Here’s what you need to know about VistaJet before you buy
According to its website, AirX currently has around 15 jets available for charter.
Still, Matthews has seen success.
In an interview last year, he told Business Aviation Magazine that by 2022, AirX had grown charter sales from 8 million euros in 2011 when he entered the company to 150 million euros.
During the December 2022 interview with Head For Points, nearly six months before the FT’s initial article, VistaJet was clearly on Matthew’s mind.
He told the frequent-flyer website, “Buying a $60 million jet [as Vistajet has] versus a $6 million jet competitor with the same cabin doesn’t make sense. That doesn’t work when you’re only flying (for) four hours. They have $2 billion of aircraft finance. Two of their aircraft are still more expensive than my entire fleet at AirX. The hourly rate published in their accounts is $1,000 more per hour than me. Do you really want to take on $2 billion more in debt just so you can charge an extra $1,000 per hour?”
Part of the WeChat text shows, after the FT story, Matthews and executives discussing how they could raise rates if Vista airplanes were grounded.
What’s next is seemingly going to be decided by a court in Malta.
DOWNLOAD THE TRANSLATED FILING: PRIVATE JET CARD COMPARISONS. VISTAJET VS AIRX TRANSLATION Sworn Application English Version Final (3)[33]
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