November 20, 2024
Volato says Honda Aircraft has terminated its purchase order for its very light jets. Volato had planned to continue sales.
Honda Aircraft Company LLC. has terminated Volato’s fleet purchase agreement.
The termination on Sept. 10 was effective immediately.
News of the notice came via an SEC filing by Volato late Friday.
It did not specify why Honda terminated the deal.
The May 2023 agreement called for the purchase of 23 HondaJet HA-420s.
The aggregate purchase price of $161.6 million.
Deliveries were scheduled to begin in fiscal 2023 and continue into fiscal 2025.
According to the filing, Honda Aircraft will retain the deposits that Volato has previously paid.
The 2021 start-up can now enter into individual purchase agreements for each aircraft for which a deposit had previously been paid.
It’s unclear if the termination was related to Volato’s agreement with FlyExclusive to provide management services for its fleet and customers.
After its FlyExclusive deal, Volato said it planned to continue selling shares on yet-to-be-delivered HondaJets.
Volato CEO Matt Liotta at the time said, “By shifting fleet operations to FlyExclusive, we reduce our operational costs while continuing to focus on delivering value through our aircraft sales and expanding our software solutions, such as the Vaunt empty leg program.”
That Sept. 4th announcement said Volato expected “to take delivery of new HondaJets and Gulfstream G280s, and these aircraft will become part of FlyExclusive’s managed fleet.”
It’s also unclear how Volato clients with deposits for upcoming HondaJet deliveries will be impacted.
It’s also unknown if Volato had sold shares against any of those yet-to-be-delivered aircraft.
Volato allowed fractional customers to begin flying on its fleet under their ownership terms before the delivery of their aircraft.
Its contracts called for a 30% deposit against the cost of their shares.
Representatives of Honda Aircraft and Volato did not respond to requests for comment.
READ: What’s Next For Volato Customers?
In December 2022, Honda Aircraft sued HondaJet fractional operator Jet It, accusing it of violating its fleet purchase agreement by reselling aircraft.
The lawsuit was settled in April 2023, shortly before Jet It shut down in May 2023.
Before closing, Jet It was moving from the HondaJet to Embraer’s Phenom 300.
FlyExclusive’s fractional light jet program is the Citation CJ3+ so that the HondaJet will be a new type for its fleet.
In a November 2022 email to customers, Jet It CEO Glenn Gonzales wrote, “(Honda Aircraft) assert that their aircraft is ‘designed for operators’ and is the perfect fit for charter and fleet operators. And while their product may well be described as a fine piece of engineering, their service has been woefully lacking.”
Volato had previously cited delayed deliveries as impacting its financials.
In 2019, Wing Spirit announced plans for up to 15 HondaJet VLJs for inter-island service in Hawaii.
In 2020, European Wijet shut down after a failed move from Citation Mustangs to the HondaJet.
Allegations of fraud accompanied both the Wijet and Wing Spirit failures.
Last year, Volato signed a letter of intent for Honda’s new long-range light jet, the Echelon, which is currently under development.
Gonzales’ 2022 blistering email critical of Honda Aircraft prompted Liotta to respond at the time, saying, in part, “Although there is more work to be done, as an operator that believes in long-term, transparent relationships, product improvement, operational efficiency, and delivering the best customer experience, we have confidence in the HondaJet for the long term.”
Separately, on Sept. 12, a class action lawsuit was filed in the United States District Court for the Middle District of Florida against Volato Inc. and Volato Group Inc.
The lawsuit alleges Volato failed to provide 60 days’ notice required under the WARN Act before its widespread layoffs.
However, the WARN Act typically applies to layoffs at a plant or single location.
The lawsuit alleges 233 employees were laid off. Most impacted were thought to be pilots.
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