“We are thrilled to have Kompass Kapital join the Airshare ownership group and strongly believe its investment will have a material impact on our future,” said John Owen, CEO, Airshare.

“Kompass’ reputation is impeccable, and their track record in helping businesses flourish is well known. Additionally, they have already demonstrated great success in partnering with our legacy ownership group through other investments.”

Airshare has grown significantly in recent months. After acquiring Wheels Up aircraft management business last year, the company nearly doubled in size and now operates almost 150 aircraft. The aviation company’s current fleet comprises of 14 Phenom 300s and seven Challenger 3500s. 

Airshare offers a variety of private aviation services, including aircraft management, charter flights, and fractional ownership programs.

“We are very excited to partner with Airshare, where we join a talented team dedicated to serving the private aviation needs of business and leisure customers both domestically and internationally,” said Bradley Berger, managing partner, Kompass Kapital.

Jefferies acted as exclusive financial advisor to Airshare. Lathrop GPM served as legal counsel to Airshare, and Spencer Fane served as legal counsel to Kompass Kapital.

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There’s a range of evidence to consider. Most recently, reports last month that Wheels Up laid off more than 10% of its pilots blaming staffing imbalance. Also, the much-reported pause in commercial airline hiring is understood to have played a role. But how much does this reflect Wheels Up’s individual situation and what, if any light, does its cast on the availability of commercial pilots in general?

“Wheels Up has reduced its fleet size and primary service area, which would indeed make them overstaffed,” Brian Foley, founder and principal of consultancy Brian Foley Associates (BRiFO) tells CJI. “Flight revenues have also decreased suggesting fewer flight hours flown.”

Reduction in US charter

It’s likely to have been exacerbated by the continuous reduction in US charter utilisation, which the recent ARGUS report estimates to have fallen by 5.3% year-on-year, he adds.

So, taken together, the latest evidence could suggest aviation – both business and commercial – is seeing significant improvement in the availability of pilots to fly its aircraft. Foley puts it like this: “This, [slowdown in charter] combined with airline and freight carrier pilot hiring pauses, slowdowns and furloughs suggests a plateau in the pilot shortage and more available cockpit crew members.”

Bearing that in mind, can we conclude continuing reports about the impending shortage of pilots are overstated? Business aviation, unlike the airlines, has a distinct advantage when it comes to pilot recruitment, according to Foley. The sector requires fewer than 1,500 hours experience which, in turn, provides a more ready supply of pilot candidates than the stream available to the United, American Airlines, Delta and the like, he adds. 

This unlocks another significant point. “Our industry’s problem is more about pilot retention after attaining 1,500 hours and going to the airlines,” says Foley. “With airlines slowing hiring, this should become less of a problem in the near term.”

Unexpected silver lining

One unexpected silver lining to the supply chain cloud plaguing aviation is a beneficial impact on the supply of pilots. Boeing’s and Airbus’s inability to deliver new airliners in quantity will also have a positive impact on pilot availability, thinks Foley of BRiFO. 

It is a point picked up by Mike Stengel, principal of consultancy AeroDynamic Advisory. “There is still a shortage of pilots in the medium term due to unfavourable demographics,” he says. “But airlines are getting some temporary relief because they can’t get new airplanes fast enough, which has thus slowed down their hiring plans compared to the frenzy we saw in 2022 and 2023.”

The key word here for Stengel is “temporary”. Whatever the short-term challenges, the long-term direction of travel is clear. “As production rates increase at Airbus and Boeing, and Boeing also sorts through its own issues, we expect pilot hiring at major US airlines to accelerate again which will create ripple effects throughout the industry,” he argues. “This eventually translates into higher attrition at regional airlines and the business and general aviation segment that Wheels Up plays in since major airlines are often viewed as career destinations.” 

We did ask Wheels Up for comment but were told the organisation was unable to offer a view due to the media quiet period ahead of its second-quarter financial results expected on August 12th, 2024. In May, the company posted first-quarter 2024 financial results with total revenue down 44% year-over-year to $197m. (The fall was mainly driven by its exit from the aircraft management and aircraft sales businesses, as well as reduced membership and flight revenue).

11,000 airline pilots certified

Meanwhile, in March the Air Line Pilots Association (ALPA) highlighted FAA research revealing the US continues to certificate more airline pilots each month than in the years before the global pandemic. For example, more than 11,000 airline pilots were certified in the 12 months to March alone.

“Despite continued data to the contrary, corporate special interests continue to push the narrative that the United States lacks enough pilots,” the association said on its website. “ALPA has long maintained that while there were some pilot training backlogs coming out of Covid, the system is working and still producing record numbers of pilots. Passenger demand continues to be strong, and while mainline airline hiring has stabilised, resulting in a reduction of new pilots being hired, flight schools continue to have record enrolment.”

Urging against FAA legislative and organisational changes, Jason Ambrosi, president, ALPA wrote: “The system is working as intended, we’re producing more than enough pilots, and we’re experiencing the safest period in US aviation history, thanks in large part to the highly trained pilots on every flight. However, all stakeholders have an obligation to remain vigilant and play an active role in the operations of the most complex aviation system on the planet.”

So, it seems for now, at least, fears about an acute shortage of business aviation pilots and their airline colleagues may be misplaced. (Read the CAE Aviation Talent Forecast here).

*Planes need pilots – for now and the foreseeable future. No one disputes the tremendous progress being made with autonomously piloted aircraft. But do you fancy leaving the ground in one any time soon?

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Our feature Wheels on Fire, published in CJIQ Q3 2023, probed the long, and at times winding, path taken by the company as it restructured. We talked to the key people in the room, including Kenny Dichter, who played a leading role in planning  the business’s profit-focused future.

The second short-listed feature, ‘We are a company of engineers’, was also published in CJIQ Q3 2023. This article, based on an interview with top Dassault Aviation executive Carlos Brana and colleagues, explores how  engineering skills and disciplines are said to be helping the company thrive in the highly competitive world of business jet manufacturing.

“Most of us are engineers here – we are a company of engineers,” Brana told CJI last year, as the company celebrated 60 years of making Falcon jets.

According to the Aerospace Media Awards organisers: “The Aerospace Media Awards have been created to honour journalists and publishers who have made a significant contribution to aerospace journalism and publishing.”

Launched 11 years ago, this year’s awards  will be presented in London on Sunday, July 21st, 2024.

Meanwhile, you can sign up for your free copy of Corporate Jet Investor Quarterly here. Also, previous editions of CJIQ digital publication, first launched in 2019, are available to read here.

The post CJI SHORTLISTED IN THE 2024 AEROSPACE MEDIA AWARDS appeared first on Corporate Jet Investor.

Gama Aviation went public in 2014 when it acquired Hangar8 which was already listed on London’s Alternative Investment Market. In theory, the reverse takeover gave the company access to more capital for acquisitions. At the time, Gama Aviation was managing all of Wheels Up’s King Air flights and the merged company had almost 150 aircraft under management. (It later sold its share of its US aircraft management business to Wheels Up.)

Many listed company CEOs believe that the market does not truly understand or value their business. But Khalek was able to prove this last year when Gama Aviation sold Jet East, its fast-growing US maintenance business. Jet East made up a third of Gama Aviation. At the time Gama Aviation had a market capitalisation of about £60m.

In November Gama Aviation sold West Star for $131m (netting $100m). Steve Maiden, who led the fast growth of Jet East, was this week appointed CEO of West Star.

Some of the cash from this sale has been used to take Gama Aviation private. Perhaps surprisingly a significant number of investors have chosen to keep their shares even though they are no longer easily tradable. One high-profile UK investor bought 2% of Gama Aviation after the de-listing was announced. 

Khalek is excited to be back running a private company. He estimates that between 25% and 40% of his work life has been taken up by the demands of being listed.  Now freed up, he wants to grow Gama Aviation. “I am not sure everyone in the business is as excited that I will have more time,” he jokes.

Gama Aviation is looking to grow its FBO business. It has just completed a parking apron at Sharjah Airport, near Dubai, and is now starting on a new 14,000 sqm hangar and FBO due to open next year. The company is working through planning for its Jersey FBO in the Channel Islands. 

It has also hired Graham Williamson, formerly of ACASS Europe and TAG Aviation, to grow its aircraft management business. Williamson, who has been a competitor of Gama Aviation for many years, likes growing companies. He was at Emirates Airlines when it had three aircraft.

“It is exciting when you are growing and the opportunity for Gama Aviation is huge,” says Williamson.

Gama Aviation is in talks to buy Austrian operator Tyrolean Jet Services (one of its last stock exchange announcements was on this deal). Tyrolean Jet Services was the first Austrian business jet operator.

“We want to create bespoke operations in different locations like Four Seasons does with hotels”

“We want to create bespoke operations in different locations like Four Seasons does with hotels,” says Williamson. “We want to develop local presence in combination with our engine room in Farnborough. We want to provide great service, great product and be more focused on small numbers of highly bespoke clients.”

Khalek says it is not about trying to build one global operator. “One of the reasons that consolidation is tough is that aircraft management is a very personal business. You don’t want to grow into a big monster chain, you want guests to feel that they are staying at a boutique hotel where everyone knows their name.”

It is looking to build a series of small management companies – with no more than 25 aircraft – with local management. Gama Aviation believes that it can get economies of scale in back-office functions like finance, trip planning, maintenance and purchasing. Khalek adds another simile: “It is like a Michelin Star restaurant – you want a unique maitre d’ but the kitchen needs to be producing a consistently strong product.”

Khalek never hid his frustrations with running a public company (including to the Wheels Up team before they floated). He is clearly excited about the freedom the business now has. “We have all been weighed down with regulatory issues, things like Brexit, Covid, supply chain issues and others,” he says. “We need to shake ourselves out of this and go back to why people go into this industry. People do it because they love it and they are passionate about it. We need to remember how enjoyable this industry is.”

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This week, when George Mattson (who has now been CEO for five months) announced the company’s first-quarter results, there was none of this excitement.

Sales were down 44% and it posted another loss, but this is not a surprise. The company is still restructuring. Mattson stressed that everything was in line with the plan.

“Wheels Up was great at the offensive, but its defence was weak,” says one member of its founding team looking back. “It was becoming the Amazon of business aviation but the warehouses and delivery team could not keep up.”

Much of the past year has been about building this defence. In an analyst call, Mattson and Todd Smith, Wheels Up’s chief financial officer, stressed how they are focusing on operations and turning around the company. They said that they have added more than 250 years of operational experience to its Atlanta Member Operation Center (we don’t know how many people this is). It had on-time performance of 87% and a flight completion rate of 98%. It is also cutting its fleet and cutting costs.

At $197m, sales for the first quarter were down 44% compared with last year. But half of this came from the sale of its aircraft management business to Airshare and lower aircraft sales (the company’s aircraft sales team have also since left). Charter – mainly run through Air Partner – was up 20%.

The number of active members fell by 25% to 9,155. Some of these were members in the centre of the US that Wheels Up no longer wants to serve with its King Air fleet (but it is very happy to arrange charter for them). Active users fell to 10,218, a 23% YoY drop from 13,336 users in the same quarter last year.

The results also show how long it can take to change a membership company. Wheels Up stopped selling its guaranteed nationwide programme in June 2023. So it still has customers on this programme – although it is now less than 20% of its peak.

Wheels Up is saying that it is on track to produce positive adjusted EBITDA by the end of the year. It had an adjusted EBITDA loss of $49m in the quarter; similar to the same quarter last year. 

The biggest change in the past 12 months is that it has added $490m in new investment – particularly the cash and support that has come from Delta Air Lines. At a members’ event at the Masters golf tournament, Ed Bastian, Delta’s CEO, stressed that the airline is committed to Wheels Up.

Mattson and Smith still have a way to go to get Wheels Up to profit. The company had a net loss of $487m for 2023 financial year, down from $555m in 2022. It got through $6,765m of cash last year. But they have a plan and will quietly keep working on it.

The post Wheels Up’s profit plan appeared first on Corporate Jet Investor.

The decrease in revenue was primarily driven by the exit from the aircraft management and aircraft sales businesses, as well as reduced membership and flight revenue.

Active Members decreased by 25%YoY to 9,155, a result of the regionalisation of member programs and a focus on profitable flying.

This member decline also led to a decrease in active users to 10,218, a 23%YoY drop from 13,336 users in the same period last year.

Live flight legs and total private jet flight transaction value decreased 24% and 26%, respectively to 11,754 and $191,763.

However, the total private jet flight transaction value per live flight leg remained relatively stable, decreasing only 3% year-over-year to $16,315 compared to $16,772 in the same period last year.

At the bottom line, Wheels Up’s net loss improved slightly year-over-year to $97.4m translating into loss per share of $0.14.

Despite the decline in revenue, Wheels Up highlighted strong operational performance, exceeding internal goals with a 98% completion rate and 87% on-time performance (D-60) for flights. The company also announced its plans to open a new flagship maintenance facility at Palm Beach International Airport (PBI) and the appointment of David Harvey as chief commercial officer.

“Wheels Up has made great strides to improve our operations and consistently deliver exceptional service and an experience worth repeating for our customers,” said George Mattson, Chief Executive Officer.

“Our strong operational performance provides the foundation for driving to profitable growth. I am pleased with the market interest in the accessibility and flexibility of our offerings, and we are seeing accelerating commercial momentum through our strategic partnership with Delta Air Lines.”

“Despite slower demand in January and February, we saw sequential improvement in March that is following through into the second quarter,” said Todd Smith, Chief Financial Officer.

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“We at Wheels Up are continuously evaluating and acting upon opportunities that will drive efficiencies and control costs, all in service of strengthening our business model and improving our member experience,” said George Mattson, CEO, Wheels Up.

The company said its new PBI facility signifies a shift in maintenance network strategy by strategically locating resources closer to areas with high flight density. The company aims to achieve better alignment with its overall network and flight patterns with the launch of new MRO.

“The opening of our new state-of-the-art maintenance facility at PBI is a key strategic step, leveraging our resources and locating our facilities in areas of high flight frequency.  As a result of these measures, we are improving reliability and efficiency while reducing costs as we continue to drive toward adjusted EBITDA profitability later this year,” added Mattson.

The company will initiate an immediate closure of its Colorado facilities. The relocation of personnel from the Fort Lauderdale location will occur upon the opening of the new Palm Beach facility.

To ensure a smooth transition for impacted employees, Wheels Up has collaborated with MRO providers FEAM Aero and AVEX Aviation in Cincinnati and Broomfield. The company said these partnerships will provide departing staff at Colorado sites with direct opportunities for placement within these established companies.

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To be successful they realised they needed a business jet charter marketplace to drive demand. So they decided to launch that as well. One of their professors suggested they focus on the marketplace and park the air taxi idea. The Avinode charter marketplace launched in 2002.

CAMP Systems this week agreed to buy Avinode and two smaller FBO software businesses – FBO One and Total FBO –  for $200m. The professor was right.

It is a good deal for World Kinect (the energy company formally known as World Fuel) which acquired Avinode in 2014. World Kinect will use the cash to pay down debt and focus on its core fuelling business. It has clearly made a good return on its investment. World Kinect took control in 2019 just before its main business was hit with grounded airlines.

“We are excited about the possibilities the partnership between our companies will bring to our customers,” said Oliver King, chief executive officer, Avinode Group.

The acquisition also makes a lot of sense for CAMP Systems, the aircraft maintenance tracking business. CAMP Systems is itself owned by Hearst, a 136-year-old private company. Hearst is best known for publishing regional newspapers like the San Francisco Chronicle (which it launched in 1887) and magazines like Cosmopolitan, Good Housekeeping and Harper’s Bazaar. But along with newspapers, TV and magazines it has three significant business-to-business data divisions: Fitch Ratings, healthcare and transportation.

The transportation division includes data that helps mechanics fix trucks and cars. This includes MOTOR, a magazine that Hearst has owned for more than 120 years. MOTOR has evolved from a print consumer magazine into a data business for car repair, parts and insurance. Aviation is just as significant to Hearst.

Hearst acquired CAMP Systems in 2016 from private equity firm GTCR. (GTCR is now an investor in JSSI and has supported it buying two aircraft maintenance tracking companies that are rivals to CAMP.)

CAMP Systems then bought Inventory Locator Systems, the spares marketplace, from Boeing in 2019. In 2021 it bought a majority stake in FlightBridge, a workflow system that connects business jet operators with FBO, car handlers, hotels, airlines and catering companies.

When the deal closes in May, Avinode will fit into CAMP’s Marketplaces Group along with ILS, FlightBridge and Amstat – the aircraft listing marketplace.

“This represents a complementary extension of our business and platform to bring exciting new opportunities to the market and better serve our expanding customer base,” said Sean Lanagan, president and chief executive Officer, CAMP Systems.

World Kinetic did not run a formal sales process, instead it contacted companies that had already approached it in the past. The business could have fitted well with Directional Aviation’s spin-off Tuvoli (which has FlyEasy, a rival marketplace and a payment system competitor). It might also have been of interest to Portside, the flight department software company which raised $50m in private equity from investor Insight Partners (and recently acquired the rights to Wheels Up’s AVIANIS software). The founders of Wheels Up had also tried to buy Avinode several times.

King and the senior management team have no plans to leave. This includes Per Marthinsson, one of the three founders, who is Avinode’s chief revenue office.

The other two founders are backing a European car charging start-up. It was branded before they joined, but is genuinely called ChargeNode.

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Firestone,  who started Wheels Up with Kenny Dichter in 2013,  will remain in an advisory capacity until the end of the month to “ensure a smooth transition”. 

“While it’s great to have achieved the highest level of status with all of the major hotel brands that gets me an end of the hall room or a higher floor location, I am most excited about spending more time in South Florida with my wife Natalie and our three wonderful children,” he wrote on LinkedIn.

“I have been fortunate to have had a career of more than 30 years that has spanned multiple countries at some of the world’s top aviation organizations. So much has changed in our world and in our industry since we started Wheels Up in 2013 but what hasn’t changed is our relentless pursuit to deliver a world-class experience for our Members.”

READ: Wheels Up revenue falls 24% in third quarter

Firestone began his career in media relations and sports marketing  before becoming a senior vice president under Dichter at Marquis Jet in 2002. In 2007 he set up Asia Jet in Hong Kong before moving to become president of Hawker Beechcraft for a year in Hong Kong in 2009. He then joined up with Dichter again to launch on-demand private aviation service Wheels Up. 

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Our feature Wheels on Fire probes the business restructuring of Wheels Up. No aviation business has attracted as much attention as Wheels Up this year. This cover story feature probes how and why the restructuring happened. Plus how the company is preparing for a profit-focused future.

Star players in the feature include: (of course) Kenny Dichter, founder, former CEO and chair. George Mattson, new CEO of Wheels Up and, the man who appointed him to the role, Ed Bastian, CEO, Delta Air Lines among many others.

Here’s a selection of quotes from our cover story feature. This from Dichter after his departure from the company: “I am very enthusiastic about the future of Wheels Up. The entire Wheels Up community has my unwavering support on the journey ahead.”

And here’s Bastion on Dichter’s contribution to the business. “I would like to extend my sincere gratitude to Kenny Dichter for building the Wheels Up brand into a powerhouse in private aviation,” he said after closing the big financing deal. “We have grate appreciation for his steadfast devotion to the members, customers and employees and his role in elevating the private aviation experience, which will undoubtedly guide the industry’s path forward.”  Read the full story here.

When Dassault Aviation’s executive vice president Civil Aviation, Carlos Brana spoke to CJIQ, he stressed the technical qualifications of the manufacturer’s staff. “Most of us are engineers – we are a company of engineers,” he told us. It’s a discipline and an approach to business planning that infuses all of Dassault Aviation, he said.

Brana is responsible for defining and implementing global strategy for Falcon Aircraft sales and customer service. His to-do list includes defining the guidelines for the modernisation of Dassault’s product line. So Brana and the team had something to celebrate last month when the manufacturer confirmed its long-awaited Falcon 6X had finally entered service after the jet won type certification from both EASA and FAA on August 22nd.

During our interview, Brana looked ahead to the commercial launch of the 6X and its next development project – the Falcon 10X, due to enter service at the end of 2025.

Another leading business jet to feature in the current edition of CJIQ was the ACJ TwoTwenty in our popular First Look feature. Launch customer luxury resort company FIVE Hotels is so pleased with its new jet it’s reluctant to release the aircraft to exhibit at events. Chadi Saade, acting president, Airbus Corporate Jets told us: “FIVE Hotels seems delighted with its ACJ TwoTwenty and aircraft schedule is so busy – to the point we can’t get hold of the aircraft  as much as we would like or shows.” But he added: “It’s a nice problem to have.”

Aloki Batra, CEO FIVE Hospitality told us: “A dare-to-be-different jet, the ACJ TwoTwenty cabin is one of the most innovative and technologically-advanced aircraft cabins ever designed. One that boasts all the conveniences of luxury living, but in the sky.”  

No stranger to fast jets was the late Hamish Harding, the late chairman of Action Aviation, who tragically died on June 18th, 2023, when his submersible imploded during a dive to view the wreck of RMS Titanic in the North Atlantic. Our feature recalls happier times, as we documented his many adventures in the air, in space and below the sea.

The first adventure we featured was his world-record breaking circumnavigation of the Earth via the North and South Poles at the controls of a Qatar Executive Gulfstream G650ER together with a specialist team. Last year Harding blasted into space aboard the Blue Origin New Shepard 4 space rocket.

The feature, Jules Verne planted the idea, recalled another record-breaking achievement, his dive aboard the Triton submersible DSV Limiting Factor to the deepest part of the world’s oceans. Accompanied by submarine explorer Victor Vescovo, Harding crossed the Challenger Deep in March 2021. Read the full feature – including his many other accomplishments – via the link.

Meanwhile, you can read the digital version of CJIQ here. And, if you like what you read, why not sign up for the free print version of the magazine?  Also, we are always searching for new stories from the fast-moving world of private jet aviation. So, if you have an idea, please let us know.

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