Vista Global posted a net income of $1 million on $2.1 billion in revenue through Q3 2024 as KBRA affirmed its BB- bond rating.
Vista Global, parent of VistaJet and XO, reported a small net profit of $1 million in the first three quarters of 2024, according to a Financial Times review of its accounts.
That follows a net loss of $139 million in 2023 for the entire year.
Per the report this morning, Vista Global’s Adjusted EBITDA was up 7% to $600 million year over year on revenues of around $2.1 billion, also up 7%.
The $1 million net profit in the first three quarters of 2024 seems to be a significant improvement.
However, it’s not clear if and how much of the turn to net profit is based on a change to how Vista Global records depreciation.
FT reporter Dan McCrum wrote:
‘For 2023, Vista changed auditors to PwC and altered the conservative depreciation schedules that (chairman and majority owner Thomas) Flohr has said contributed to Vista’s (net) losses. After cutting $135 million from Vista’s depreciation expense, the airline made slightly improved net losses of $139 million for the year, and was judged a going concern.’
Vista Global says it uses Adjusted EBITDA to judge its performance.
According to the privately held flight provider’s financial statements, the FT says it had $62 million in cash at the end of Q3.
While that was the FT’s headline (VistaJet cash reserves drop as super-rich cut travel plans), the article noted in the bottom half, “With available capacity on a $230 million revolving credit facility, Vista reported access to available funds of $105 million at the end of September.”
After McCrum’s original article about Vista Global’s finances in May 2023 highlighted the deficit of prepaid flight funds to cash, Flohr told CNBC, “[W]e need only about 22% of (prepaid funds) to serve our clients for the direct operating expenses of those flights.”
VistaJet fulfills most member flights on its Vista Members’ fleet, consisting mainly of around 250 owned and leased super-midsize, large-cabin, and ultra-long-range private jets.
It operates the world’s third-largest commercial private jet fleet after NetJets and Flexjet.
By contrast, broker-model jet cards require the provider to have enough cash to buy flights on third-party operators when customers call.
The various sourcing models and types of operator fleets—fractional, managed, owned, leased, floating, and based, with various hybrid operations—can make determining financial stability challenging, even for the few publicly traded companies constantly under a microscope.
In 2010, Warren Buffett, whose Berkshire Hathaway owns NetJets and doesn’t generally report detailed numbers on the subsidiary, wrote, “Even though NetJets was consistently a runaway winner with customers, our financial results, since its acquisition in 1998, were a failure.”
In his first 11 years of ownership, the fractional operator had an aggregate pre-tax loss of $157 million. Debt went from $102 million to $1.9 billion, per Buffett.
Last year, NetJets was doing well enough that it was able to give its pilots $1.6 billion in increased compensation over five years.
During its 2023 annual meeting, the late Charlie Munger said, “NetJets has been remarkable. You can argue it’s worth as much as any airline now.”
READ: What happens to your jet card and private jet membership deposits?
VistaJet members rose from 910 at the start of 2023 to 1,250 at the end of September.
The FT reports VistaJet sold 22,100 Program hours during 2024’s first three quarters.
According to the FT, members’ pre-purchased flight hours were down 10.5% year-over-year.
In 2023, it sold 33,400 prepaid flight hours, a 13.4% drop.
Again, per the FT, Vista Global attributed the dip to a 2022 customer bump it gained after acquiring Jet Edge, which had an extensive membership program.
Program contracts at VistaJet run for three years and start at 25 flight hours per year.
Buyers typically pay annually.
However, larger buyers can negotiate early-exit penalties and split payments quarterly.
Hourly rates range between $15,000 for its Challenger 350 and over $25,000 for its Global 7500s.
Vista Global’s overall revenue was around $2.1 billion through September 2024, compared to around $2.6 billion for all of 2023.
Just under half of sales come from on-demand charters, according to FT.
That includes the wholesale market, where Vista’s floating fleet is used by brokers and other jet card programs.
In October, Fitch had projected full-year 2024 revenue to be slightly over $2.8 billion.
Back in August, Private Jet Card Comparisons exclusively reported Vista Global was selling off its U.S. light jet fleet and legacy Citation Xs, although the latter deal has yet to be completed.
Older aircraft types out of manufacture have been a drag on fleet operators in a post-COVID world.
They say parts shortages keep aircraft grounded for extended periods and hamper dispatch reliability.
In 2023, Vista refurbished 93 aircraft, including newer model jets acquired via Jet Edge and Air Hamburg in 2022.
Per the FT analysis of Vista Global’s finances, its $4.5 billion debt remained similar in 2023 and 2022.
It had doubled from 2021 to 2022.
The accumulated debt comes from a half-dozen acquisitions of operators and brokers and the purchase of new Bombardier airplanes.
Last month, 9fin reported Vista Global was closing in on an $800 million raise of preferred debt.
That money would “boost free cash flow by funding principal payments on VistaJet’s aircraft financing arrangements.”
The FT reports a “$239 million put option liability due in May 2026.”
Flohr is thought to own about 85% of the company he founded in 2004.
Also, today, KBRA affirmed its BB-issuer rating with a stable outlook for Vista Global.
It wrote:
‘The issuer rating reflects the company’s strong market position in the private aviation industry, leveraging a diverse service offering that serves a large, diverse, and global customer base. This is supported by a best-in-class aircraft fleet, growing aircraft utilization rates, and manageable maintenance capital expenditure requirements. The company’s recent completion of a comprehensive fleet refurbishment program, while temporarily impacting EBITDAR due to associated cost and downtime, positions Vista Global for long-term growth by enhancing passenger experience, improving fleet efficiency, and bolstering operational capabilities.’
KBRA continued:
‘The rating affirmation also considers stable credit metrics, manageable debt maturity profile, successful integration of recent acquisitions, and a robust presence in capital markets, enhancing its financial flexibility. The company’s focus is now on organic growth, primarily through increasing aircraft utilization, as it de-emphasizes acquisition following an aggressive growth strategy via acquisitions in the past. The rating remains constrained by the highly cyclical nature of the aviation industry, with exposure to intense competition in a highly fragmented market. However, KBRA notes that business aviation, specifically the segment that Vista Global targets, is generally less cyclical and tends to more closely track economic growth and corporate profitability, making it less volatile than the commercial segment.’
KBRA added, “The Stable Outlook for Vista Global reflects our expectations that profitability and credit metrics will continue to improve over the next 12-18 months supported by higher fleet utilization rates.”
Unfortunately, commentary on the various private aviation companies and options often miss the fact that each solution has its plusses, minuses, risks, and rewards.
READ: Comparing The 5 Ways To Fly By Private Jet
VistaJet positions its Program and VJ25 as asset-light and lower-commitment options against fractional ownership.
At the same time, like fractional programs, its guaranteed prepaid programs offer more flexible booking and cancelation terms and a more consistent experience than an ad hoc charter.
However, in the case of a flight provider failure, jet card, and membership clients who paid deposits for future flights would be unsecured creditors.
READ: Six reasons not to buy a jet card.
The same would hold if you paid for an ad hoc charter flight and the operator or broker went bust.
While the prepaid funds are a risk for jet card members, VistaJet program customers can book flights at guaranteed pricing with as little as 24 hours’ notice.
They can also cancel with similar notice.
VistaJet offers the industry’s most global primary service area, guaranteeing those rates worldwide without charging additional repositioning fees.
Like fractionals, the VistaJet programs provide a recovery aircraft at no additional expense.
When there are mechanicals, it is a distinct advantage over most ad hoc charters, particularly for international flights.
Intercontinental flights on its ultra-long-range private jets can range over $200,000 per sector.
Standard ad hoc charters are often subject to cancellation penalties after booking.
Blacklist Aero, a website that helps chase unpaid bills within the industry, recently reported on a dispute over a $433,500 ad hoc charter flight that carried a 75% cancelation penalty.
The fixed hourly prices, no extra repositioning charges, ease of booking, guaranteed recovery, and flexible cancelation policies make both the jet cards and fractional ownership popular with regular flyers despite various downsides of both options.
For example, most fractional providers don’t guarantee residual value when buying back shares.
Also, if your fractional provider fails, the unwinding process can involve paying off liens against your aircraft.
In other words, every rose (full ownership, fractional, jet cards, ad hoc charter) has its thorns.
READ: Ad hoc Private Jet Charter: The anti-jet card solution has risks, too
Vista’s XO brand has been moving to an instant booking platform using dynamic pricing.
The shift is designed to simplify booking ad hoc charters, eliminating the typical back-and-forth.
XO removed its guaranteed fixed-rate program in 2022.
Its deposit programs are pegged at $100,000 and $250,000.
A Vista Global spokesperson tells Private Jet Card Comparisons, “These financials have been available to our stakeholders, being shareholders and qualified institutional buyers of our bond since November 2024.”
She adds, “They take confidence in our steady execution, as readily demonstrated by our bond trading levels. Our client centric-strategy included refinement of our fleet to better service them over the long term.”
Read the FT story here.
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