March 18, 2025
S&P Global is the latest ratings agency to issue an analysis of VistaJet, XO parent Vista Global’s financials.
In a report released yesterday, S&P Global updated its rating actions for VistaJet and XO parent company Vista Global Holding.
It followed reports from Fitch Ratings yesterday and KBRA last month about the privately held private jet flight provider.
S&P affirmed Vista Global at B+ while maintaining a negative outlook.
It gave Vista Global’s new proposed term loan a BB- rating.
Per the latest report, “Slower improvement in operating performance than expected in 2024 resulted in its S&P Global Ratings-adjusted funds from operations (FFO) to debt remaining well below 12%.”
S&P continued, “We forecast that Vista Global’s operating performance will further improve over 2025-2026, although we see a risk that Vista Global might not be able to restore credit ratios consistent with a B+ rating.”
It added, “The recently announced $600 million convertible preferred equity issuance and proposed $500 million secured term loan to refinance aircraft financing debt will reduce Vista Global’s annual debt amortization and interest payments, supporting its FFO cash interest coverage and liquidity profile.”
The rating agency continued, “We affirmed our B+ issuer credit rating on Vista Global. We also raised our issue rating on its $2 billion senior unsecured notes to B from B- and assigned a BB- issue rating to Vista Global’s proposed new $500 million senior secured term loan.”
The negative outlook on the long-term issuer credit rating indicates S&P could lower the rating over the next 12 months if the private jet flight provider cannot achieve a weighted average FFO-to-debt ratio higher than 12% in 2025 and 2026.
The same holds if its free operating cash flow (FOCF) after lease payments remains negative or liquidity weakens.
Per S&P:
Vista Global’s 2024 results improved year on year but not as much as we had anticipated. The company’s S&P Global Ratings-adjusted EBITDA increased to about $750 million in 2024 (from about $670 million in 2023), but was below our previous forecast that it would improve to $800 million-$830 million. We note that we expense nonrecurring costs and variable lease payments in our calculation of adjusted EBITDA. The slower improvement in operating performance than expected was due to a decline in on-fleet on-demand revenue, and while high-margin program revenue growth remained strong at about 17% in 2024, it slowed from 28% the prior year. Demand for private charter flights continued to be softer than anticipated across all regions, although we understand that Vista Global outperformed the broader market. In addition, the company had a large working capital outflow in 2024. As a result, Vista Global’s adjusted FFO to debt was about 8% in 2024, remaining well below our threshold of greater than 12% for a B+ rating.
The agency continued:
There is a risk that Vista Global might not achieve credit ratios consistent with a B+ rating in 2025-2026. We now forecast that Vista Global’s adjusted EBITDA will increase to $780 million-$800 million in 2025 and $830 million-$850 million in 2026, supported by 10%-14% growth in subscription program revenue, partly offset by a continued decline in on-fleet on-demand revenue. We anticipate that Vista Global’s adjusted EBITDA margin will continue to improve within 27%-28% (after about 27% in 2024), as it further increases its share of revenue from its high-margin program segment and its nonrecurring costs reduce. As a result, we forecast that Vista Global’s adjusted FFO to debt will be 10%-12% in 2025 and 2026. We see a meaningful chance that the company could outperform our base case for revenue and margin improvement, meaning it might be able to achieve weighted average FFO to debt above 12%, consistent with a B+ rating.
“Vista Global’s refinancing transactions are generally credit supportive, albeit a $100 million shareholder distribution will be paid out,” according to the report.
S&P added, “The proposed new $500 million secured term loan will be used to refinance existing aircraft financing debt, resulting in lower debt amortization and thereby improving the company’s liquidity profile. The contractually agreed new $600 million convertible preferred equity will be used to repay existing debt and pay a $100 million shareholder distribution. We treat the preferred equity as debt under our criteria since it is provided by a limited number of noncontrolling shareholders (including RRJ Capital) and has a stated yield. However, the yield is to be paid in-kind rather than in cash, which should help Vista Global improve its FFO cash interest coverage to about 2.5x in 2025 and about 3.0x in 2026 (from about 2.1x in 2024).”
The agency expects the private jet flight provider to “prioritize leverage reduction over debt-funded fleet expansion during at least the next two years.”
It noted, “The company decided to dispose of its lower-margin Citation fleet in 2024, resulting in a smaller overall fleet size of 214 aircraft at the end of 2024 (compared with 266 in 2023), with 28 aircraft still held for sale.”
Private Jet Card Comparisons reported on the fleet adjustments last August.
So far, Vista America has sold its light jet fleet, which it acquired via its Red Wing Aviation acquisition in 2020.
The Citation X super-midsize jets came mainly via its 2018 purchase of XOJet.
VistaJet ended 2024 as North America’s fourth-largest charter/fractional operator.
S&P said, “Vista Global continues to have no plans to expand its fleet over the next couple of years and is instead prioritizing sales execution to drive further improvement in its fleet utilization.”
Fleet utilization increased to 894 hours per aircraft in 2024 from 813 in 2023.
However, that was under the 1,000 hours per aircraft it achieved in 2021 before the Air Hamburg and Jet Edge acquisitions.
“Improvements in fleet utilization should, in turn, boost Vista Global’s EBITDA and cash flow generation and reduce its net debt leverage,” per S&P.
S&P reported, “Vista Global and its new minority preferred equity owners have set a net leverage target of 3.5x. We note that the target is significantly below the 5.2x company-adjusted net leverage in 2024. We understand that if net leverage falls below 3.5x, distributions to the preferred and ordinary shareholders are permitted up to an amount consistent with 3.5x net leverage, pro forma for the distributions.”
S&P estimates that the net leverage target translates to about 5.3x on an S&P Global Ratings-adjusted basis (or slightly above 12% FFO to debt).
Moreover, S&P added, “The negative outlook indicates that we could lower the rating if Vista Global fails to sufficiently improve its operating performance in the next 12 months.”
Vista Global could also see a lower rating if it is “unable to achieve a weighted average FFO-to-debt ratio higher than 12% in 2025 and 2026, if its FOCF after lease payments remains negative, or if liquidity weakens.”
Per S&P, “This could occur if the company fails to deliver sufficient revenue and EBITDA margin improvement linked to its fleet utilization and yields, or adopts a more aggressive financial policy than expected, prioritizing fleet expansion or other discretionary spending over deleveraging.”
On the upside, S&P said, “We could revise the outlook to stable if Vista Global’s adjusted FFO to debt increases above 12%.”
That would be based on EBITDA exceeding S&P’s base case due to higher-than-expected fleet utilization or yields.
The group maintains a more conservative financial policy and positive FOCF after lease payments.
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