Flexjet CEO on F1 partnership, fleet expansion to 400 aircraft, and private aviation's tailwinds from commercial decline

Wall Street was expecting to them to actually get the $2 billion, you would have seen more movement.

And also Google's going to pay over time. But anyway, we have our next guest in the waiting room. We have Andrew Collins from Flexjet. He's the global CEO. We're very excited to have him join the show. Welcome to the TVP and Ultradome. Andrew, good to meet you. Thank you so much for taking the time to come chat with us. How are you?

I'm doing great. Great to see you guys.

Great to see you, too. Um, I would love since it's the first time on the show, I would love to go a little bit back with your history with the company, um, recent developments, recent news. Uh, and then I have a bunch of questions about the shape of the business and where you're going next. Sure thing.

Um, so can you tell me a little bit about your background and your history with Flexjet?

Sure. Uh, I came into the company uh, in 2012 through an acquisition. And I was running a company called Sensient Jet which invented the jet card

uh which is a way of flying privately at 25 hours at a time and then uh over time was you know worked on a lot of different mergers and acquisitions within the company worked directly with the chairman uh and eventually was asked to become the global chief executive officer and it has been in a fantastic run. It's been interesting and uh the company now sits at about 5,000 folks or so. Uh, and we are global and you find me today in London. Uh, I've been working out of our London office this whole week.

Yeah. How has the footprint grown? What's been the biggest driver of growth internationally? Uh, I'm thinking about the the fleet, but also the customer base. Where has the business changed and reshaped during your tenure?

Yeah, it's been interesting. I think that you know when I got into the private aviation space,

it still was somewhat of a niche market and you know institutional capital eventually did discover it which was really interesting and I think that allowed for you know some expansion in the industry. Uh but probably the big watershed moment you know really had to be COVID and what happened uh to you know in the last say I don't know five to six years uh 2019 was you know sort of your traditional singledigit growth um you know year and then co came in I think everybody worried about what would happen to the business and then it absolutely exploded because I think people were you know held back they wanted to have experiences they wanted to get out there and so we saw a I know why it exploded is because private aviation is to me one of the most addicting things on the planet. And if you get a bunch of people that get introduced to it because there's a pandemic,

can't go back.

You can't it's really hard to go back. I have a a a friend who was texting me like an addict last night uh because he's like, I got I I I can't I can't stop. uh he had like a he made he was he he he boo he chartered something last night that uh was like a under a 5h hour drive or something like that and and he didn't even have a rush and all this stuff and

um

with all the social media addiction lawsuits I would be worried about the business uh facing a similar uh similar addiction lawsuit because it is one of the most addictive products out there

more addict I I I do that's that's a good point a lot of people it's like give up social media or private aviation They'd be like, "I'm giving up social media."

Probably. Probably.

I'm logging off.

I hear that. That's great. Yeah. Fantastic.

Anyway, so you mentioned you mentioned uh uh institutional capital coming into the business at a certain point in time. Um help me understand that at a deeper level because I imagine that there have been uh there's been debt on a fleet. Uh there's financing arrangements for individual assets in the portfolio. What has the evolution of the capital structure of Flexjet and maybe just the the private aviation industry been generally over the last decade?

You know, it's a it's a really great question because I think we consider ourselves stewards of the balance sheet. Um, we very much have, you know, been methodical about the way we've taken on any debt that we've taken on and how we've grown the company. Um, it is a capital intensive business, especially with you, you're dealing with assets that are worth obviously millions and millions of dollars. Um, so I think there's been an approach in the industry to to grow either organically or to start taking on money. And some have done it really well and others have not truthfully. Um, and and I think what you learn from it is you want to make sure that you grow in a very intelligent and smart way. So um, we have 350 aircraft, but uh, the the thing about our model is is that a lot of our consumers are the ones that are purchasing the model. We pre-ell most of our shares. So while we carry some debt on the balance sheet, a good bulk of the the fleet itself is actually owned by our consumers.

And so we have 350 aircraft now. We'll grow to another 50 aircraft this year to get to about 400. Uh I wish I could get another 50 to be honest with you. It's uh it's it's got an incredible demand and there's an incredible backlog uh in the private jet space. But I I think that the other piece I would I would raise is unlike in say technology where you may have sort of write once and kind of uh sell at high margins and continue to iterate. Um this is an assetbased business and it's not a proctor and gamble market, right? There are millions of people that fly privately and I appreciate the uh the addiction piece and and how it's gotten the exposure. Um, in fact, what's interesting about that is is the the finishing touch to what I was saying is we've retained a lot of those folks. So, they didn't go away, right? They they came in and they got Yeah. 100%. I just I'm finishing your sentence basically, which is they definitely stayed.

And so, so we have, you know, a back we have people on a wait list for certain aircraft. Our fleet and our complexion of our fleet has changed. We've gone from, you know, sort of light to super mid. Now, we're very much into the large cabin aircraft. Uh, we announced the G700 program last year exclusively. We just announced the Gulfream G500 program. Uh, we're up 60% year-over-year on transatlantic flying. So, we've moved from a 48 contiguous state, you know, sort of entity to one that's truly global now. And capital, institutional capital has helped us to do that, right? We have we have great banking relationships. We've we've debated going public. If you go back in our history, you'll see that we we debated that opportunity. Um but in in reality, we have access to capital. We want to we want a a business that, you know, um we'll do 350,000 flight hours this year. We're profitable. Um so I think that, you know, we've had an opportunity to to really, you know, um grow the business and and it has evolved over time for sure. How uh how is the sort of commercial sector and trends there? You have, you know, p uh the sort of last generation of pilots, the pilots that never got addicted to doom scrolling on social media while while flying. You know, the you have aging aircraft. It feels like uh uh I I would say like commercial aviation just feels like it's getting less safe. I don't know if that's actually true, but that's how that's how how it feels.

Certainly been lots of headlines

and I feel like that is a that's also a tailwind. Is that am I do I have a good read there? Is that part of the psychology of people that are choosing uh to go the to go the charter route?

Well, I won't speak for an airline or or their safety levels or anything of that nature, but what I would tell you is is that commercial aviation is probably the best marketing force that we have in private aviation, right? in that it has degraded over time and you can see it in various ways. Now, some of that is not on a company. Some of that has things like government shutdowns as an example that really help drive some of those things. So, the nice thing about private aviation is is that it's built on alternative airports. So, I I think in the US uh 500 commercial airports, 70 are really the ones that bear the brunt of most of the volume. private probably does 7% of the volume amongst those 70 at most. So we're really, you know, going by those those big hubs. And so when something like a government shutdown happens, we are a classic alternative now for people uh that that want to be able to trust that they can go from point A to point B. I would say service, you know, um economic pressures, uh you see in Europe, you've got some distressed uh commercial carriers here right now. Uh, so yeah, I I I think your read on the evolution of commercial and there are some fine commercial airlines, don't get me wrong. I don't want to just slander my my aviation brother.

I said it first.

You did. I And and so

it's just something and again it wasn't it's not even like as factbased as it is like a as a as a feeling. Yeah.

Yeah. Yeah. Yeah. and and and and but it's true like we definitely see folks that and now look I don't compare us to commercial based on you know costs and such but I would tell you that that you know you do see people that when something happens whether it it it it's a co it's a you know I need to make sure the flight makes you know gets me there whatever it is whatever that driver is we tend to be a really good force for them to to kind of rely on. I want to talk about the F1 partnership. We recently had a an F1 uh reserve driver on the show and he was saying that he will often fly

I think it's Saturday after practice back to HQ and do a night of sim racing to do basically like more testing and then take a flight back. and he's doing that all uh all commercial and he has to be ready to uh fly uh or not not fly but actually drive the car the next day if he's called up. Uh sounded like uh sounded pretty rough uh rough conditions for somebody that's expected to be driving that fast around a racetrack. So excited to hear that you guys are working with Formula 1.

Yeah, I I would tell you I am too. I'm a fan and and a bit of a fanboy at the at the same time, right? And um I I I think that you know the the partnership we're going to be the we are the official designated the official private aviation partner of F1 now and you know that that comes with a lot of trust. We've been working with them for a while. Uh but we will be flying their executives. We do have drivers that fly with us. Um the scenario you just outlined that's classic. That's not just F1. That's business, right? it it's the ability to be, you know, refreshed and ready to go the next day and and and really think about time management and, you know, we all run off that same watch, but private really allows you to manipulate it. That's an important factor. And then, you know, this then evolves into our customer base, which what we're seeing is we're now kind of entering this economy of experiences versus this economy of things. And so a lot of the folks in our base and the reason we do partnerships is we try to differentiate in the air that incin experience that in-flight experience we have artisal interiors. Uh we we tend to say that uh other jets are gray. They're either gray or beige inside. We tend to customize our our interiors. Uh we we try to deliver, you know, high-speed inflight entertainment with partnerships like Starlink, uh with Loi. you know, we do a lot of things to really make that that experience as frictionless and as enjoyable as possible regardless of what you're doing. Um, and so two, we're trying to do that now outside the cabin and give you, you know, only in Flexjet type of experiences. And as a luxury brand, uh, we tend to have folks that, you know, would like to seek unique experiences with other luxury platforms. And as a global brand now, right? So I was talking about the evolution of the company. We're now globalizing Flexjet. There's no better partner, right? There's there's 20 plus countries involved in racing uh for F1. So it it tends to serve as a really great canvas for us to create very unique experiences for the folks that have that affinity within our base.

Very cool. on on the procurement front. Uh we talk with a lot of we spend all of our time uh I wish we got to spend more of our time talking with folks in in private private aviation. It's sort of a little treat a treat for us, but we spend most of our time talking with you know technology founders, entrepreneurs, hardware uh founders, etc. Um, and uh, I'm curious how you think about procurement and uh, around planes and and new technologies that will be coming online, you know, 5 10 years out. I'm sure you're one of the uh, I'm sure you're an important

person to pitch, you know, advancements in in aviation on on the uh, actual plane side and and other parts of the stack. But what's your framework for evaluating, you know, new technologies? I'm sure you want to stay uh on the frontier, but at the same time, you're balancing safety, reliability, uh, you know, and and managing the fleet overall.

Yeah, it's a great question. So, I actually just saw something that said that I think like 58% now of orders that are starting to come in through OEMs are really for fractional markets. So, we've become a big buyer, to your point, in in in fleet buying. Um, one of the things that we do, and I credit our chairman, Ken Ricky, on this is he's big on being involved in the business before you're getting into the business in some respects, right? So, when the EV tall movement came uh and and everybody thought that we were going to be the Jetsons inside of 5 years, um, it was important to understand for us short distance aviation. So, we understand fixed wing, we understand long haul flying, we understand a lot of different things, but short distance is really interesting. And so we actually at the beginning of COVID invested in vertical lift and helicopters. And so we bought two different, you know, twin engine companies, one in London and one in New York that was a long-standing company. And we did that specifically to get the expertise and the model and understand how to work within short distance aviation. So that's like, you know, kind of table stakes. can we understand how that's going to function and fit into our world first and understand safety and understand all the things that are rigorous and important to us. The next is um we screen a lot of people and so uh we have made some announcements though where we've gone through some high evaluations and it'll take some time uh that we don't have here but uh you know we did uh order over 200 EV talls we have another group that we're working with uh we just recently announced that and um is doing a lamp when it comes to you know its ability to um to fly. So we we we have a future ahead of the future of aviation. So uh actually they're here in the UK. So we we're pretty good I think in terms of screening thinking and then thinking about how it would meet the needs of our consumer and fit in our brand. But you're right, the most important aspect of it is is we just don't take someone's word for it. We're going to want to understand, you know, fly in the aircraft, understand it, and give all the rigor to it. Um, we've got 1500, you know, product support and maintenance people that are part of our entity. So, there's no form of due diligence that we can't do, whether it's just an M&A transaction or it's actually the future of flight. And and we go pretty deep, but we are active and we have a pretty good track record of investing in the future. Well, congratulations on the F1 partnership. Thank you so much for taking the time to come chat with us.

We'll see you in the paddic

and have a anytime. And I'll definitely see you in the paddic. Yeah, let's go. Great to have you on, Andrew. Come back on anytime.

Thanks, guys. Appreciate your time.

Have a good one.

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