“We are excited to have Matt lead us through our next phase of growth as CFO. His extensive public company experience will be highly valuable as we continue to add focus and rigor to our finance department,” said Jim Segrave, CEO and founder, flyExclusive.

Lesmeister was working as the company’s chief accounting officer prior to his promotion.

Lesmeister joined flyExclusive on May 30, 2024, as executive vice president and chief of staff. He has 14 years of public company experience across various finance roles, most recently at Fox Factory Holding Corp.

At Fox Factory Holding Corp, Lesmeister built an FP&A organisation from the ground up with an emphasis on business partnership, cross-functional collaboration, KPI management and the efficient deployment of capital resources.

“I was drawn to flyExclusive because it is unlike any other business in private aviation,” said Matthew Lesmeister, CFO, flyExclusive.

“Because of the company’s vertical integration strategy, we have full control over what we offer our customers, and we have a great opportunity to act strategically in the months ahead as we continue our journey as a publicly-traded company.”

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“Transparency and innovation are at the core of our fractional model and continue to differentiate us in the marketplace,” said Brad Blettner, chief revenue officer, flyExclusive.

“The JetQuity Protect program offers a compelling proposition to our fractional customers by creating easier planning and certainty in their investment. We’re proud to further simplify the process of owning a private jet share and provide our customers with a best-in-class experience along the way.”

By paying a one-time fee upfront, owners can lock in a minimum value for their share of the jet. This protects them from the possibility that the market value of the jet could decline after five years.

In addition, regardless of how the jet market performs, the program guarantees they can sell their share for at least the predetermined price. If the market value of the jet happens to be higher than the guaranteed minimum after five years, the owner gets the higher amount.

The company said that the program provides certainty as to the future value of the asset while ensuring that fractional owners can sell their aircraft share at the guaranteed price.

flyExclusive owns and operates the second-largest fleet of Cessna Citation aircraft in the world, giving fractional owners guaranteed access to a large, versatile fleet of light, mid or super-mid aircraft with no monthly management fees.

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FlyExclusive reported total revenue of $315m in 2023, a slight decrease from $320m in 2022. This dip can be attributed to the termination of a revenue-sharing agreement with Wheels Up, another jet charter service. 

Notably, Wheels Up previously accounted for a significant portion nearly 40% of FlyExclusive’s income in 2022. On June 30, 2023, FlyExclusive terminated its agreement with Wheels Up. Following this termination, Wheels Up share in FlyExclusive revenue declined to 22% during FY23.

Beyond the dip in revenue, the company’s total costs and expenses also went up. Cost of revenue, which includes expenses directly associated with operating flights, such as fuel, pilot salaries, landing fees, and aircraft maintenance clocked in at $264.2m in 2023, up from $255.4m in 2022 .

Selling, general and administrative (SG&A) expenses also witnessed a significant 40% jump. In 2023, FlyExclusive’s  SG&A expenses increased to $75.4m from $53.8m in 2022. The increase suggests higher marketing and sales efforts in 2023, possibly to offset the loss of revenue from the terminated agreement with Wheels Up.

Meanwhile, depreciation and amortization expenses, increased slightly from $23.1m in 2022 to $26.9m in 2023 .

As of December 31, 2023, the company held approximately $254m in assets. However, a significant portion of this is offset by $193m in long-term debt, primarily related to aircraft purchases.

Meanwhile, cash and cash equivalents were reported at a relatively low $11.6m.

“We currently anticipate that cash required for expenditures for the next 12 months (2024) is approximately $137.6m,” the company said in the financials. During the fiscal year under review, the company reported net decrease in cash and cash equivalents of $11.5m compared to net increase of $2m in 2022.

FlyExclusive share price has plummeted by 77% since March 2024.

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He incorporated, the fractional jet and charter company, in January 2021. Two months later he ordered HondaJets. Volato took delivery of its first aircraft in August 2021. Last week the company went public on the NYSE American after less than 2.5 years of flying. He wanted to list the company to help Volato grow faster.

“We believe that this transaction provides not only the capital to accelerate our fleet growth and strategy, but also a level of transparency and institutional support that should make our product even more attractive to new fractional owners and private fliers,” said Liotta.

Volato has a fleet of 23 HondaJets and has 24 firm orders. This includes four Gulfstream G280s coming next year. It had sales of $96m in 2022 – helped by new fractional aircraft sales.

The company has three types of customers: fractional owners, jet card members and ad hoc charter customers. Volato has an innovative offering for its fractional owners – they can use the aircraft as much as they want, with special owner rates, or share in revenue from charter.

The company has bases in southern California, Georgia, Massachusetts, Texas and two in Florida. It acquired Gulf Star Aviation in March 2022 to establish itself in Houston and plans to copy this in other markets. Its next targets are Colorado, New York, Chicago, northern California and the Pacific Northwest.

After listing Volato announced a new partnership with Fly Alliance to give owners access to larger aircraft. It also launched a new partner benefits programme with companies including Spa company Canyon Ranch, concierge firm Quintessentially, Goss RV, Lacure Villas, online poker PokerGO; spirits supplier ReserveBar; Hertz and others. 

Volato follows Wheels Up and Jet Ai. The next business aviation operator set to be listed is flyExclusive, which has also moved its focus from charter to fractional. Its SPAC has delayed its shareholder meeting from December 5th to December 19th.

Liotta stresses that SPACs have moved on from the first wave. He always planned to float the company (it is the second company he has taken from launch to listing) and believes that transparency is good for business aviation.

At CJI Miami this year, Liotta stressed this. During a panel he commented on an answer made by George Mattson, CEO, Wheels Up the day before.

“He made a joke about having your financials exposed for everybody to look and I think that is a really good point,” said Liotta. “It is easy to beat up on people who have their financials transparently out there. The question is what about other people who don’t have theirs out there?”

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This means that flyExclusive’s fractional aircraft customers can lock-in a value for their aircraft. Jetquity typically offers five year guarantees.

“We are thrilled to team up with flyExclusive to offer a comprehensive solution to fractional jet owners,” said Asad Rahman, CEO, Jetquity. “Our residual value guarantees will provide flyExclusive’s clients with a competitive edge and enable them to forecast their financial outlay far more accurately than is possible with today’s market offerings.”

The guarantee will cover the fractional operator’s Cessna CJ3 and Cessna CJ3+ fleet. It will also include new CJ3 Gen 2 aircraft when they are delivered.

“Partnering with Jetquity to offer residual value guarantees for our CJ3 aircraft is another way we can offer the best service and value to our customers. This collaboration ensures that fractional owners can invest in our state-of-the-art aircraft with confidence, knowing that their investments are protected,” says Jim Segrave, CEO, flyExclusive. “We are excited about the opportunities this relationship with Jetquity presents, and we believe it will further strengthen our position as a leading fractional jet provider.”

Jetquity launched in April 2023. It also has a partnership with Jetcraft, the global broker-dealer.

Also read: Jetquity launches to guarantee future aircraft values

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“The Cessna Citation CJ3 Gen2 is our most comprehensive Gen2 product announcement yet, offering customers proven performance, leading edge technology and an unmatched cabin experience,”  said Ron Draper, president and CEO, Textron Aviation. “As a pilot of the CJ3 series, I appreciate the aircraft’s excellent range, payload and efficiency, along with new productivity and comfort features.”

FlyExclusive has been named as launch fleet customer. “We take pride in being the fleet launch customer for the Citation CJ3 Gen 2, building on our decades-long relationship with Textron Aviation,” said Jim Segrave, founder, chairman and CEO of flyExclusive. “I am excited that our fractional customers will get to invest and travel in the top light jet in the world.”

For pilots, aircraft has Garmin Autothrottles, Optional Enhanced Vision System (EVS), a touch screen interface and new GDL60 aircraft connectivity. They also get 4.5 inches of extra legroom. Passengers may notice improved steps and lighting. There are also skylights in the lavatory, and a new optional sink and vanity design.

Like the CJ3+, the Citation CJ3 Gen2 seats 10 passengers. It has a maximum range of 2,040 nm.

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The latest display follows an initial installation of SmartSky hardware on the Cessna Citation X. The displays highlight ATG capabilities. 

“At flyExclusive, we pride ourselves on delivering a premium experience every time out of the gate. SmartSky delivers dependable and secure connectivity that not only enhances the passenger experience, offering the ability to live stream and conduct high quality video calling, but also provides real-time data transfer to and from the aircraft,” said Jim Segrave, founder and CEO at flyExclusive.

“Our Cessna Citation X has successfully used the SmartSky system, and we’ve experienced the connectivity firsthand – it’s a fantastic product,” added Segrave.

Dave Helfgott, CEO of SmartSky, said: “SmartSky and flyExclusive are companies that value innovation and delivering the very best for our customers. Our alignment in providing a consistent, uninterrupted service to customers speaks for itself. We look forward to showcasing our nationwide coverage, reliable connectivity, and easy-to-install technology alongside flyExclusive at NBAA 2022.”

flyExclusive and Smartsky are at NBAA at booth #3077 and static display (AD_405 and AD_305).

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North Carolina-based operator, flyExclusive will purchase eight Cessna Citation XLS Gen2 aircraft and six Citation Longitudes (pictured), with deliveries expected in 2024 and 2025 respectively.

“This agreement reinforces flyExclusive’s rapid growth and further bolsters the company’s offerings in the fractional space,” said Jim Segrave, chairman and CEO, flyExclusive.

The company has also exercised its option to purchase another five Citation CJ3+ aircraft from its previous order of 30 CJ3+ jets earlier this year, with delivery expected in 2024.

With its fleet of 90 light, midsize, super-midsize and heavy jets, flyExclusive is a Part 135 owner and operator. The company provides jet club, partner and fractional programs.

Cessna Citation business jets are designed and built by Textron Aviation.

Ron Draper, president and CEO, Textron Aviation said: “We’re proud that flyExclusive, a growing fractional operator, has chosen the Citation XLS Gen2 and Citation Longitude to offer to their customers entering business aviation.”

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The firm has a pre-transaction equity value of $600m and is expected to provide up to $310m in proceeds, including $85m of committed convertible notes and $225m of SPAC cash.

The SPAC, EG Acquisition, sponsored by EnTrust Global and GMF Capital — which has invested in MySky, raised the $225m in its initial public offering in May 2021.

Under the terms, flyExclusive and EG  will adopt flyExclusive as the corporate operating brand. flyExclusive founder and CEO Jim Segrave will lead the combined firm.

“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 Segrave.

flyExclusive said it will gain undisclosed “significant” additional capital. And the current leadership team will retain control.

Gregg Hymowitz, CEO and director, EG Acquisition and chairman and CEO, EnTrust Global said: “flyExclusive has become one of the fastest-growing providers of premium private jet charter experiences thanks to their world-class leadership team, business model designed to maximise utilisation and flight unit economics and the consistent high-quality service they provide to customers.”

Via the purchase of convertible notes that were entered into simultaneously with the signing of the agreement, investors are providing an additional $85m to flyExclusive. The notes will convert into shares of the combined company upon the consummation of the business combination at a price of $10 per share (subject to adjustment in certain instances). 

The $85m will be mainly used for aircraft acquisition.

Segrave added: “flyExclusive previously announced the purchase of 30 Citation CJ3+ light aircraft with deliveries scheduled to start third quarter of next year. With this additional capital, we are planning to further expand our fractional ownership program to include mid and super-mid aircraft to provide more options to our valued customers.”

The transaction should be wrapped up in the first quarter of 2023.

There have now been over 90 private equity investments in business aviation. Five of those transactions have totalled more than $400m. 

Last week, Directional Aviation’s Kenn Ricci announced his companies Flexjet, Sentient Jet, FXAIR, Private Fly and Sirio will merge with a SPAC called Horizon Acquisition Corp. 

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The Citation X series, with more than 300 aircraft in operation, joins a growing list of aircraft types that have already been granted STCs for SmartSky’s patented Air-To-Ground (ATG) connectivity. The already-awarded STCs include aircraft from major OEMs such as Textron Aviation, Gulfstream Aerospace, Bombardier and Embraer, with additional STCs in progress.

The company claims that its connectivity is more secure than other providers’ service due to each aircraft being assigned a unique connection to the network, rather than sharing the same connection with multiple aircraft across a broad area.

Operator FlyExclusive installed the hardware to the Citation X aircraft at its Kinston, North Carolina facility in June for its inaugural flight with the technology, ahead of the FAA STC being issued this month. In July, SmartSky announced that its ATG connectivity was available nationwide across the US.

“We aim to make high-performance, reliable inflight connectivity available for everyone in business aviation,” said Dave Helfgott, CEO, SmartSky Networks. “This successful certification with a key customer is an important step towards achieving that goal.”

SmartSky and Gogo Business Aviation have been involved in disputes over patents in the last two years. In April 2020, connectivity rival Gogo Business Aviation submitted a petition to the US Patent and Trademark Office, believing that SmartSky’s patent was not valid. SmartSky successfully defended its inflight connectivity patents in court that September, and has filed a patent infringement lawsuit against Gogo in February this year.

Britton Wanick, vice president, Marketing & Partnerships at SmartSky Networks told CJI: “In 2020, Gogo filed an IPR against one of SmartSky’s granted patents. The US Patent Office summarily denied Gogo’s challenge on both procedural and substantive grounds and Gogo failed to appeal its loss. Separately, in 2022, SmartSky filed a patent infringement lawsuit against Gogo in the US Federal Court in Delaware. SmartSky alleges that Gogo is infringing four of Smartsky’s patents. SmartSky also filed a motion for a Preliminary Injunction to have the court order Gogo to immediately stop marketing ATG services which infringe SmartSky’s patents while the litigation is pending and before it goes to trial.

“Discovery relating to the Preliminary Injunction motion has been completed and SmartSky is awaiting a hearing on the PI motion. We anticipate that the hearing will take place in the coming month or so. Gogo is seeking to have SmartSky’s lawsuit dismissed and SmartSky filed in opposition.”

This week, Corporate Jet Investor (CJI) spoke to SmartSky’s president Ryan Stone about the company’s turbulence service SmoothSky.

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