Gapping down
In reaction to earnings/guidance:
- WKME -16.2%, DOCS -9.2%, KD -7.9%, AGYS -5.8%, TJX -1.9%
Other news:
- SEAT -12.2% (stock offering)
- EVGO -8.2% (stock offering)
- TSVT -6.5% (presents broad range of new data highlighting novel approaches across its cell therapies portfolio)
- OSW -6.4% (prices secondary offering of 9.0 mln shares of common stock at $10.00 per share)
- HESM -5.7% (prices secondary offering of 11.1 mln Class A shares at $27.00 per Class A share)
- TGLS -5.3% (multiple stock offerings)
- INTA -5.2% (multiple stock offerings)
- MAXN -5.1% (stock offering)
- XFOR -3.4% (positive Phase 3 results)
- AKRO -3% (prices offering of 5238500 shares of common stock at $42.00 per share)
- GTES -2.5% (stock offering)
- RE -2.5% (prices offering of 3.6 mln shares of common stock at $360.00 per share)
- SCSC -1.3% (hit by ransomware attack)
Analyst comments:
- KNX -2.7% (downgraded to Neutral from Outperform at Credit Suisse)
- CWCO -1.8% (downgraded to Neutral from Buy at Janney)
- WERN -1.6% (downgraded to Neutral from Outperform at Credit Suisse)
Gapping up
In reaction to earnings/guidance:
- TGI +9.5%, KEYS +8.4%, DT +8.1%, WIX +8%, AEG +6.3% (Trading update), NXGN +3.3%, RSKD +2.2%, LPG +2%
Other news:
- WAL +9.9% (QTD deposit growth of $2.0 bln)
- RNA +9.6% (FDA has eased the partial clinical hold on AOC 1001)
- PTCT +5.4% (APHENITY trial achieved primary endpoint)
- ICPT +3.6% (receives FDA Orphan drug designation)
- PUMP +3.4% (announces $100 mln share repurchase program)
- NYCB +3.1% (prices secondary offering of 39,032,006 shares of common stock by the FDIC)
- PDLB +2.8% (repurchase program)
- MPLN +2.6% (stock offering)
- TOST +2.2% (Director disclosed the purchase of 635,000 shares worth more than $12.5 mln)
- TSLA +1.5% (hosted shareholder meeting outlining multiple developments)
- NOW +1.4% (repurchase program)
- LYFT +1.1% (appoints new CFO)
Analyst comments:
- APG +5% (upgraded to Outperform from Neutral at Robert Baird)
- APP +4.9% (upgraded to Buy from Neutral at BofA Securities)
- FLNC +3.7% (upgraded to Neutral from Underperform at BofA Securities)
- WYNN +2.9% (upgraded to Overweight from Equal Weight at Barclays)
- ABNB +1% (upgraded to Buy from Accumulate at Phillip Securities)
DAX:
- Siemens (SIE TH) +1.6%
- Siemens Boosts FY Comparable Revenue Forecast
- SAP (SAP TH) +0.6%
- SAP Says It’s Still Open to Acquisitions After Qualtrics Sale
- Commerzbank (CBK TH) -1%
- Commerzbank 1Q Net Beats Estimates; Sees 2023 NII About €7b
MDAX:
- Aroundtown (AT1 TH) +1.8%
- TeamViewer SE (TMV TH) -1%
- Thyssenkrupp (TKA TH) -1.7%
SDAX:
- flatexDEGIRO (FTK TH) +1%
- Hornbach Holding (HBH TH) +1%
- Varta (VAR1 TH) -1.1%
>>> Up
* Adevinta Raised to Overweight at Morgan Stanley; PT 100 kroner
* Adevinta Raised to Overweight at Morgan Stanley; PT 100 kroner
* Calliditas Therapeutics Raised to Buy at SEB Equities
* Implenia Raised to Outperform at Credit Suisse on Wincasa Deal
>>> Down
* Dermapharm Cut to Hold at SRH AlsterResearch; PT 49 euros
>>> Down
* Dermapharm Cut to Hold at SRH AlsterResearch; PT 49 euros
* Grieg Seafood Cut to Hold at DNB Markets; PT 84 kroner
* InPost Cut to Neutral at JPMorgan; PT 10.90 euros
* Repsol Cut to Hold at Jefferies; PT 14 euros
* Sonova Cut to Neutral at JPMorgan; PT 283 Swiss francs
* Tertiary Minerals Reinstated Buy at SP Angel
>>> Initiation
* Chariot Ltd Rated New Buy at Liberum; PT 45 pence
* ITM Power Re-Initiated Buy at Liberum; PT 120 pence
* Tertiary Minerals Reinstated Buy at SP Angel
>>> Initiation
* Chariot Ltd Rated New Buy at Liberum; PT 45 pence
* Clean Power Hydrogen Rated New Buy at Liberum; PT 84 pence
* Invinity Energy Systems Rated New Buy at Liberum; PT 78 pence* ITM Power Re-Initiated Buy at Liberum; PT 120 pence
* Oxford Instruments Rated New Hold at HSBC; PT 2,900 pence
* Seacrest Petroleo Bermuda Rated New Buy at Banco BTG Pactual
* Uniphar Rated New Buy at Numis; PT 3.91 euros
>>> Call
* Adevinta Upgraded at Morgan Stanley, Preferred Alongside Scout24
* Velocys Rated New Buy at Liberum
>>> Call
* Adevinta Upgraded at Morgan Stanley, Preferred Alongside Scout24
* Shell Top Integrated Pick, Repsol Cut on Lower Refining Margins
Japan equities extended their advance as better-than-expected economic growth fueled optimism over the market outlook. The offshore yuan weakened. Japanese stocks led gains among major benchmarks in Asia, after the Topix Index closed at the highest level since 1990 on Tuesday. The nation’s markets may be on the cusp of a rare bull market, according to Goldman Sachs Group Inc. The government said Wednesday gross domestic product expanded at the fastest pace in three quarters as a further easing of pandemic regulations boosted consumer spending. The offshore yuan, meanwhile, fell to as weak as 7.0097 to the US currency Wednesday, the first time it has breached the 7 level since late December as economic data continued to disappoint. Shares in mainland China fluctuated, while the Hang Seng China Enterprises Index dropped as much as 0.9%. A slew of weaker-than-expected data from China, including industrial output and retail sales, has raised concerns over the strength of recovery in the world’s second biggest economy and spurred calls for more policy stimulus to bolster growth. Shares advanced in South Korea and fell in Australia. US stock futures edged higher in Asia after the Nasdaq 100 closed up just 0.1% and the broader S&P fell, following a rapid decline in the final minutes of the session. President Joe Biden and House Speaker Kevin McCarthy were hopeful when asked whether a deal on the debt-ceiling could be reached within days to end a stalemate ahead of a potential US default. US After Hours KEYS +7.8% up on earnings; WAL +7.6% up after outlining QTD deposit growth exceeding $2.0 bln; AGYS -9.9%, DOCS -8.1%, KD -7% all down on earnings.
Nikkei +0,66% Hang Seng -0,48% CSI-0,35% Shanghai -0,23% Shenzen +0,11%
eur$ 1,0866 CNH 7,0007 CNY 6,9946 JPY 136,57 GBP 1,2481 CHF 0,8958 RUB 80,4874 TRY 19,7448 WTI$ 70,89 +0,04% Gold 1,991,3 +0,31% BTC 27,091 +0,50% ETH 1,827+0,27%
S&P +0,21% Nasdaq +0,25% EutoStoxx -O,12% FTSE -0,18% Dax -0,03% SMI
Macro :
- Global Economy Risks Stalling as China, Germany Juggernauts Slow
Keep an eye on :
- AGN NA : Aegon 1Q Solvency II 210%
- ARGX BB : Drugmakers Circle $23 Billion Biotech Argenx Ahead of Key Data
- AZE BB : Azelis Offering of 10.1m Shares Prices at €19.85 Apiece
- BGEO LN : Bank of Georgia Group 1Q Net Income GEL301.3M Vs. GEL240.6M Y/y
- CO FP : Casino Says It’s Extending Solicitation Period Until May 23
- CBK GY : Commerzbank 1Q Net Income Beats Estimates
- ENX FP : Euronext 1Q Adjusted Ebitda Beats Estimates
- EQT SS : EQT Sells Entire Remaining Stake of ~5.08m Shares in Vitrolife
- LSEG LN : Blackstone Consortium to Sell About 28M LSE Group Shares: Terms
- MANU US : Qatari Sheikh Made Improved Offer for Man United Tuesday: Times
- MANU US : Qatari Sheikh Made Improved Offer for Man United Tuesday: Times
- NESN SW : Nestlé Waters to Cut Around 25% of Jobs at Vosges Site: AFP
- SAP GY : SAP to Buy Back up to €5B of Shares Starting 2H 2023
- SAP GY : SAP's Revised 2025 Financial Targets Better Than Expected: React
- SAP GY : SAP Says It’s Still Open to Acquisitions After Qualtrics Sale
- STLA IM : Stellantis Can’t Meet Brexit Rules on Parts Sourcing: BBC
- UBI FP : Ubisoft Sees 1Q Net Bookings About EU240M, Est. EU332M
- UBSG SW : UBS Set to Win EU Approval for Credit Suisse Takeover: Reuters
- UBSG SW : UBS Sees $34.8 Billion in Negative Goodwill From Credit Suisse
- VITR SS : EQT Sells Entire Remaining Stake of ~5.08m Shares in Vitrolife
- VOW GY : Volkswagen, Huawei Discuss Software License for Cars in China:FT
- ZURN SW : Zurich Ins. 1Q P&C Gross Written Premiums $11.97B
Private jet disrupter: the debt-fuelled ascent of Thomas Flohr’s VistaJet
Lossmaking airline’s founder has become an aviation superstar as his company amassed a fleet of luxury aircraft
To many, Thomas Flohr is a genius who took one look at the private jet industry and thought he could do better.
A self-described “asset finance guy”, he started as a first-time jet owner trying to “sweat the asset” and VistaJet was born. Nineteen years later, with hundreds of aircraft, the 63-year-old is an aviation superstar taking on the market leader, Berkshire Hathaway’s NetJets, through audacious dealmaking and bold investment.
The question mark hanging over the Swiss entrepreneur’s strategy is whether Vista can turn a profit and support the debt he used to build it. Net losses amounted to $436mn over the past four years, according to company disclosures to bond investors. Total debt more than doubled last year to $4.4bn as Vista’s fleet increased by half to 360 jets, helped by the acquisitions of Air Hamburg, Europe’s largest charter operator, and US-based Jet Edge.
It has also spent billions of dollars on top-of-the-line planes from Bombardier, deliveries that were essential to the Canadian manufacturer through years of government-backed restructuring.
Vista’s pitch to customers of its so-called Jet Card is a superior experience, without the inconvenience or expense of maintaining a luxury asset that spends most of its life on the ground. “We’re able to sell a guaranteed-availability model,” Flohr told the Financial Times at his Mayfair sales office, adding that the 365-days-a-year coverage “is better than aircraft ownership”.
Vista’s fleet is scattered around the globe like an elite taxi service ready to pick up the next fare. With as little as 24 hours’ notice, customers can travel in one of the Dubai-based company’s 18 Bombardier Global 7500s, the world’s fastest business jet able to fly nonstop from Hong Kong to New York.
Subscription sales have supported cash flows. At the end of 2022, customers had paid a total of $831mn up front for hours yet to be flown, but Vista had only $134mn cash left in the bank, according to company disclosures.
The combination of debt, net losses and short-term liabilities prompted auditor EY to warn in its opinion on the 2022 accounts that “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.
German aviation regulator the LBA also raised the issue of cash liquidity at Air Hamburg following the takeover at a regular inspection in March, according to people familiar with the situation. Vista said it had agreed a plan of action and resolved the matter by the end of the quarter. The LBA declined to comment.
EY’s assessment, disclosed in a prospectus this month as Vista raised a new $500mn unsecured bond, echoed questions from some industry rivals about Flohr’s rapid expansion. A crash under the weight of debt could potentially dump hundreds of jets on to the market, hand substantial losses to Vista’s well-heeled customers and upend the market for aircraft finance. EY declined to comment.
Flohr said the business was highly profitable on an earnings before interest, tax, depreciation and amortisation basis, and that net losses were a consequence of conservative accounting of non-cash items such as depreciation.
Stakeholders were happy with Vista’s cash flow and financial performance, he said, and pointed to Vista’s B3 credit rating: “Moody’s upgraded our bond, after deep studies, including the recent audit, because we’re transparent and predictable as a company.”
A B3 rating indicates debt judged “speculative” and subject to “high credit risk”. Moody’s changed its outlook on Vista to “positive” from “stable”, reflecting potential for “performance and leverage improvements”; the rating reflected Vista’s “strong position” in the industry, “significant contracted revenue from a diversified customer base; and high aircraft utilisation rates”, balanced by Vista’s “high leverage”. On Moody’s calculations, debt last year stood at 7.6 times adjusted ebitda of $576mn.
Uncharted territory
Vista’s fortunes have been closely tied to those of Bombardier, which sold off units to focus on the business jet market after its 2016 state rescue, and the Canadian government’s support of Vista’s expansion.
Canada’s Export Development Corporation finances up to 85 per cent of the net purchase price of Bombardier jets and is the largest lender on the Global 7500 aircraft. EDC disclosures indicate that it has lent between $500mn and $750mn to Vista.
The cabin of a Bombardier Global 7500 business jet © Christinne Muschi/Reuters
“Vista were massively important,” said a person involved in financing the aircraft manufacturer’s sales. “They were the number-one customer for the longest time, they were probably one of the reasons why Bombardier decided to build the Global 7500.”
Bombardier declined to comment on specific transactions. It said VistaJet was “a longtime Bombardier customer, and we are proud that the company operates a great number of Bombardier business aircraft in its fleet”.
The 7500, and Vista’s 43 aircraft capable of flying across the world, such as the Global 6000, are prestige planes. The charter operators with which it competes are primarily regional businesses and typically either manage aircraft for rich owners or buy second hand — cheap cast-offs acquired when oligarchs or executives at a big business decide to upgrade.
“It’s a very high-, hard-cost industry. The money that is being made is on lean margins,” said one US operator.
John Matthews, a longtime rival to Flohr who runs Maltese charter firm AirX, said jet customers could be surprisingly frugal, taking unfinished bottles of wine with them at the end of flights that cost more than $10,000 an hour. “Aside from people in tech and third-generation heirs, the world’s super-rich are surprisingly cost-conscious,” he added. “A lot of older billionaires worked bloody hard for their money.”
US-focused NetJets flies new aircraft only on a “fractional ownership” basis. Customers, rather than the company, commit capital to buy the jets in return for a share in their use, and are locked into long-term contracts.
At this month’s annual meeting for Berkshire Hathaway shareholders, chair Warren Buffett criticised Wheels Up, a US Jet Card competitor backed by Delta Air Lines that has reported widening losses since it listed in July 2021. “They’ve got 12,600 people who have given them $1bn . . . I think there’s a good chance some people will be very disappointed later on,” Buffett said. Wheels Up said it was “not considering bankruptcy”, was taking action to address its cash position and the long-term prospects for its business were strong.
Vista’s Jet Card customers sign three-year contracts that do not normally allow refunds. Last year the balance of “flight hours sold but not yet flown” increased by $179mn. Flohr said the variable cost to Vista of flying those hours was a small fraction of the $831mn liability recorded on its balance sheet.
His recent dealmaking, however, has made Vista more like a standard charter operator. It now manages 87 aircraft for owners, and more than half of Vista’s $2.4bn of sales last year were “on demand” aircraft charters.
One broker who works with Vista said that “charter rates, especially for long-range aircraft, are through the floor. It’s a race to the bottom.”
Vista said it had always balanced its programme with charter sales, and that the ability to sell otherwise empty “dead legs” as jets move between jobs, or flights at times of slack demand, was “a strength of the business model”.
Flohr said Vista’s takeovers last year were a response to very strong demand, and that the company starts the year with 100,000 hours already sold. “We’re consolidating the market. Those hours were flown by the mom and pop shops, and they don’t like it.”
Several former employees praised Flohr’s financial acumen. The group survived a period in 2017 when concerns about the outlook caused its bond debt to trade at distressed prices. Flohr secured a $200mn investment from New York-based private equity firm Rhône Capital at a $2.5bn-plus equity valuation that restored market confidence and marked him out as a billionaire.
Trading planes
Next month Flohr will drive for a Ferrari team at the Le Mans 24-hour race in a car emblazoned with the VistaJet logo, a hobby that helps market his company as an exclusive club for the super-rich.
He also lives the brand. To reach St Moritz, where he has a seven-storey home and keeps a collection of rally cars, Flohr lands in Milan on a silver VistaJet then transfers to the Alps in a company helicopter.
An unusual aspect of Vista’s growth is Flohr’s role as a middleman in its aircraft purchases. Bond prospectuses and annual accounts for Vista detail multiple related-party arrangements with companies controlled by Flohr that were involved in aircraft trading.
One effect of these transactions was to offset the cost of personal use of the jets by Flohr, who as chair and 84 per cent shareholder has not taken any salary or dividends and pays for his own travel — Vista recorded an average $7mn of annual flight revenue from its founder over the past six years.
For instance, Flohr personally ordered more than 30 Global 7500s from Bombardier in 2015. In 2018 he then sold call options against 30 aircraft to an entity called Vista Lease, for $19.5mn. Vista Lease was then purchased from “associates of Flohr” by Vista Global, the airline holding company.
Terms of the Vista Lease purchase entitled Flohr to $1mn each time Vista exercised one of the 30 options and further “true up” payments of $7.1mn to $12.6mn per plane to reflect a rise in the value of the aircraft since the orders were placed. Vista disclosures indicate the initial purchase price of each jet was about $60mn.
Vista, and its supporters, said Flohr took a big personal risk by placing firm orders for aircraft when his company did not have the resources to do so, and that Rhône Capital approved all related-party transactions. Money flowed in both directions: Flohr paid Vista $90mn over 2021 and 2022 for the cancellation of aircraft put options, recorded as “other operating income”. Rhône Capital declined to comment.
The use of outside entities owned by Flohr was questioned by some former Vista employees, who spoke on the condition of anonymity. “Why not just consolidate everything?” asked one.
For the 18 Global 7500s delivered in the past two years, Vista disclosed that included in the cost of the aircraft was $224mn “paid or credited” to Flohr. The remaining 12 options were cancelled. In 2021 Flohr also sold two aircraft to Vista, for $93.2mn, which he had previously leased to the company.
A Global 7500 is worth about $75mn today, said Steve Varsano, founder of The Jet Business, a business aviation showroom in London, but he cautioned that prices could drop should there be an influx of supply. “If you have 12 Global 6000s for sale and all of a sudden you have five come on the market, that’s a big deal.” He said there were only four or five Global 7500s available. “It’s the top, top of the market. It gets pretty thin up in the atmosphere up there.”
Flohr insisted that “if the company bought an aeroplane from me, then they paid the market price for it . . . Whatever I have given the company or the company has given to me is never more than the difference between cost and market value.
“For 19 years I’ve never taken $1 for salary. No wonder I’ve reinvested every single dollar this company made.”
After Hours Summary: KEYS +7.8% up on earnings; WAL +7.6% up after outlining QTD deposit growth exceeding $2.0 bln; AGYS -9.9%, DOCS -8.1%, KD -7% all down on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: KEYS +7.8%, NXGN +3.6%
Companies trading higher in after hours in reaction to news: WAL +7.6% (QTD deposit growth of $2.0 bln), PDLB +4.7% (repurchase program), XFOR +4% (positive Phase 3 results), ICPT +2.9% (receives FDA Orphan drug designation), NYCB +2.2% (stock offering), NOW +1% (repurchase program), TSLA +0.5% (hosted shareholder meeting outlining multiple developments), LYFT +0.4% (appoints new CFO), NOC +0.4% (increases dividend), LHX +0.3% (awarded U.S. Air Force contract modification), DOCU +0.1% (appoints new CFO), BG +0.1% (commercial agreement with Nutrien)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AGYS -9.9%, DOCS -8.1%, KD -7%
Companies trading lower in after hours in reaction to news: EVGO -13.6% (stock offering), SEAT -10% (stock offering), VECO -6.5% (private stock offering), OSW -6.4% (stock offering), MAXN -4.4% (stock offering), INTA -3.6% (multiple stock offerings), GTES -3.2% (stock offering), RE -3% (stock offering), MPLN -2.8% (stock offering), HESM -2.4% (stock offering), TGLS -1.7% (multiple stock offerings), EDIT -1.6% (appoints new CFO), AZEK -1.4% (stock offering), SCSC -1.3% (hit by ransomware attack)
Hôtel du Cap-Eden-Roc Revamps With Loro Piana Touches, Andy Warhol Art
The estate hotel has reopened for the season with fewer — but expanded and more luxurious — suites.
Sometimes less is more.
That holds true for the Hôtel du Cap-Eden-Roc, which debuts a slimmed-down number of suites after a yearlong reconstruction. The 43 suites boast increased floor space and airy interiors.
It was not a decision taken lightly for the historic hotel, director Sophie Volant told WWD.
“Before we make any changes or renovations, we always ask our loyal guests their opinion about it in advance, to receive their approval before doing anything,” she said. “We showed them drawings of our plans and asked their approval. So our guests are part of the process and give us some tips on what they like or don’t like, as if it was their own summer home being renovated.”
The 150-year-old hotel took care to update the rooms and common areas with modern décor, while not altering its historic bones. The revamp was overseen by Countess Bergit Douglas of MM-Design in Frankfurt, Germany, who selected cozy cashmere blankets and bedding from LVMH Moët Hennessy Louis Vuitton-owned Loro Piana.
British designer Francis Sultana outfitted the 31 junior suites with glass and bronze furniture pieces named after Ella Fitzgerald, who stayed in the hotel. The 1,075-square-foot Eden Roc suite has been updated, too, with the addition of a curated library.
The main building’s four suites have original pieces from 1870 mixed with contemporary touches, including bronze and limestone coffee tables by seminal sculptor Alberto Giacometti.
The 645-square-foot junior suites were given a “yachting spirit,” said Volant. “We were careful not to overload the rooms with furniture, because our guests’ feedback has always been that the most important focus in these rooms is the magnificent view of the sea.” The result is soft whites and light wood that don’t overpower the eye.
Art consultant Marie-Catherine Douglas brought in pieces from Andy Warhol, John Baldessari and Alex Katz. Warhols line the hallway in the waterside Eden-Roc Pavilion.
The hotel plans to stay its current size, and preserve its famous grounds. The sweeping tree-lined Grande Allée, which hosts the opening cocktail for the amfAR gala, is one of the most Instagrammable spots in the world. Through the years different proposals have been put forth to build on it, said Volant. “But we always say no. It needs to remain set in its history.”
“We want to protect the history of the hotel and its legacy to then pass it on to other generations,” Volant added. “[But] history and traditions do not prevent us from being innovative and creative and to modernize discreetly our grande dame without altering its soul.”