“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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Taking part in the 40-minute discussion, chaired by Corporate Jet Investor, will be Josh Johnson, chief financial officer (CFO), Airshare, which completed the acquisition of Wheels Up’s aircraft management business last week, and Rishi Majithia, head of Investment for MONTE. Also taking part will be  Nick Copley, founder and president, SherpaReport.com, an online publication covering private aviation and David Vanderzwaag, CEO, AIRHAWKE and Berletex Aero Design.

So, if you would like to learn more about the latest about top trends in M&A in private jet aviation, why not make a date to attend this event? Questions under discussion include: Have we passed peak M&A? Is lots of M&A the sign of a healthy industry and what is driving activity? We will also ask which sectors of business aviation offer the greatest potential for further M&A deals?

Show goers can ask a question at the event in person. Alternatively, if you are unable to attend the show, but would still like to put a question to our expert panel, please send your question to Mike Stones. See you at the finance forum.

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As well as its fleet of 24  fractional aircraft, Airshare already managed 34 jets.

“The Wheels Up business is the perfect fit for us, it has a very similar structure to ours and we are keen to add great people to our team,” John Owen, CEO, Airshare told Corporate Jet Investor. “We will mesh together the two management teams and have already spoken to as many owners as possible about moving over.”

Airshare is funding the purchase with its own cashflow. Wheels Up was focused on Part 135 aircraft that were available for charter. But Owen says this is different at Airshare. “We are as happy to have [privately operated] Part 91 aircraft as we are P135.”

Owen says that although Airshare’s fractional owners often use Airshare managed aircraft for charter when they want larger aircraft, the fractional business rarely goes outside its own fleet.

Wheels Up built the fleet by acquiring Travel Management Company or TMC Jets in June 2019; Delta Private Jets in 2020; Gama Signature Aviation in 2020; Mountain Aviation in 2021; and Atlante Air Charter in 2022. The company had been trying to merge all of these operators on to one Air Operator’s Certificate.

Airshare is privately owned. It was founded in 2000 in Kansas. It started as a fractional operator and offers shares and jet cards on both Embraer Phenom 300 and Challenger 3500 aircraft. It launched aircraft management and charter in 2008.

“This acquisition also spreads our national Prescence allowing us to grow the business further,” says Owen. “But we are not going to grow to fast. We want to grow intelligently”

The sale was arranged by Jefferies working for Wheels Up. Foulston Siefkin was legal counsel to Airshare. Kirkland & Ellis represented Wheels Up.

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Delta Air Lines, which owns 20% of the company, has agreed to provide a short-term capital infusion to Wheels Up. This will prevent Wheels Up from breaching bank covenants. It also demonstrates how the airline is keen to support Wheels Up. One other investor has also been in talks with the company about providing debt.

Ed Bastian, Delta’s CEO – and one of the highest regarded airline executives – is personally committed to Wheels Up. In April, Delta and Wheels Up said they had agreed to work more closely selling to corporate companies. “For us to be able to add that to our stack as the premium opportunity within the Delta experience, well no one has ever been able to do that before, and we have been attempting to pull that off,” said Bastian at a Wings Club lunch in May.

Airshare, the fractional operator, has agreed to buy Wheels Up’s aircraft management. The two companies have signed a non-binding letter of intent. Wheels Up acquired five significant management companies – TMC Jets (2019), Delta Private Jets (2019), Gama Signature Aviation (2020), Mountain Aviation (2020) and Atlante Air (2022) – before going public. It paid around $70m for Gama Signature Aviation alone. Merging operators is always difficult and the company has found integrating the five different operators much harder than it expected – partly due to staff shortages at the FAA. It has also seen owners who are less focused on charter move aircraft to other operators.

Wheels Up acquired Air Partner for about $110m in April 2022. Although it has been integrated with Wheels Up, it could be relatively easy to split. Mark Briffa, the CEO of Air Partner has become executive vice president and chief commercial officer at Wheels Up. Wheels Up has had interest from trade buyers and financial investors in Air Partner.

Today’s announcement gives more guidance into the future of Wheels Up. This is just the start of its restructuring and you can expect it to become a more focused company – strongly supported by Delta Air Lines – as it focuses on becoming profitable. The biggest brand in business aviation is keen to stay around.

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The value of that capital has not been disclosed. Delta has a 20% stake in Wheels Up. 

The operator, which was due to hold its second quarter results investor’s call today, has also announced entering into a non-binding letter of intent (LoI) with US operator Airshare. The letter could see the Airshare acquire Wheels Up’s non-core aircraft management business. 

The company said will share more details as available and has postponed its scheduled earnings communications. 

Just over two years since Wheels Up listed on the New York Stock Exchange, the company’s initial $10 share price has fallen tp $2.37 (after a 10-for-1 reverse stock split). It first-quarter announcement was dominated by the departure of founder Kenny Dichter as CEO. The focus for the next earnings communication will largely be on cash. At the end of March, it had $363m and could be getting close to breaking debt covenants.

See last week’s One Minute Week for more details on the state of play at Wheels Up. 

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Through the agreement, Kansas City-based Airshare plans to double the size of its Challenger fleet to support demand for its fractional programme. The firm entered the super-midsize segment with its first order for 20 Challengers in May 2021.

“The response we have received to the Challenger entering our fractional program has been tremendous, from both new and existing customers,” said John Owen, president and CEO of Airshare. “We are thrilled to extend our commitment with Bombardier and look forward to adding several more Challenger 3500s to our fleet. The strength of our partnership made it easy for us to accelerate our plans to order more of these aircraft to meet customer demand.”

The Challenger 3500 aircraft is the first business jet in the super mid-size segment to have an Environmental Product Declaration published, documenting the aircraft’s environmental footprint over its lifecycle.

Eric Martel, president and CEO, Bombardier said: “The entire team is immensely proud that Airshare continues to trust Bombardier to grow its fleet. Airshare and Bombardier share several values in common: we strive for excellence and work tirelessly to offer an exceptional experience to our clients. With this new order, our valued relationship continues to grow stronger, as the award-winning Challenger 3500 aircraft keeps elevating Airshare’s flight experience with its ultimate combination of performance and comfort.”

Airshare’s fractional programme gives each owner a 1/16th share with 20 days and unlimited flight time. The firm also offers its own jet card program, Embark, as well as aircraft management, on-demand charter and maintenance services.

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Randow has worked in director positions for airlines for the past two decades and most recently held the role of vice president of operations for iAero Airways based in North Carolina. In his new role, Randow will be responsible for improving efficiency and ensuring customers receive a flexible and productive experience.

Gruell is former vice president of Global Operations and Guest Experience at hotel brand Marriott, having spent her entire career in the hospitality industry. In her newly created role, Gruell will be responsible for overseeing all aspects of the customer journey, across fractional, whole aircraft management and charter flights. She will also promote Airshare’s “family-oriented culture” to attract and retain talent.

Gruell said: “Airshare has tremendous potential to become even more synonymous with a best-in-class experience for customers and to become even more well regarded as a great place to work.”

Airshare said the additions to the team and the new customer-focused role Gruell is taking on reflect the company’s focus on delivering “the best customer experience in private aviation”.

John Owen, president and CEO, Airshare said: “Since our customer base has grown significantly in the last couple years, it’s critical that we be proactive in maintaining and advancing our industry-leading experience for customers in every solution we offer.”

He added: “Our ability to hire people of their caliber is exciting and demonstrates the bright future ahead of us at Airshare.”

Back in August, Airshare selected Viasat as its connectivity provider for the company’s Bombardier deliveries.

The appointments follow a recent string of people moves, with new hires announced at Textron, Luxaviation, TAG Aviation and The International Aircraft Dealers Association (IADA).

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The number of connected business jets aircraft are expected to grow to 36,500 by 2031, an increase of 11,600 from 24,900 at the end of 2021, Euroconsult estimated. That represents a 3.9% Compound Annual Growth Rate (CAGR). As a result, service providers’ revenue will more than double, from $620m at year end 2021 to $1.8bn by 2031, an 11.6% CAGR.

However, the company warned that service providers will have to introduce more competitive prices as they contend with evolving technologies during this time. Satellite constellations, which are systems of satellites that work together to avoid latency and breaks in communication, are expected to disrupt the market in the coming years.

Euroconsult said: “The adoption of competing satellite constellation architectures, expected to significantly advance post-2025, will lead to an upsurge in bandwidth availability as satellite operators switch to new generation satellites.”

There has been activity in the connectivity market recently, with deals being struck and acquisitions being agreed. In June, connectivity specialist Viasat’s stockholders approved a $7.3bn deal to acquire Inmarsat, which is expected to close in the second half of this year subject to regulatory approvals. The acquisition comprises $850m in cash, about 46.36m shares of Viasat common stock and the assumption of $3.4bn of net debt. In May, Inmarsat announced at EBACE that it was upgrading in-flight connectivity speeds (of more than 130Mbps) for its service JetConneX.

Earlier this month, Viasat was selected by US fractional ownership and jet card provider Airshare to provide KA-band in-flight connectivity for its new Bombardier Challenger 350 deliveries and future Challenger 3500 deliveries that will begin next year.

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Viasat will install its Ka-band in-flight connectivity (IFC) system on Airshare’s new Bombardier Challenger 350 deliveries and future Challenger 3500 deliveries that will begin next year. Airshare said it chose Visat to allow high-speed connectivity for its fractional owners during all phases of flight including taxi, takeoff and landing, even in dense geographical areas with heavy aviation traffic.

“Choosing Viasat for our new deliveries was an important step as Airshare enters our next phase of growth,” said John Owen, president and CEO, Airshare. “Excellent connectivity is no longer simply a nice-to-have amenity while in flight.”

Airshare said it is expanding its fractional offering beyond its core markets in central US with plans to begin serving customers on the East Coast “in the near future”.

“With Airshare’s sharp focus on customer service and an exceptional in-flight experience, we look forward to supporting the new fleet’s connectivity requirements now and into the future,” said Claudio D’Amico, business area director, Business Aviation, Viasat.

In June, following its FAA approval for Dassault 7X and 8X, Viasat stockholders approved a $7.3bn deal to acquire Inmarsat. The deal is expected to close in the second half of this year subject to regulatory approvals.

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Airshare said considerable due diligence went into selecting the Challenger 350 as the aircraft to expand the firm’s operations outside its core area in central US. John Owen, president and CEO of Airshare, said: “[We took] input from our current customers and contributions from every department in the company. Partnering with Bombardier puts us in an excellent position to attract future customers who have wanted to join our programme but desired a larger aircraft with greater range, while also ensuring we continue to deliver best-in-class service that has become synonymous with Airshare.”

Bombardier continues to introduce enhancements to the 350 aircraft cabin, including high-speed Ka-band connectivity and a cabin management system.

“We appreciate the confidence Airshare has expressed in our Challenger 350 aircraft,” said Éric Martel, president and CEO, Bombardier. “This jet is the all-round performer. No other aircraft in the category comes close to its superior reliability, range, speed, performance, cabin experience and operating costs.

“Airshare is one of the most successful fractional programmes in the country. We are proud they have chosen the Challenger 350 aircraft to anchor their fleet, and we are extremely excited about the potential of this long-term partnership.”

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