Witschafts Woche The private jet king´s problem numbers, Feb.12. 2024
Vista Global - An Interesting Investigative Report by Melanie Bergemann, Philipp Frphnn and Volker ter Hasborg (c) reposted from LinkedIn
Attached is an article just published by German publication, Wirtschafts Woche, which is owned by Handelsblatt Media Group, about Vista Global (Vista). I was intrigued by several comments in this article.
Bond Performance & Interest Rates
Among the subjects covered are rising interest rates and less than stellar performance for the $500 million bond that Vista issued in May 2023. Apparently, the bond has been trading at 83%, while the yield has risen to 15%. My financial sources suggest that these numbers, along with a B- Standard & Poor’s rating, may well be cause for concern among bond traders and investors. This bond is costing Vista 9.5% per annum, significantly above the rates (coupon) being paid by less risky issuers, according to the authors.
Interest rates, which remained at record lows while Vista were taking delivery of new Bombardier jets, have risen, sharply. Vista now face the reality that the cost of servicing their debt is on the rise, while charter demand and hourly revenue are under downward pressure, industry-wide. Indeed, Vista have shifted capital investment away from new aircraft and into refurbishing older jets.
Rumors & Investigations
There is mention of a UK lawsuit, alleging fraud by Thomas Flohr, a statement from EY expressing “significant doubts about the group’s ability to continue as a going concern”, the past failure of Jetsmarter and a now-shuttered SEC investigation. In an industry that relies upon consumer and lender confidence, I imagine it’s becoming difficult to argue that these problems, especially the UK lawsuit, are helping Vista.
Vista strenuously deny that their financial fortunes are anything but extremely positive. Further, they insist that recent articles, lawsuits and investigations are without merit, or are considered irrelevant by Vista stakeholders.
When I advise my clients, I focus on financial performance and data I can analyze and assess, objectively, free from the influence of media articles or corporate spin. My concerns about Vista cash consumption, low aircraft productivity and balance sheet liabilities remain unchanged, but are based upon cold, hard numbers, not media outlets, lawsuits or past investigations.
In a recent AIN article, Thomas Flour stated that, “2023 was another year of successful performance in our business. Despite having to react to deep economic shifts and complex geopolitical uncertainty, we produced double digit growth across all markets—achieved whilst refurbishing and upgrading our fleet ahead of schedule, further improving our service standards and significantly increasing aircraft availability”. While Mr. Flohr offered few operational metrics or financial specifics, his assessment seems positive.
To be blunt, I have struggled to reconcile Mr. Flohr’s bullish statement with Vista’s Q3 2023 financial statements. Hopefully, I will reconsider my assessment when full-year numbers become available, next month.