What You Need to Know About Jet Charter Businesses: Acquisitions Anonymous Ep 329

In today’s episode of Acquisitions Anonymous, we dive into an exciting investment opportunity—a private charter jet company. With revenues doubling year over year, this business offers intriguing possibilities for investors interested in the growing private aviation market. The question remains: Is it a good investment?

Deal Overview:

• Business Type: Private jet charter and management operator
• Location: South Central U.S.
• Revenue (2021): $12.9 million
• EBITDA (2021): $2 million
• EBITDA Margin: 14.7%
• FAA Certification: Part 135

This company has built a stellar reputation for safety and service, leveraging its FAA Part 135 certification to provide private jet charters to a variety of clients.

Key Insights:

• Asset-light model?
  The key debate in this episode revolves around whether the company owns its jets or simply manages them. If it doesn’t own the planes, this makes for a more appealing business model, as it avoids the heavy capital expenditure that comes with aircraft ownership.
• Revenue Growth
  In 2021, the company doubled its revenue to $12.9 million, up from $6 million in 2020. However, it’s important to question whether this growth was driven by the pandemic (as many people sought to avoid commercial flights) and whether it can be sustained.
• Market Growth
  The private jet market is expected to grow at a compound annual growth rate of 5.22% from 2021 to 2028, suggesting significant opportunities for businesses in this space.

Potential Risks and Rewards:

• Risks
  • Asset-heavy risks: If the company owns its jets, EBITDA may not reflect true profitability due to depreciation and maintenance costs.
  • Covid impact: The spike in revenue during the pandemic may not be sustainable in a post-pandemic world.
• Rewards
  • Asset-light model: Assuming the company leases planes from owners and charters them out, this can significantly reduce capital expenditure.
  • Growing market: With demand for private jets increasing, this business is well-positioned to capitalize on future growth.

Conclusion:
The private jet charter business presents a promising investment opportunity, especially if it operates without owning the aircraft. However, it’s essential to conduct due diligence, particularly on its financials and growth prospects post-COVID, to make an informed decision.