Vistajet eyes Gulf investors to fund expansion

Vistajet founder Thomas Flohr has said he is close to sealing a deal with Middle East investors that will allow him to grow his worldwide fleet and strengthen his presence in the region.

Vistajet currently operates a fleet of 25 business jets ranging from Bombardier Learjets up to the long range Global Express, but wants to expand both his fleet and his footprint beyond his core European market.

Flohr told Arabian Business that he is close to concluding a deal with Gulf investors, and that he hopes to have something to announce in time for the Dubai Air Show in mid-November.

Before then, he would neither name the potential investors, nor outline the structure or scale of the deal, although he did state that he sees Saudi Arabia and Egypt as larger potential markets than lower Gulf countries.

“They account for 60-70 percent of private aviation in the Middle East today,” Flohr said.

What is on offer is a stake in the global Vistajet company, rather than a joint venture or any type of franchise agreement.

“I don’t believe in the joint venture structure,” he said. “If somebody wants to come in, they should be part of the whole company,” he added.

An investor might come in with the money to fund additions to the fleet, and to add local market expertise and customers. Those planes would be centrally managed from Europe, but the Middle East would have access to the entire expanded fleet.

“Partners could buy in and earn in [based on performance] to an equity stake in the whole company.” Flohr added.

Vistajet’s discussions with investors come at a time when private aviation has been caught in a perfect storm.

The super rich have been battered by the global recession, fuel prices are high, and the value of fleets has been plummeting as used corporate jets have flooded the market as part of cost-cutting measures.

However, there have been recent improvements to the market. The wealthy are recovering their wealth, and the price of used jets is stabilising, with signs that they will climb next year. The price of fuel remains a concern to Flohr.

“We are OK at $70 [per barrel of oil], but the pain kicks in anywhere above $100 per barrel,” he admitted.

A full interview with Thomas Flohr will be published in Arabian Business magazine on Sunday.

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