November 14, 2024
FlyExclusive expects Adjusted EBITDA profits by early 2025 as it sells off loss-making jets and picks up incremental revenue from Volato.
FlyExclusive executives predict reaching positive Adjusted EBITDA at the beginning of 2025, citing progress in cutting costs associated with its SPAC IPO, selling off loss-making legacy aircraft, the bottom-line contribution from its Volato deal, and overall sales momentum.
“If we continue the same trajectory we have over the first three quarters of 2024 as expected, we will attain positive adjusted EBITDA profit in early 2025,” Chairman and CEO Jim Segrave told an analysts call earlier this evening.
The founder of the 5th-largest North American charter/fractional operator added, “We’ve made substantial strides, including eliminating over half of our non-performing aircraft, restructuring our management team, nearly eliminating reliance on outside consulting services to support public company reporting, enhancing our fleet, taking over Volato’s flight operations and customers, expanding our club and fractional customer base, and optimizing internal operations.”
Segrave said FlyExclusive had converted 178 of Volato’s Insider jet card members to its JetClub jet card program.
Previous documents indicated Volato had 265 members, meaning 67% signed up by the deadline the early November deadline FlyExclusive had set when it offered three different options.
He called the Volato deal a “strategic opportunity to acquire their customer base without purchasing the company.”
That agreement is already adding to the bottom line, according to Segrave.
“All (Volato) fractional aircraft and members are now managed by FlyExclusive, and these aircraft are being added to the FlyExclusive certificate,” Segrave said, adding, “Customers have signed new agreements, becoming direct FlyExclusive clients.”
In the first month, September, the deal added “approximately $600,000 to our bottom line,” Segrave said.
What’s more, Segrave noted, “We have seamlessly handled the added volume with 175 fewer employees than Volato previously required…an impressive 80% reduction in the staffing.”
Its fractional program now features the Citation CJ3+, XLS+, and Bombardier Challenger 350 platforms.
Segrave said, “In Q4 of 2023, our first year and quarter in the fractional business, we sold 43 shares. Today, we have nearly 200 fractional share members in our program and expect to grow that significantly over the rest of Q4.”
Segrave added, “We view 2024 as a transition year, during which we aimed to eliminate 37 older, non-performing aircraft, replacing them mainly with Challenger 350’s. We have already sold 19 of these aircraft and expect fewer than 12 remaining by year-end. The drag on our EBITDA from these aircraft, which peaked at over $3.5 million per month early in 2024, has been reduced to under $1 million per month today and should be eliminated early in 2025 as we complete the refresh.”
On his first call as CFO, Brad Garner said:
“We took immediate action across both headwinds, and the results have been concrete and durable. In Q1 2024, we reported an adjusted EBITDA loss of roughly $19 million. In 2Q, our reported adjusted EBITDA loss declined to $16 million, and our continued execution of our plan resulted in a further step-function reduction in the loss to just over $10 million this quarter. This consistent quarter-over-quarter improvement is a testament to the progress that we’ve made on the fleet refresh initiative and the effective management of SG&A costs. As we head into 2025, we believe we are on a path to make continued progress on delivering positive adjusted EBITDA and, most importantly, driving increasingly positive free cash flow.”
Segrave praised his sales group. Jet Club and charter revenue jumped by 30.3% through the first nine months to $216.5 million, and fractional ownership revenue increased 314.5% to $13.6 million, largely offsetting a $66.9 million hole created when FlyExclusive terminated a GRP agreement with Wheels Up.
The companies are currently involved in litigation, and FlyExclusive’s 10-Q filing indicated it filed a counterclaim in October.
Overall revenues during the first three quarters were down 1.5% to $235.9 million.
Q3 revenues increased 24.0% to $76.9 million.
Operating loss in the quarter increased from $15.9 million to $20.9 million year-over-year.
Year-to-date operating loss increased from $13.9 million to $70.2 million.
Comprehensive loss attributable to FlyExclusive was down $24.0 million to $17.1 million through the first three quarters.
FlyExclusive had 88 aircraft in its owned and leased fleet, including light, midsize, super-midsize, and large jets, down from 100.
However, it will add up to 25 as part of the Volato agreement.
Cash and cash equivalents were $18.7 million at the end of Q3.
FlyExclusive is one of a half-dozen private flight providers that went public via SPAC IPO since Blade and Wheels Up joined the public markets in 2021.
FlyExclusive completed its IPO last December.
Speaking at Corporate Jet Investor earlier this week, Flexjet, Inc. Chairman Kenn Ricci told attendees his proposed IPO, later scrapped, was his “biggest mistake ever…it cost me $30 million to not do the transaction.”
Ricci said the prospect of enabling competitors to pick through the complicated financials would make sales more difficult.
Read the full FlyExclusive Q3 results here: FLYEXCLUSIVE Q3 2024 FINANCIALS
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