LVMH-backed investor group takes 20% stake in private jet company FlexJet
L Catterton, the private equity firm backed French luxury giant LVMH, is leading an $800 million investment in FlexJet that will also include brand partnerships and collaborations. The investment group also includes affiliates of KSL Capital Partners and the J Safra Group. FlexJet will continue to be controlled by parent company Directional Aviation Capital.
The deal highlights the luxury industry's rapid expansion into the experience economy as wealthy consumers increase their spending on travel, dining and special events. LVMH acquired hospitality group Belmond in 2018 for $3.2 billion, and has been building out its Cheval Blanc and Bulgari hotel and resort brands.
Global sales of luxury goods declined 2% last year to 363 billion euros as demand from Gen Z and Chinese consumers fell, according to a report from Bain and Altagamma. Luxury hospitality, however, grew by 4%, while gourmet food and fine dining surged 8% and sales of yachts and private jets grew 13%.
For Cleveland-based FlexJet, the deal creates a relationship with the world's largest luxury giant and its portfolio of more than 75 coveted brands, from Louis Vuitton and Dior to Dom Perignon and Tiffany.
With the private-jet industry becoming increasingly competitive and dominated by industry leader NetJets, FlexJet aims to be more like an exclusive membership club, offering luxury experiences and bespoke services. FlexJet already has partnerships with Belmond, yacht maker Ferretti Group and Bentley Motors, collaborating on jet interiors and curated events.
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"We have been trying to move Flexjet into an experiential role," said Kenn Ricci, chairman of FlexJet and principal of Directional Aviation. "If you think about luxury travel and where it is today, I keep thinking about a FlexJet community. When you have an experience at a hotel, you get to have it for a week, and you get to know what that experience is. But when you fly on a jet, it happens four hours, five hours. So how do we create that FlexJet community?"
Ricci said most of the proceeds of the deal will go to expanding and improving FlexJet's infrastructure. That includes buying larger, long-range planes to fill rapidly growing demand for international travel. The company will also build up its infrastructure overseas, with added maintenance facilities and ground handling. And FlexJet will continue adding and training flight crew through its special cabin attendant academy. About 25% of the proceeds will be used to pay a special dividend to shareholders.
Ricci said FlexJet is projecting EBITDA of about $425 million this year, up from $398 million in 2024 and more than double the levels in 2020. The company offers fractional ownership and leasing options, as well as jet cards. Its fleet of 318 aircraft is expected to reach 340 by the end of 2025, and it has over 2,000 FlexJet members under the fractional and leasing program, according to the company.
Ricci said L Catterton approached FlexJet with the potential deal as the private equity firm seeks to stay ahead of the changing definitions of luxury among the wealthy.
"(L Catterton) presented us some ideas about where they see the future of luxury," Ricci said. "They basically see that the luxury of the future is time. And they see that in private travel, you can recoup time."
Ricci said the details of potential brand partnerships or collaborations have yet to be announced. But he cited as a model FlexJet's partnership with Belmond, which includes special deals and enhanced stays at the company's luxury hotels in Venice and Ravello, Italy; and Mallorca, Spain, as well as other locations.
He said the company's bespoke aircraft cabins, modeled after individually designed rooms at the best hotels, would also continue to be a competitive advantage.
"When faced with a behemoth like NetJets, we don't need to be the largest," he said. "We want to be the boutique."
L Catterton is 40% owned by LVMH and the family office of CEO Bernard Arnault. It manages $37 billion in equity capital across consumer brands including Birkenstock, Thorne and ETRO.
Scott Dahnke, global CEO of L Catterton, said in a statement FlexJet's history "is one of never settling in pursuit of thoughtful innovation to best fulfill the desires of the consumers within their unique and exciting marketplace."
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