NetJets orders, Vista launches trading, Kenny leaves Wheels Up
Last week was a long one in business aviation. Kenny Dichter has left Wheels Up. NetJets has placed options for 250 Praetor 500s. Vista Global has also launched Vista Global Trading headed by Bill Papariella.
On Sunday (May 7th), at the annual Berkshire Hathaway investor day Warren Buffett, chair and CEO, praised the performance of NetJets. “It’s in a class by itself. It’s done what Ferrari has done in a different sort of way in cars.” Charlie Munger, vice president of Berkshire, said that NetJets is now worth the same amount as a major airline (credit to Private Jet Card Comparisons for listening to the six hour meeting to get these quotes).
Buffett was also asked about Wheels Up. He did not hold back saying: “It has 12,600 people who have given them over a billion dollars on prepaid cards and I think there’s a good chance some people are going to be disappointed later on.”
Buffett’s comments focused interest on Wheels Up’s first quarter results which came out on Tuesday. The big news was that Kenny Dichter, its founder and CEO, was stepping down. Over green juice in the Wyn Hotel at NBAA back in 2013, he pledged that he would build the biggest brand in business aviation. He did and it will be fascinating to see what he does next.
Todd Smith, Wheels Up’s CFO, has been named interim-CEO. Ravi Thakran, who led the SPAC that acquired Wheels Up, is now executive chairman.
The financial results were overshadowed by Dichter’s departure. Wheels Up lost $100m in the first quarter, with adjusted EBITDA of – $49m but this is not a big change. It lost $89m in the same quarter in 2022 (with a $49.5m EBITDA loss). No one expected it to make a profit in the first three months of the year.
Aside from Dichter, there were three key things announced. First, there are signs that demand is starting to fall. Active members fell 1% to 12,285 for the first quarter of 2023 compared with 2023.
Second, the company is radically restructuring its programme. Rather than try to fly countrywide, it is refocusing on two core markets: east of the Mississippi River (with part of Texas) and west. It will keep its King Air fleet in the east. Offering light, mid-size and super-midsize aircraft in both regions, it is cutting the cost of flying and daily minimums. Using a King Air will be 7.6% per hour cheaper. Customers outside these areas will be encouraged to book charter with Air Partner.
This is a big shift. The company says that 80% of its customers are in these two markets. It also makes it much easier to support the fleet – particularly King Airs – reducing delays. With the programme changes it has now announced its clearest plan to get to profit.
Third Wheels Up also announced more cooperation with 21% shareholder Delta Air Lines more closely. Large Delta corporate clients will now be sold Wheels Up flights. Wheels Up customers will continue to get Delta frequent flier points and perks.
Launched on Wednesday, at the excellent International Aircraft Dealers Association (IADA) conference in Florida, Vista Global Trading is an exciting venture. It will be led by Bill Papariella, chief business officer at Vista.
Papariella was CEO of Jet Edge International which Vista acquired in 2022.
As well as helping existing owners trade their aircraft for programmes, Vista Global Trading is looking for large multiple aircraft deals. At Jet Edge, Papariella bought and sold hundreds of aircraft – particularly Gulfstream G4SPs and G450s and Bombardier Challenger aircraft.
He loves trading and Vista Global Trading could become a significant business. Jet Edge Partners will continue to operate as a separate US aircraft broker led by Kevin White, but will work closely with Vista Global Trading.
The timing of the announcement is a bit of a surprise. Normally you would expect this to come at a large industry event like EBACE (which is next). Surely this has nothing to do with any other news last week?