Corporate aircraft leasing firm Jet Bank secures $250m initial equity raise
Jet Bank, a new corporate aircraft leasing firm, has secured $250m in its initial equity raise. The investment now allows the firm to acquire aircraft and lease them back to charter operators.
The Florida-based company plans to help operators strengthen their balance sheets and improve their liquidity positions by acquiring their aircraft on a sale-and-leaseback basis. With the newly raised funds and its Private Equity partner, Thomas Garbaccio, CEO and founder, Jet Bank told Corporate Jet Investor that with moderate leverage, the firm has up to $500m “of firepower” available to invest.
“This significant financial boost supports Jet Bank’s primary objective of supporting charter operators in their pursuit of expansion and growth,” said Garbaccio. “This infusion of capital empowers operators to seize new opportunities, serve more clients, and broaden their reach in the competitive charter aviation industry.”
Garbaccio said that until now, one of the only ways charter operators have been able to grow is by finding fractional or private owners and M&A activities. “What Jet Bank brings to the market is if you have an older fleet of aircraft and you want the place deposit on a brand-new type, we’ll buy your aircraft and lease it back for three to five years,” he said.
Jet Bank can purchase multiple aircraft in a single transaction, eliminating the lengthy and uncertain process of individual aircraft sales, continued Garbaccio. This means operators can free up cash while maintaining full control over the assets and use that money to either expand their business or reduce debt. “It’s similar to an equity investment, but without diluting the shareholders, whilst improving the balance sheet and the operating financial performance,” said Garbaccio.
With aircraft values and interest rates rising financing has become an expensive ordeal. which could stagnate growth for charter carriers, said Garbaccio. “Our operating lease focuses solely on the assets, eliminating the requirement for additional guarantees,” he added.
“We take away the major down payment required through purchasing, we take on the residual risks of the assets, and we give away the operational control of the asset to the operator for a predetermined period.” This enables operators to efficiently expand their fleets, achieve aircraft commonality, and realise substantial economies of scale in maintenance and pilot requirements.
There are key lessons that business aviation can learn from commercial aviation, he claimed. “Business aviation is about 20 years behind commercial aviation in finance terms because it’s smaller and they aren’t the same means available to the private jet industry. Bonds or structured financial products are only available to the larger players with sizeable financials,” he said. “Whilst if you look at the airline industry, well over 50% of the fleet is on lease. Because your fleet is a great way of unlocking equity to continue the business expansion.”
Following the equity raise with its partner, the new aircraft financing company is taking on clients looking to expand their fleets. “The plan for us now is to get a few deals under our belt,” said Garbaccio. “We will be approaching charter operators who are looking to free up to $100m in cash and say, we can help you do that.”