The company repurchased a total of $788m, consisting of $338m senior notes of 7.125% due in 2026 and $450m of 7.875% due in 2027.

Bombardier had previously issued notices of partial redemption for these notes on May 21, 2024. The redemption process, including the payment and surrender of the notes, is being handled through the Depository Trust Company.

Earlier this month, Bombardier announced the successful closing of its previously announced offering of senior notes raising a total of $750m with these notes maturing in 2032 carrying an interest rate of 7.00% per year.

The company said that it plans to use the proceeds from this offering, along with existing cash reserves, to pay off some of its existing debt including the $338m and $450m in today.

Bombardier has been on a deleveraging drive to improve its balance sheet.

Acknowledging the actions taken by the company, credit ratings agency S&P Global upgraded the Canadian business jet maker Bombardier’s credit rating to ‘B+’ from ‘B’ citing continued progress on reducing debt and a stable business outlook.

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The announcement comes just days after the company announced better-than-expected results for the third quarter.

The company’s tender offer said that it will purchase for cash up to $110m of its outstanding notes. Further breakdown showed Bombardier’s intentions to purchase $75m of its 7.125% senior notes due in 2026, whereas it plans to purchase the remainder $35m of its 7.875% senior notes due in 2027.

The tender offer is set to expire at 5pm on December 6th, 2023. The cumulative principal outstanding for 2026 notes is $1.2bn and $1.892bn for the 2027 notes.

Bombardier said the offer will be financed through a new $500m senior notes issue.

The company said: “… it has issued a conditional notice of redemption for all of its outstanding 7.50% Senior Notes due 2025 … the redemption date is December 6th, 2023, and the redemption price is 100% of the principal amount redeemed, plus accrued and unpaid interest.

“The redemption of the Notes is subject to and conditioned upon Bombardier completing a new offering of debt securities in the aggregate principal amount of not less than US$500 million before the Redemption Date; however, Bombardier may delay or waive this condition in its sole and absolute discretion.”

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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.” 

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The decision was taken because some interested parties asked for more time to submit the necessary documents. The original deadline was set on 12th June 2023.

Piaggio Aerospace has a €556m order portfolio, with a P.180 Avanti EVO backlog of 17 units. The company expects to break even at the end of 2023, it said.

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“Joining JSSI gives us the opportunity to grow the business faster than we can alone,” Miller tells Corporate Jet Investor. “We will have more access to capital and also can work with the salespeople across the whole JSSI platform to originate more deals.”

Shearwater rarely competes with banks. As an asset backed lender, it has always focused on the underlying aircraft more than the customer’s credit. A lot of its deals have been outside of the US for aircraft older than 10 years with an average deal size of about $5m-$8m.

JSSI Aviation Capital will have a similar strategy, but with a focus on the US market as well. 

Miller started in aviation in the US Marine Corps as an F/A-18 pilot. He launched Shearwater in 2014 after heading Guggenheim Partners’ Business Aircraft Investment Group (which was acquired by Stonebriar Commercial Finance). JSSI was also an early investor in Guggenheim Partners’ Business Aircraft and has invested in past Shearwater deals.

Shearwater worked closely with family offices and private equity to source cash. JSSI Aviation Capital is also keen to work with banks looking to syndicate deals or to be a quality alternative for a customer that may not meet their financing criteria.

“We have worked with Chris for over a decade and know the business well,” Neil Book, president, JSSI tells CJI. 

Backed by private equity firms GTCR and Genstar, JSSI’s business has transformed in recent years. Best known for its maintenance programmes, JSSI has acquired or created several businesses including Conklin & de Decker an information company, which went alongside the launch of JSSI Advisory Services (which offers appraisals, inspections and consulting). JSSI also acquired TRAXXALL and SierraTrax two maintenance tracking software companies.

One of its fastest growing businesses is JSSI Parts & Leasing, which sources parts and leases spare engines. It has also financed a few aircraft in special situations. “Our focus has always been on simplifying the complexities of maintaining an aircraft and providing a great customer experience. Who better to offer asset-based financing solutions?” says Book. 

“We help protect the asset value by providing maintenance tracking software, maintenance programmes and 24/7 AOG support,” he says. “It is a different product, but fundamentally all about protecting an aircraft’s value which is what our businesses do.”

Like Shearwater, JSSI Aviation Capital will expect borrowers to keep at least a third of the aircraft’s value in equity and require approved third party aircraft management.

The acquisition closed in early May with JSSI Aviation Capital closing is first deal – for a southeast Asian aircraft – today. Miller adds: “We are already growing the portfolio and there are a lot more deals to come.”

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The notes carry a coupon rate of 7.5% per year. The proceeds from the offering, alongside Bombardier’s cash in hand, will be used to fund its outstanding 7.500% senior notes due 2024, and to finance the offer to purchase up to $345m aggregate principal of its outstanding 7.5% senior notes due 2025, as well as related fees and expenses. The company issued the new notes on January 18th.

Bombardier has been restructuring debt over recent years, having previously issued more than $2bn in senior notes in March 2019 at a comparatively high-yield to finance tender offers that were due in 2020 and 2021.

At the end of 2017, the company closed an offering of $1bn senior notes that were due in December 2024.

The Canadian OEM reported a better than expected fourth quarter in its 2022 preliminary financial results, having delivered 123 aircraft in the year compared with the guidance of 120 or fewer. As a result, Bombardier had a book-to-bill of 1.4 and a predicted order backlog growth to about $14.8bn.

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Eric Weisskopf, MD, Hyperion said the new platform aims to close a gap in financing for business jets. The new platform, which has “worked effectively for real estate and renewable energy transactions” will offer investors and lessors a “dedicated financing structure”.

Hyperion said that financing for aircraft has become increasingly fragmented as traditional lenders have retreated to more vanilla financing (involving call or put options), while the private aviation sector continues to grow. The platform will allow retail investors an opportunity to fund business aviation for the first time, according to the company. “The gap in financing for cargo and business jets is often unfulfilled because of the smaller number of aircraft, which tend to be second hand,” said Weisskopf.

Hyperion Aero Capital expects investors for the business jet funding to comprise current institutional investors, including bank debt, its founder Scott Levy told Corporate Jet Investor (CJI). The company aims to attract investors refocusing on alternatives through listing on the Frankfurt Stock Exchange. Hyperion told CJI that listing the company will make liquidity available to investors through a secondary market. 

The company said a volatile stock market, four-decade high inflation and raising interest rates and geopolitical tensions have stunted the market. But investors will be able to refocus and diversify their portfolios through Hyperion’s financing model.

The founder said they expect the split for financing to be about 30% business jets, with the remainder focused on cargo, as the volume of it is increasing as China opens up again.

Levy said: “Investors will be able to access a secure, insurable real economy asset which will provide above market returns without the volatility associated with the current market, while lessors will find a dedicated team and a single point of contact for financing assets which mainstream banks find difficult to finance.”

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Camber, which was named SimpleCharters until its rebrand at the end of last year, has been operating since 2012, offering clients real-time pricing on charter bookings.

The company is run by founder and CEO Charles Denault, who will take on the title of Technology director, Camber under the Vista umbrella. In his role, Denault will be “setting the future of air mobility through a tech-enabled shared economy model,” according to his LinkedIn.

Thomas Flohr, founder and chairman, Vista Global told Corporate Jet Investor (CJI) that integrating Camber’s technology will improve the efficiency of instant booking options on the XO app and drive automation across Vista’s approved operators.

Flohr added: “Providing clients with the simplest and most digitalised private aviation solutions is key to Vista’s unrivaled customer offering and strengthens its position as the world’s largest on-demand charter provider. Vista’s commitment to constantly finding new and innovative solutions is behind the vision of digitising the entire private aviation process. Its growing customer base demands fast and seamless access to flight services through digital platforms and no longer accepts the hassle of traditional charter booking.”

The deal closed late last month for an undisclosed sum.

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The division accounted for more revenue than the commercial aviation side of the business this quarter, making up 26.8% of the group’s overall $1.02bn revenue.

The group sold 23 executive jets within the quarter, accounting for almost half of the business jets sold in the year-to-date (52). Of the 23 sold in Q3, 15 were light jets and the remaining eight were mid and super midsize jets. Embraer said Q3 was the second-best third quarter for executive aviation in the last decade.

On an earnings call, Antonio Carlos Garcia, executive vice president and chief financial operator, Embraer said: “This is one of the highest quarters [in terms of backlog] since the beginning of the pandemic, driven by solid sales activity in executive aviation and service and support.”

Reported Q3 gross margin was down slightly compared with last year, at 19.7% this year and 21% in Q3 2021. But the gross margin is still up year-to-date at 20.6% in the first nine months of 2022 compared with 16.3% within the same time last year.

Group-wide, free cash flow in the quarter was negative $109.4m, mainly due to an increase in working capital because of higher deliveries in Q4 this year, which is expected to reverse to a positive trend.

The group also cut its debt by $0.53bn since Q3 last year, with the group finishing the quarter with $1.3bn debt. Embraer said the decrease in debt is a result of cash generation during the last four quarters. To ensure liquidity, Embraer obtained a revolving credit facility in October this year for up to $650m, as well as a credit transaction guarantee of $100m by JP Morgan and UK Export Finance to finance suppliers.

The group’s total backlog remained stable in Q3 at $17.8bn, the same as Q2 this year and up 6% compared with Q3 2021 when backlog was $16.8bn.

The topic of supply chain problems was brought up on the earnings call held shortly after the results were published today. Carlos Garcia said that despite the supply chain hold-ups, he still expects the company to deliver strong full year results. He said: “We all know the supply chain constraints which are impacting Embraer, and a big portion of the deliveries will be in Q4. Despite the challenges of the supply chain, we should stay in the lower end of the delivery guidance for […] executive jets.”

Francisco Gomes Neto, CEO and president, Embraer added: “The end of the year will still be challenging with the concentration of deliveries in the fourth quarter. But we have known this since the beginning of the year and the company’s focus has been on mitigating such issues. We are prepared to deliver solid full year results.”

Gomes Neto said that delivery slots for the next two years are “almost completely filled” for executive jets. He said: “Regarding the coming years we foresee a better perspective in terms of revenue and profitability growth.”

Embraer results at a glance:

• 23 executive jets delivered in Q3, 52 delivered year-to-date
• Executive Aviation revenue up 6% year-on-year to $271.7m
• Gross margin of 19.1% in Q3 compared with 19% in Q3 last year
• Free cash flow in Q3 was negative $109.4m
• Debt down $0.5bn since Q3 last year

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The loss was in line with analyst expectations. Wheels Up is committed to positive earnings in 2024. It is forecasting total sales of between $1.55bn and $1.58bn for the full year – it raised this 4% when it announced its result.

Active users increased by 11% to 13,339. Live flight legs rose by 7% since last year to 21,025, with continued flight demand driven by the growth in active members and the acquisition of Air Partner. Active Members grew 12% yoy to total 12,688

Flight revenue per live flight leg rose 20% since last year, up to $13,266, largely due to programme changes that included higher pricing and the introduction of a fuel surcharge.

Wheels Up said its net loss, which increased by $27.4m yoy, was due in part to higher spending. The company invested significantly in technology – particularly its own Fleet Management System (UP FMS). All of its aircraft are now on the UP FMS and Wheels Up said this is the first building block of its marketplace. It is also investing in a new Member Operations Centre in Atlanta, Georgia. This will open in 2023. It is also looking to cut sales and administration costs.

Wheels Up had $284m in cash at the end of September 2022, down from $785m at the end of 2021. The company announced a $270m enhanced equipment trust certificate backed by its fleet in October.

The company said it was eliminating the role of president, held by Vinayak Hegde since last October, to “streamline” the organisation. Kenny Dichter, CEO and chairman, said on an earnings call following the results that the group is prioritising safety and delivering “world class service with great pilots”. He added that removing the role would “improve focus and accountability”.

Dichter said: “Our current structure limits our ability to focus on driving specific outcomes at the appropriate levels in the organisation. In order to address this, we are eliminating the role of president and transitioning to a more granular organisational design focused on operations, digital transformation and more specifically our marketplace while evolving our product offering.”

Hegde, who served as chief marketplace officer before becoming president, will continue to work with Wheels Up in an advisory role. On Monday, he sold 9,592 shares of Wheels Up stock for an average price of $1.58, netting $15,155.36 in total. He now holds 2,065,385 shares in the company, valued at $3,263,308.30.

Todd Smith, chief financial officer, Wheels Up said the company is exceeding its pilot hiring goals with over 450 pilots hired so far this year. He said that while the number of pilots employed is increasing, there are problems with pilot scheduling due to FAA operating certificates, whereby a pilot certified on one aircraft type can’t fly the same aircraft on another certificate. “Even though we are one company, that creates unnecessary friction on our pilots’ scheduling, as well as added travel and logistical costs,” he said. Smith added that Wheels Up is working with the FAA to fix this and bring “greater scheduling flexibility,” which will improve the service and lower costs.

Smith added that Air Partner is “continuing to deliver ahead of initial expectations”.

Results at a glance:

• Revenue up 39% yoy to $420.4m
• Active members up 12% yoy to 12,688
• Live flight legs up 7% yoy to 21,025
• Net loss up $27.4m yoy to $86.8m
• Adjusted EBITDA decreased by $21.3m year-on-year to a loss of $45.2m.

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