Another large private aviation company, flyExclusive has just announced plans to become a public company. The rapidly growing charter operator is planning to merge with EG Acquisition Corp. (NYSE:EGGF) and be listed on the NYSE.
Since its founding in 2015, flyExclusive has grown into one of the largest operators of Cessna Citation aircraft in the world with a floating fleet of about 90 light to heavy jets.
Founder & CEO Jim Segrave sold his former private jet company, Segrave Aviation, to Delta Private Jets in 2010. He then served as President of Delta Private Jets from 2010 to 2013. He will lead the new combined company after this SPAC deal is completed.
In its early years flyExclusive provided aircraft to other operators and to brokers on a “wholesale” basis, but has been and continues to transition to contractual committed demand (GRP) and to its own Jet Club & fractional ownership products.
The Jet Club, flyExclusives’s jet card type membership program, was launched in May 2020, and offers non-refundable, multi-tiered membership options, with a unique daily and hourly pricing structure.
The company announced a new fractional ownership program in the Citation CJ3+ light jet earlier this year, with the first planes arriving in 2023 – but potential owners can start to use other planes in fleet straight away. Expansion of the fractional program to the mid and super-mid categories is expected immediately.
In addition, the company has a partnership program for aircraft owners, under which flyExclusive purchases and upfits an aircraft, then sells it but assumes responsibility for maintenance and operations via a triple net lease. The partner/owner's benefits include tax depreciation and owner’s rates and is aimed at people who fly 80 – 150+ hours a year.
Looking at hours flown, the company was the second largest Part 135 charter operator in the US in the first half of 2022. Having been the fourth largest charter operator in the whole of 2021.
As a bit of background, the FAA reports there were 1,863 Part 135 charter operators as of 5/3/2022 - so many of these other operators are very small with just one or two planes. And the overall market has certainly been consolidating over the last few years with larger operators taking more market share.
The company operates primarily Cessna Citation aircraft, with a few large cabin Gulfstream G-IVs for longer flights. The rough breakdown of the current fleet is:
- 10 Citation Encore Plus light jets
- 12 Citation CJ3 light jets
- 40 Citation Excel/XLS mid-size jets
- 7 Citation Sovereign super-mid jets
- 12 Citation X super-mid jets
- 7 Gulfstream GIV-SP large cabin jets
And the company is expecting to grow the fleet to 154 aircraft by the end of 2024.
flyExclusive is anticipating total 2022 revenue of $360m and is estimating 2023 revenue of $522m and $729m in 2024. Most of the revenue comes from aircraft charter, with some from aircraft sales and third party maintenance work in the future. It says the year-over-year membership growth, in its Jet Club, has been 200% with about a 94% retention amongst existing members, and has substantial contractually committed revenues from wholesale clients.
Looking forward the company says the “Private charter market has been and continues to attract greater proportions of first-class passengers from commercial airlines.”
Private Aviation Market
flyExclusive estimates the totally addressable market (TAM) for private aviation charter and fractional ownership at $32bn, which is split 55% corporate and 45% wealthy individuals. And it sees this growing to a potential market of more than $43 billion by 2025, driven by enhanced affordability, new customer segments, and increasing penetration in existing economic cohorts. It also refers to a McKinsey report that estimates only ~10% of households that can afford private aviation (i.e., households with a net worth over $10 million+) use it.
As part of its growth, in 2022 flyExclusive estimates it has about 1.9% of the charter and fractional market and sees its share growing to 3.4% by 2024.
Following the proposed SPAC transaction, flyExclusive is expected to have over $300m of net cash, which it can use to continue its growth.
“We are excited to enter the public markets through our business combination with EG Acquisition Corp. This capital, combined with our leadership team’s significant aviation industry experience, will allow flyExclusive to rapidly grow our workforce,significantly expand our fleet and further invest in our customer experience, while maintaining our core values and family first culture” said Jim Segrave, CEO of flyExclusive.
The respective boards of directors of both EG Acquisition Corp. and flyExclusive have each approved the proposed transaction. The parties expect that the proposed transaction will be completed in Q1 2023.
Note. The news of this latest public offering closely follows the announcement last week that Flexjet is going public via a SPAC deal, and Wheels Up went public via a SPAC in 2021. The largest private aviation company, NetJets, is owned by publicly quoted Berkshire Hathaway.