Flexjet and Flight Options, for years the second- and third-largest players in the fractional aviation business, announced plans Thursday to combine forces.
Directional Aviation Capital (DAC), a private investment firm that already owns fractional operator Flight Options and jet card provider and charter operator Sentient Jet, announced that it is buying Flexjet from Bombardier Aerospace for $185 million. As part of the Flexjet acquisition, DAC also said it has placed a firm purchase order with Bombardier for 85 business jets valued at $1.8 billion, along with options for 160 more airplanes worth another $3.4 billion. The transaction is expected to close by the end of 2013, subject to U.S. government approvals.
The Flexjet sale is just the latest in a series of big events that have helped reshape the fractional landscape over the past 18 months. In February 2012, Cessna announced that it was discontinuing the sale of new shares in its CitationAir fractional program. Then, in October of last year, the Avantair fleet of some 56 Piaggio P-180 Avanti twin turboprop airplanes was grounded for several weeks after the discovery of a mechanical problem. Avantair was never able to recover from that grounding and halted all flight operations on June 26th of this year. The company is now embroiled in an involuntary bankruptcy in federal court in Florida.
Bombardier started the Flexjet program in 1995, but after 18 years of fighting to overtake industry leader NetJets, the Canadian-based aircraft manufacturer decided it was finally time to throw in the fractional towel. Rumors that Flexjet was for sale have been circulating in the business aviation industry for years and the story gained credence in May 2012 after Bombardier announced that it was going to be selling as many as 275 Challenger 350s to NetJets, a deal that pitted Bombardier’s own fractional operation in head-to-head competition against Flexjet’s biggest competitor.
The airplanes DAC is buying from Bombardier include 25 Learjet 75s, 30 Learjet 85s, 20 Challenger 350s and 10 Challenger 605s, to be delivered between 2014 and 2018.
DAC’s principal, Kenn Ricci, told the media that Flexjet will continue to operate separately from Flight Options. He said Flexjet will be marketed as the luxury brand flying newer aircraft that are four years old or less with state-of-the-art technology, while Flight Options will be the “value” fractional provider with a fleet made up primarily of pre-owned or remanufactured jets. That is the same market niche that Flight Options has sought to fill ever since Ricci founded the company in 1998.
This is not the first time that Ricci has acquired a Flight Options competitor. In December 2001, he merged Flight Options with Travel Air, a subsidiary of Raytheon Company. Ricci left Flight Options in 2003, but returned as the company’s chairman in 2008. As DAC’s principal, the entrepreneur has made a series of business aviation acquisitions since 2007 and the firm’s portfolio now includes, in addition to Flight Options, Flexjet and Sentient Jet, aircraft remanufacturer Nextant Aerospace, maintenance, repair and overhaul facility Constant Aviation, aviation fuel provider Everest Fuel Management, aircraft sales broker Sojourn Aviation, wholesale charter marketer Spinnaker Air and parts provider Aerospace Products International.