March 19, 2025
Fitch affirmed Vista Global senior unsecured ratings VistaJet Malta Finance and Vista Management Holding Inc. bonds at BB-.
Fitch Ratings has affirmed Vista Global Holding Limited’s Long-Term Issuer Default at B+ with a Stable Outlook.
The rating agency also affirmed the senior unsecured ratings on the bonds issued by VistaJet Malta Finance P.L.C. and Vista Management Holding Inc. at BB- with a Recovery Rating of RR3.
Per Fitch, Vista and key operating companies guarantee the notes.
The Issuer Default Rating, or IDR, “reflects Vista’s global market position in a fragmented market, diversification and growing share of contracted revenue, but also niche operations, concentrated ownership with key man risk and volatility in on-demand services.”
Fitch rating definitions are here.
Fitch adds, “Vista recently announced a $600 million equity-like injection, pro forma, for which we deem the company to be better positioned for a B+ rating and expect EBITDAR leverage to decline from about 5.9x in 2024 to around 5x in 2025.”
The investment led by Singapore-based RRJ was announced yesterday morning.
As to its report, Fitch stated:
We estimate Vista’s EBITDAR leverage at 5.9x in 2024, down from 6.4x in 2023. This is above our negative rating sensitivity of 5.5x, but the $600 million equity-like transaction will support deleveraging in 2025. Considering our expectations of moderate operational and profitability growth and some normalization of working capital movements, we forecast EBITDAR leverage to decline to 4.9x in 2025.
Fitch continues:
Vista aims to prepay close to $900 million of debt (including about $300 million of lease liabilities) with the proceeds of the $600 million equity-like funding and the upcoming new debt issuance. In addition to reducing leverage, these transactions will improve the debt maturity profile, benefit liquidity, increase the unencumbered fleet, as well as increase the EBITDA margin from a reduction in lease payments, as part of the lease debt will be repaid from equity proceeds.
Regarding Vista Global’s cash flow:
We estimate the company remained free cash flow (FCF) negative in 2024, albeit with a much lower outflow than in 2023. Negative free cash flow was mostly driven by higher-than-expected capex as well as a material working-capital outflow. We expect EBITDAR growth and working capital normalization to lead to consistently positive free cash flows (before lease debt repayment above P&L lease expense), supporting leverage consistent with the rating. We do not forecast material external growth in our rating case.
Fitch says, “We estimate Vista’s Fitch-defined EBITDAR at about $760 million in 2024 with a margin of around 28%, which we forecast at about 28.5% in 2025-2028.”
This compares to $704 million in 2023.
“We expect EBITDAR growth in 2024 to derive from a moderate revenue increase, somewhat offset by a rise in semi-variable costs, partially due to higher salaries and training expenses. We forecast EBITDAR growth of about $40 million in 2025, driven by higher aircraft utilization following the disposal of less profitable aircraft and an increase in (VistaJet Program jet card) live hours,” Fitch says.
Fitch continues, “We estimate the share of contracted Program revenues to gradually rise to around 60% in 2028 from 47% in 2023, consistent with the company’s strategy.”
Fitch expects the parent of flight providers VistaJet and XO to reach $900 million EBITDAR in 2028.
The agency said the company has achieved a “solid competitive performance.”
“In 2024, Vista outperformed the market in flight hours growth, with an increase of about 5%, compared with a 1% decrease for the global market, driven primarily by the growth in Program live hours,” per Fitch.
It added, “This was partially offset by lower on-demand (charter) hours due to divestment of the inefficient Citation fleet. Market flight activity in most regions weakened, but Vista’s global coverage provided some resilience relative to its peers. The company recorded growth in on-fleet flight hours in most regions of its operations.”
Fitch called Vista “one of the leading operators” in a “highly fragmented” market.
Vista Global operators ranked third-largest in North America in 2024.
However, it warned, “Our forecasts do not assume further M&A and further debt-funded M&A could put pressure on the rating.”
The agency added:
Vista operates a niche product, which differentiates the company from airlines in its business model and cost structure. More broadly, Vista’s large share of revenue under fixed contracts, with a customer base that is more resilient than the general public to economic cycles and a floating fleet (aircraft not anchored to certain airports) are key differentiating factors from commercial airlines. This all supports the company’s higher debt capacity than some second-tier commercial airlines at a given rating. Within the private aviation sector, compared with providers with fractional or full asset ownership, Vista offers lower all-in costs and higher flexibility as well as no asset residual risk to customers.
Key assumptions include:
In its recovery analysis, Fitch assumes that Vista Global would be treated as a going concern rather than liquidated in bankruptcy.
Vista had short-term financial debt obligations of around two its cash balance, excluding lease payments at the end of last year, per Fitch.
It adds:
In 2025, we expect the company to generate more than $100 million of FCF (after lease expense), which, together with the initial readily available cash that we estimate at $130 million, $600million equity-like proceeds and planned debt issuance, would be sufficient for scheduled debt repayment and leave the $265 million committed RCF available and undrawn. In addition to debt maturities, Vista also has about $65 million of deferred consideration payable in 2025 for past acquisitions. Vista had a sizeable working capital outflow in (the first three quarters of 2024), while for the full year of 2024, we estimate another material outflow of about $100 million. We have conservatively forecast working capital outflows at a lower level than in 2024, and there could be an upside from prepayments on incremental Program live hours.
As of end-2024, it operated a fleet of 214 aircraft, according to the Fitch report.
Last month, KBRA affirmed its BB-issuer rating with a stable outlook for Vista Global.
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