Luxaviation cash flow issues
 

The rumblings of cash flow issues are true according to the company web site. In response they say they are profitable but that there are delays in paying suppliers because the money is in the wrong places!!!
Is this the first sign of the wheels coming off this buy-it-all whatever the cost enterprise...who appeared to have unlimited resources?

Assuming this information is correct....it certainly raises a massive question mark over the Competence of the money men behind Luxs gravity defying growth. Is the money pit beginning to run dry?

Judging how much suppliers were willing to lend to Zetta Jet over the course of only 16 months, I wouldn't be too worried for ages yet... :rolleyes:

Luxaviation...
 

... is this the operator who has kept the habit of making late Per Diem payment for... YEARS?

Late payments
 

Imagine a company, in a distant land, which knows exactly how much per dimes you are entitled to as it sent you their - and upon your return you find a summary that has been paid into your chosen bank account .......dreaming

Thread creap......but what is going on at LEA...? The revolving door from which crews, manager's and aircraft are leaving spins faster and faster. Most recently the replacement FTM quits after a few months and in walks his replacement....the apparently available ( why?) ex FM of the Challies from Vista. What is bizarre is that this guy left LEA scarcely three years ago ....and how does one put it? Was not exactly a fan of the chief pilot/Legacy fm/ everything else manager.......so seconds out..!..round one guy's .....the fur will be flying.!!!...WEIRD!!!! ( or maybe desperation?)

Now we hear CEO of execujet has walked and the main man at Lux Mr Big aka Patrick Hansen has parachuted himself as an emergency caretaker!!

Taken in isolation any one of these things doesn't amount to much .... but one could be forgiven for concluding that the wheels are beginning to come off the Lux bus as it careers at breakneck speed in the opposite direction to all conventional wisdom...

the evidence ( certainly in the UK) seems to be that this Lux buying orgy has achieved the sum total of less than nothing if measured in term of customer experience and workforce motivation/contentment.
It is quite obvious, judged by the mass exoduses from LEA and Execujet of senior highly respected managers as well as very large numbers of their most experienced pilots and operations staff ( certainly from LEA) that Lux has totaly failed to connect with or inspire them as to what their vision or direction of travel is.

The situation is now made significantly worse because, without any discernible help from Lux, management is left to those without experience or , frankly, ability to muddle on with it. As a result, Morale is lower than it has ever been.

The generally accepted wisdom is that the only plan Lux had was to spend gazillions buying up and packaging/ rebranding huge numbers of operations worldwide then sell their shiny branded product with trumpets blazing on a public floatation for vast profits for their bold investors....( who exactly are they..������......??????)

Lux are like an invading army that wins the war with overwhelming fire power ( in their case money) but looses the peace in the ensuing chaos ( because the good guys all left)

If their grand project goes pear shaped.....then it will be another lesson hard learned that those who try to reinvent the wheel always fail.

And, who pays the price? The poor bast£&@s who work on the coal face.

But WTF do I know?!

As long as they think that aviation is a commodity, investors will fail on it.
On the long run, it "may" create some value. They put at controls people without an ounce of aviation knowledge, the worsts are the one coming from industry ( manufacturing).

All the coming IPO's ( LUX, GlobeAir, etc..) will fail either immediately or later. If one entity buys the whole float ( like a debt) and re-market it ( to bottom line investors), the one's that will pay the price will be these ones ( just after the staff).

They have only ONE chance, there is so much cash out there that one might decide to dump this overflow in this endless hole, ONCE.... Then they will make the scheme "as advertised", and this ill be the end of it.

As I wrote just above, you replace LUX, by ANY name with a lot of publicity around, they are following the same pattern, since it is, in the "normal" perspective the only issue out to cash years of work. The other one is the RYR despair (known as the Starbuck strategy), of endless growth at any price, then contraction at certain points in order to aggregate the market. This does not work too well if there is no MASSIVE cash infusion. EK tried it, they failed; many others will and will fail, as long as there is a limiting factor in operation ( slot, fuel, maintenance, taxes, wages, etc..)

Anyway, find a good spot and enjoy while it lasts. One thing to remember though. Nature HATES emptiness; for one good guy that leaves 10 are showing up..repeating the same mistakes all over again..

Good post CL
What sickens me in all this is that the guys behind all this .... The money men in Lux who's brainchild all this was cannot loose! Everytime an aquistion or sale is made or money raised they get their percentage...and it will be a big one.
For sure they hope to make a load more from a successful float and reputations would be lost if it did indeed go pear shaped., but be quite certain that he/ they already made enough millions out of the whole scheme to live happily ever after.

In all fairness - I'm surprised none of you saw this coming from the very moment this ill conceived brainfart of an idea even raised its head.

:ugh:

I think that EVERYONE whom has a "past" in this industry saw it coming..

So how is this going to play out?
Are we seeing the start of a long slow painful car crash or is Lux going to come up with another wizard plan...
Hansen putting himself as CEO of Execujet is surely a sign of pure panic and desperation .

Whilst he's busy trying to hold what remains of execujet together .... how is he going to find the time to discharge his function as CEO of his huge multi company worldwide empire?!!

If I was one of his investors who has supplied him with seemingly unlimited blank cheques Id be asking some questions!!

From outside it might be crash, from inside it might have been planned that way, by a handful of people.. Just speculating..

I can take the job and the money for a year...

So are you suggesting that there are 2 that are waiting/wanting it to fail and get their old company back for a song?

What is a surprise in aviation ?

Something that works as planned !

Everything is possible, and one thing for sure, there is always alternative options, some are less obvious than others, and vulgum pecus calls it a miracle..

According to Sunday Times LEA are suing RBS to recover £4.6 million pounds of losses over what LEA alleges was a mis sold insurance that was sold to protect them against interest rate rises that never happened.... The claim is that they were effectively bullied into buying this insurance!!!!
An alleged loss on this scale could only have been against loans well in excess of £10 million and the suspicion must be that this was to do with their mis judged belief that the future was VLJ shaped as a result of which they bought a load of Mustangs.

The pay scale for LEA pilots is still the same as it was in 2009...
We have seen no benefit whatsoever from any of the Lux razzmatazz and money ( quite the opposite)..so whilst our management go off on Lux management beanfeasts to exotic venues and the Lux zillions are pumped into elaborate publicity and window dressing and partying, those of us at the coal face are just treated with contempt...
Is it any wonder that staff turnover has exceeded significantly over 75 percent over the last five years?

if this litigation is successful, then properly, the greater part of it should be distributed as a one off bonus to those of us who have effectively paid for this "mis sold" insurance...by seven years of pay cuts...

Yeah right.......Dream on...........

Royal Bank of Scotland faces another trial: Company alleges it was "scared" into buying interest rate swaps | City A.M.

Anything more recent?

As fr giving cash to the troops, well i don't think anyone would be holding their breath.

"Luxaviation expands US presence with Paragon Aviation tie-up"

https://www.flightglobal.com/news/ar...viatio-443733/

There is something mighty strange about the way that Lux just keep on throwing money in every direction........long after the original target date of 2016 set for floatation ( stated when Lux bought LEA)....
If Lux are serious about proving that their empire is capeable of making any money conventional business wisdom states that there has to be a period of consolodation after the spending stops. This gives an opportunity to prove to any would be investor that all their investment and spending plans were well founded and that the combined businesses can return a profit.
The day of reckoning just gets kicked further down the road whilst they keep spending more on expansion.
Weird

anyone heard about the redundancies at execujet and lea? I hear several including the airworthiness manager at lea have been given notice...

"Airworthyness manager"????
If thats our Corbyn supporting , self-appointed manager of Political correctness and manager of just about everything else ....that'll be the first constructive thing Lux have done since taking LEA over.
Lets hope Christmas has indeed arrived early this year!

Airworthiness manager, I think they mean CAMO and not that the troops on the ground have heard. Place in the unlikely category.

I must say one does look on with jaw dropped wonder at who has their hands on the controls of LEA at a local level.....wonder at just what degree of competence Lux really are showing in building their empire. You might have expected them to drop in their chosen appointees to execute their plans...instead of which, with every senior departure of the managers who were the backbone and character of LEA the company has appeared more and more parochial, inexperienced and inward looking....with a structure more like that of a flying club than a big league player.
The fact that staff and managers at all levels have flooded out since Lux took over begs the question as to whether Lux are in fact in this totally out of their depth and just hoping that their big bet miraculously captures the attention of the market when they try to cash in.

I heard its the CAMO nominated person and the new nominated person will be based in Cambridge. Possibly more redundancies at LEA.

Senior managers at both LEA and Execujet UK. Looks like lux have done a really good job at damaging both organisations possibly beyond repair. Would be interesting to know how many people have left the organisation in the last 12 months 40+? 50+?

I am told by a reliable source that that almost ninety percent of the staff who were with LEA at the time Lux took over have left, by far and a way the majority ...of their own free will. Up until that time turnover of staff was minimal...and many had been with the company for years.

That statistic is absolutely staggering and reflects the complete failure of Lux to engage with or inspire their staff in their headlong money spending orgy.

How many charter clients/airplane owners have left LEA? Did they attract new customers?

Well according to their web site they only seem to have four Legacy 600s left in UK ....most of which are pretty tired. (I recall they used to boast the largest Legacy Fleet in the world with at least twice that number) So somwhere between Lux arriving and now it seems theyve lost a whole bunch of decent airframes including a couple of tip top 650s.
Not exactly a ringing endorsement by the moneyed punters either then!
I would imagine the euro/gbp gradient is probably doing a lot to sustain the UK operation...Without that who knows what the story would be?

"Lost" is a bit of a red herring. An aircraft "Lost" is one that's gone to a competitor - and whilst there have been some of these (Bookajet being the most recent lucky winner of an ex-LEA Legacy) some were owners who no longer had a requirement - or cash - to pay for a jet.

My point being - diminished fleet is not necessarily a sign of a struggling company.

Sure.......but its hardly a sign of a vibrant healthy company attracting new owners and business either.
When you look at the rotating exit door that has spun faster and faster at LEA since Lux took over where experienced, highly respected ,long served management and staff alike have voted with their feet it is clear that the Lux message.....whatever it is....has not impressed.
When you hear of the same story at Execujet ( where Hansen had to parachute himself in to run it).... All this really does not give confidence that Lux have not in fact created a monstrously large company that they cannot now control.

Ghengis, what makes you think that those who have left are escaping the new Luxemburg management?

Very good point D and F.....
If I read you correctly I totally agree with the sentiment.
Due to the fact in large part that Lux's mismanagement philosophy seems to be to leave the locals to get on with it...... there have been promoted some of the most unlikely and profoundly disliked characters who seem to be given free reign to work their personal agendas to replace the respected guys who have gone. It's almost as if the old guard who have trousered their millions don't care any more and are deliberately sticking two fingers up to their detractors by promoting these guys! Cut off their noses to spite their faces it could be said!
Hardly believable.... but that's the way it looks to me.
Ask anyone who has gone why and the same name/s come up almost every time.

I can well believe it. But they were stuffed the day they bought those little jets to ferry "Barry & his mates" away on golf weekends, chasing the low end of the market, people who can barely afford it. Tiny margins = lots more work for tiny profit or very possibly (probably) a loss.

I bloody hate "barry and his mates" type phone calls, especially on a Sunday afternoon when you are just about to prepare the roast. Or when BA's computers crash and you get people calling up to offer you £500 for a jet to Nice. Anyway back to topic....

Forget about changes of management, financial position, people and aircraft coming and going. For me, in my role, the biggest problem is the ops side of the business. Now you have one central OPS team doing ALL the ops for the group, multiple AOCS, multiple FTLS to consider etc etc. Its a mess, I dont see how they can cope and customer service is suffering as result. On some bookings I have had to do some ops work for them to get the job done.

PS Miles I don't consider Bookajet all the lucky to recieve G-LALE, especially when Air Hamburg have what, 10 new or newish 600/650's no with the ability to do one way or virtual one way pricing if they so desire and no owners to report to other than the big boss and the banks....

Very interesting to have a broker's perspective.
I have long thought that all this explosive expansion of Lux, claiming to be the worlds second largest.....etc..etc... Is all smoke and mirrors.
They dont own their aircraft and are totaly reliant on hundreds of demanding ultra high net wirth individuals from all over the world ( to whom they are individualy accountable) to entrust them with their precious machines.
if these owners lost confidence their business could disappear very quickly indeed.
what is absolutely clear from the absence of growth of the UK operation since they arrived is that, from an owners perspective, the jury is out.....at best. At worst they arent convinced by the razzmatazz and blustering....and the dripping tap of departing airframes could easily become a torrent.
Owners like continuity and must be unnerved to see people they have dealt with for ages disappearing.

Very good post Sheikh that sums it up quite clearly. Once the owners of the jets lose confidence in the service you offer and take their jet elsewhere it takes strong hands on management to find a replacement aircraft and very hard work to attract new where's to what appears to be a failing scenario.

Well that's called running a "management company" and it is the same as TAG, Global Jet, BAA, JetAviation etc are all doing (JetA less charters) and for the most part are profiting very well from.

It's when companies start buying and owning jets that things go wrong in my opinion. Selling charters with aircraft financed and owned by someone else is massively de-risking your business as there is always an owner paying crew, parking, maintenance, insurance etc etc while you charge €10-20.000 a month in management fee and taking 10% on all charters sold by your charter department. You don't want to own all that iron sitting on the ramp when charter business is going down.

CP

Lucky was a tongue in cheek remark - a 10 year old managed aircraft isn't going to print money against the Air Hamburgs of the world, but they'll do OK with it. Only having one aircraft of any type is difficult to compete in a world of dynamic pricing (unless you have a very understanding owner) but at least they're in the market place.

Ultimately, Relationships and stability are vital to retain management customers. The problem is, you can't accurately put a financial value on either.

Anyone fancy a wager on the next big merger?

EJ have lost several aircraft over the past 6 months as well as a considerable number of staff.