February 3, 2025
Jet.AI becomes a pure-play AI provider after selling its aviation division, which includes jet cards, fractional, and charter to FlyExclusive.
FlyExclusive has entered a definitive agreement to acquire Jet.AI’s Aviation business in an all-stock transaction.
Jet.AI currently operates in two segments: Software and Aviation.
The Aviation segment features fractional ownership, jet cards, on-fleet charter, management, and buyer’s brokerage.
The Software segment features the B2C CharterGPT app, the Ava agentic booking AI, and the B2B Jet.AI Operator platform.
Both FlyExclusive and Jet.AI are publicly traded after entering SPAC mergers in late 2023.
This transaction is expected to close in the second quarter of 2025.
It is subject to various closing conditions, including Jet.AI financing, regulatory review, and shareholder approval.
The deal value is estimated between $12 million and $22 million.
Per the announcement:
FlyExclusive will acquire the business in conjunction with Jet.AI’s focus on being a pure-play AI solutions company. The transaction will occur following Jet.AI’s spin of the business into a new company (SpinCo), which would then be acquired by FlyExclusive (collectively, the Business Combination). Jet.AI shareholders will retain their Jet.AI stock and receive new Class A common shares in FlyExclusive as part of the transaction. The Business Combination is contingent upon the closing conditions outlined in the agreement.
FlyExclusive is the nation’s fifth-largest charter/fractional operator.
In September, it entered an agreement with Volato to assume management of its HondaJet fleet.
The deal gave it the option to purchase the company.
Volato continues to operate as a technology platform selling its Vaunt empty-leg program.
During its Q3 earnings call, FlyExclusive said the deal added $600,000 to its bottom line.
After moving into the red last year, the Kinston, North Carolina company has said it expects to be Adjusted EBITDA positive in “early 2025.”
It attributed losses to costs associated with going public and older, less reliable, and older aircraft it is retiring.
Its revenues during the first three quarters of 2024 were down 1.5% to $235.9 million.
Jet AI’s Q3 revenues increased from $3.37 million to $3.92 million, while its net loss decreased from $4.29 million to $2.88 million.
Jet.AI revenues increased from $8.04 million for the first nine months to $10.85 million.
Neither have reported Q4 earnings yet.
Jet.AI launched flights in late 2021 with a HondaJet fractional and jet card program.
It was initially known as Jet Token.
Recently, it has focused on artificial intelligence solutions targeting the ad hoc charter market and B2B software designed to help operators sell more empty-leg flights and increase revenue.
Jet.AI’s fleet is operated by Las Vegas-based Cirrus Aviation Services, a management company and charter operator.
Both company fleets feature Honda Aircraft Company and Textron Aviation aircraft.
Jet.AI has three HondaJets, a CJ4, and a King Air 350.
In December, Jet.AI ordered three Citation CJ4 light jets from Textron.
FlyExclusive has fleet orders with Textron for CJ3+ light jets, XLS Gen2s, and Longitudes announced in April and October 2023.
They are part of its fractional ownership program.
More recently, FlyExclusive said it was adding Bombardier Challenger 350 super-midsize jets.
“This deal is mutually beneficial as it is expected to provide FlyExclusive with additional growth capital and enhanced shareholder liquidity and to allow Jet.AI to focus as a pure-play AI solutions company,” according to the announcement.
FlyExclusisve Chairman and CEO Jim Segrave said, “The proposed transaction with Jet.AI is the latest example of the value FlyExclusive’s vertically integrated private aviation platform provides to industry participants.”
He added, “The transaction benefits FlyExclusive investors and will augment our continued growth and market share expansion as an industry leader.”
Segrave noted, “Additional growth capital and new shareholders provide an early tailwind in 2025 as we onboard additional high-performance aircraft and serve strong demand for our differentiated customer service.”
Jet.AI Chairman Mike Winston cited the deal as a “natural fit” with “clear synergies.”
He added, “This business combination with FlyExclusive offers our shareholders the opportunity to benefit from growth in both private aviation and AI.”
The deal is structured as an all-stock transaction.
It will spin off Jet.AI’s charter business assets into the SpinCo.
SpinCo will then be acquired by FlyExclusive.
Consideration will be in the form of fully paid and non-assessable shares of Class A common stock of flyExclusive equal to the quotient of the purchase price, divided by the average volume-weighted average price of flyExclusive’s stock for the thirty trading days immediately before the effective date.
Jet.AI shareholders will retain their Jet.AI stock while receiving new Class A common shares in FlyExclusive to account for the portion of the spun-off aviation business.
The final purchase price will be based on Jet.AI’s net cash multiplied by the applicable premium percentage.
Net cash of at least $12 million is a condition to closing.
It will consist of cash on hand.
That includes deposits held by Textron Aviation, subtracting any cash net working capital requirement mutually agreed upon, and transaction costs triggered by the deal’s closing.
Jet.AI signed a $50 million non-binding term sheet with Hexstone Capital LP.
It is similar to its existing $16.5 million arrangement with Ionic Ventures LLC.
The applicable premium percentage paid for the aviation business will be between 115% and 120%.
The deal’s estimated value is between $12 million and $22 million based on final net cash.
Jet.AI will be the third M&A deal for FlyExclusive, including its SPAC.
In 2020, it acquired Gulfstream operator Sky Night LLC.
It is now selling off its large-cabin fleet to focus on the super-midsize Challengers.
One analyst says some deals are essentially restructuring other recent deals.
Last Fall, Wheels Up bought GrandView Aviation, a large Phenom 300 operator.
GrandView was sold in 2022 to Global Medical.
Airshare bought Wheels Up’s management business in 2023.
Those management businesses came to Wheels Up by acquiring Gama Aviation Signature and Mountain Aviation in 2020 and 2021.
Kompass Kapital acquired a majority stake in Airshare last July.
Vista Global sold off its light jet fleet last summer.
It acquired the Citation private jets via then top 20 operator Red Wing Aero in 2020.
Its Citation X fleet is also expected to be sold.
That fleet is a legacy of its 2018 purchase of XOJet.
There have also been new players in the dealmaking.
George J. Priester Aviation bought Hill Private in 2023 and Mayo Aviation in 2022.
Leviate Air Group acquired 60% of Chairman Aviation in October 2024.
READ: Private Aviation Execs Say Operator M&A Fraught With Risks
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