Flexjet Plans SPAC IPO Valued at $3.1 Billion

The deal is valued at $3.1 billion, which the company says is nearly 11 times (10.8X) than the $288 million adjusted earnings expected for 2022. When the deal closes, the Ohio-based company said it would use the proceeds to continue growing its fleet and operational footprint, which includes MRO facilities and a private terminal.

Kenneth Ricci, chairman of Flexjet, said in a statement that his company’s profitability would serve as a “launch pad to accelerate our growth,” and that Flexjet was “making this decision at a time when we believe the marketplace is expanding at a more aggressive rate.”

Flexjet has seen significant growth this year. Even amid talks of an economic slowdown, potentially reducing business aviation traffic—and a broad trend of companies that went public via SPACs struggling to appeal to investors—the company remains on track. 

In April, Flexjet said it would hire 350 pilots to fly the 50 new jets it will add to its fleet this year, which will stand at 254 by year’s end. It partnered with GE Digital Maintenance in May to improve its flight data and predictive maintenance capabilities. In June, by acquiring the Associated Aircraft Group (AAG), Flexjet launched a private helicopter division to offer complimentary helicopter hours—using Sikorsky S-76 helicopters—to its Gulfstream G650 fractional owners.

On the pilot side, the company is known for its “Dedicated Crew,” a unique pilot operating model that assigns pilots to a specific tail number. As pilots have flocked to the airlines as compared to Part 135 operators, Flexjet says it has been able to attract and retain pilots. Its average new-hire pilot has more than twice the flight hour minimum required for application. 

The company says 36 percent of its 1,000 non-union pilots have been with it for more than 15 years. 

More broadly, Flexjet employs more than 3,100 people globally, including 450 certificated maintenance technicians across nine locations in the U.S., United Kingdom, and Italy. To minimize extended aircraft-on-ground situations, it also has a network of 20 mobile maintenance support units in the U.S. and a network of partner facilities across the globe.

The company’s fleet includes 142 super-midsize, large-cabin, and ultralong-range jets. The company is seen as the rival to its neighboring Ohio counterpart, NetJets, which has a much bigger fleet, with more than 750 jets.

The company provides various marketing solutions and branded storefronts to service private and business jet operators. Customers can leverage fractional jet ownership and private leasing through the flagship brand, Flexjet. Through its Sentient Jet storefront, there are jet cards for customers needing fixed hourly rates. Its FXAIR and PrivateFly brands offer on-demand charter programs, and Sirio focuses on full aircraft ownership. Collectively, Flexjet says its subscription-based recurring revenue model has provided predictable revenue and cash flow, which is a metric the company is betting public investors will desire.

“Having capital and currency will position us to expand market share at an accelerated pace in an opportunistic environment,” Ricci said.

The company says its clients stem from a customer base of ultra-high-net-worth individuals and Fortune 500 corporations that make up approximately 10,000 contracts. Moreover, the company says it has maintained a 97 percent retention rate of members and that more than a third of its fractional customers—35 percent—have more than a decade’s long account. The company has undoubtedly benefited from the switch that travelers are making to private and business jet travel, especially following the pandemic—it says 55 percent of customers have been members for more than five years.

Business-wise, Flexjet told investors via its presentation that in 2021, its revenue grew to $1.72 billion and is expected to reach $2.3 billion this year. Its 2019 adjusted earnings were $97 million, meaning the company could nearly triple that this year if it meets its $288 million projections.

Serial entrepreneur Todd Boehly will commit up to $300 million from his Eldrige Industries company to backstop the deal. Boehly co-owns a range of entertainment brands, and sports teams, including the Los Angeles Lakers, Los Angeles Dodgers, and the Chelsea Football Club, 

Boehly, CEO, CFO, and chairman of Horizon—the SPAC—said, “I’ve known Kenn and the team for nearly a decade. Their ability to profitably grow Flexjet to what is estimated to be over $2 billion in revenue through an unrivaled product offering and desirable subscription-based business model sets the team apart.”