US-based subscription-based private aviation Flexjet has entered into a definitive business combination agreement with publicly traded special purpose acquisition company Horizon Acquisition Corporation II that will result in it becoming a publicly listed company. Upon the closing of the transaction, Flexjet is expected to be listed on the NYSE under the ticker symbol FXJ.

Flexjet has a full breadth of market offerings that reach private jet users through various branded storefronts that target specific private flying needs. These storefronts include Flexjet, which focuses on fractional jet ownership and leasing; Sentient Jet, which focuses on jet cards; FXAir and PrivateFly, which offer on demand charter programmes; as well as Sirio, which focuses on full aircraft ownership.

The company's subscription-based recurring revenue model provides the basis for predictable revenue and cash flow. This revenue comes from a large, committed customer base of ultra high net worth individuals and Fortune 500 corporations through approximately 10,000 committed contracts. Flexjet's customers are highly loyal, demonstrated through a 97 per cent retention rate and long-tenured relationships. Over 35 per cent of Flexjet's fractional customers have been with the company for more than 10 years and 55 per cent have been with the company for more than five years.

For over 25 years, Flexjet has provided its loyal and growing customer base with precise, efficient and personalised experiences on every trip. Today, the company has a fleet of over 250 aircraft and helicopters and a global aviation infrastructure network. The company's pilot operating model, referred to as 'dedicated crewing', is one that assigns pilots to one specific aircraft N-number. This provides an extremely comfortable and safe environment for the company's flight crews and the familiarity with their aircraft increases dispatch reliability over similar aircraft not flown with dedicated crews.

Flexjet has also made a commitment to maintaining the highest compensation among its pilot peer group as well as attractive work rules, making it an employer of choice and reducing pilot attrition during an extremely competitive pilot hiring environment. Flexjet's average pilot new hire has more than twice the flight hour minimum required for application and 36 per cent of its pilots have been with the company for more than 15 years.

Flexjet's business model, innovative service delivery, proven subscription-based model with consistent profitability and world-class management team set it apart from its private aviation industry peers. The company's global reach consists of 3,100 employees, including 1,000 non-union pilots and 450 licensed maintenance technicians across nine office locations in the US, the UK and Italy.

Flexjet's maintenance infrastructure and capabilities are the largest of any private aircraft operator and are a foundational element to all aircraft operations. Competent, timely and coordinated servicing has a crucial impact on fleet readiness and dispatch availability. Flexjet achieves this through a network of 20 mobile maintenance support units that are based throughout the US and a network of partner facilities across the globe. This investment in one of the most robust maintenance infrastructure networks in the industry ensures consistent and exemplary service and safety, and the integrity of key revenue streams through a relentless focus on aircraft dispatch reliability.

“Having capital and currency will position us to expand market share at an accelerated pace in an opportunistic environment,” says chairman Kenneth Ricci. “We will parlay our existing profitability and use that as a launch pad to accelerate our growth into the next chapter. We are making this decision at a time when we believe the marketplace is expanding at a more aggressive rate. Additionally, the collective infrastructure necessary to operate this model would be very difficult to replicate. Accumulating the aircraft, customer base, global infrastructure, technology and most importantly the culture would take years, if not decades.

“We place a tremendous focus on capital deployment and return on invested capital, and we have an extremely talented management team that has built this company in a very capital-efficient way. We have the infrastructure, we have tremendous depth and commitment from our employee group and we have a vision."

“Flexjet's global presence, aircraft network and proprietary technology have established the company as a category leader in private aviation. Eldridge has a long-tenured partnership with this world-class management team and believes that the scale and breadth of Flexjet's solutions will enable it to continue to capture share in a large and accelerating market,” adds Horizon CEO, CFO and chairman Todd Boehly. “I've known Kenn and the team for nearly a decade, and their ability to profitably grow Flexjet to what is estimated to be over $2 billion in revenue through an unrivalled product offering and desirable subscription-based business model sets the team apart. We believe this transaction provides Flexjet with ample capital to execute Flexjet's long term vision, the ability to continue to serve its loyal customer base and positions the company for success in the public markets.”

The transaction values the combined company at a pro forma enterprise value of $3.1 billion, representing 10.8x projected 2022 Adjusted Management EBITDA of approximately $288 million. The majority of proceeds in the business combination are expected to be held on the company's balance sheet.

The transaction is backstopped with an up to $300 million common equity capital commitment from Eldridge Industries, an affiliate of Horizon's sponsor. Upon the closing of the transaction, existing Flexjet shareholders, which include affiliates of Eldridge Industries that are current investors in Flexjet, are expected to own 89 per cent of the combined company.

The boards of directors for both Flexjet and Horizon have approved the proposed business combination, which is expected to be completed in the second quarter of 2023, subject to shareholder approvals and other customary closing conditions, as well as successful completion of the pending solicitation of shareholders to extend Horizon's period to complete a business combination transaction.