The Chamblee, Georgia-based fractional charter jet operator had widespread employee layoffs after entering into an aircraft management services agreement with competitor flyExclusive (NYSE: FLYX) on September 3.

Thursday’s class action was filed by law firm Kwall Barack Nadeau PLLC and attorney Arthur Schofield in the U.S. District Court for the Middle District of Florida. In their complaint, prosecutors state Volato employed approximately 260. At least 233 of these employees were laid off August 30 after receiving an email notifying them of their termination.

The WARN Act mandates employers with over 100 employees provide a 60-day notice in advance of plant closings or mass layoffs. The complaint alleges that because these employees were let go as part of a plant shutdown or mass layoff, they were entitled to receive such written notice.

On its website, Kwall Barack Nadeau states that Volato’s actions have left the terminated employees without the compensation and benefits they were entitled to, creating financial distress for many. The plaintiffs seek to secure compensation for unpaid wages, accrued holiday pay, accrued vacation pay, accrued sick leave pay, and other benefits lost due to Volato’s failure to provide notice.

“This case is about holding Volato accountable for the harm it has caused its employees,” said Ryan Barack, lead counsel for the plaintiffs, in a statement on the law firm’s website. “Employers are required by law to provide notice before significant layoffs, and Volato’s failure to comply with the WARN Act has had a devastating impact on its workforce.”

Volato’s poor quarterly financials earlier this summer were reminiscent of issues that faced Jet It, another fractional charter jet operator that failed a year prior due in part to supply chain issues that rocked the industry in 2021 and 2022.

Volato did not immediately respond to FLYING’s request for comment.

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In a SEC filing on Tuesday morning, the AMS includes an option for Volato to merge into a wholly owned subsidiary of flyExclusive. This option expires one year from the date of the agreement and allows an option for flyExclusive to purchase Volato during that time.

This comes as Private Jet Card Comparisons reports widespread layoffs at Volato. A source familiar with the situation at Volato confirmed such layoffs and provided FLYING with a letter of termination they received from the company.

• READ MORE: Volato to Drop 5 Leased Jets, Furlough Pilots

“In light of market conditions this year, Volato has been actively seeking ways to improve its operating costs and increase efficiencies,” the letter stated. “As part of that, Volato has been undergoing talks with several private aviation companies and has recently signed a letter of intent (LOI) with flyExclusive. The LOI outlines an immediate move to combine certain operations through cooperative agreements. This strategic move is expected to strengthen our position in the market and provide new opportunities for growth. However, as we transition through this period, it has become necessary to adjust our workforce to better align with our current and future operational needs.”

The letter further stated that the step was part of Volato’s strategy to improve operational efficiency and reduce costs as the company anticipates the delivery of new aircraft and the successful completion of its merger with flyExclusive.

Terms of the AMS

Tuesday’s agreement will see flyExclusive manage flight operations, sales, and expenses of Volato’s fleet, which consists of 13 fully fractionalized aircraft, eight leased aircraft, and four managed aircraft. The goal under the AMS is to transfer aircraft to the flyExclusive certificate, which will occur over the coming months in coordination with the FAA.

“As a fully integrated operator, flyExclusive is well positioned to offer synergistic value to Volato’s clients and deliver enhanced value for our overall growing customer base,” said Jim Segrave, founder and CEO of flyExclusive, in a news release from the company. “Over the years, we’ve made strategic investments to remove industry bottlenecks and grow and maintain a leading, consistent customer experience. We’re proud to welcome Volato’s customers and look forward to offering them access to our growing fleet of light, midsize and super-midsize jets.”

In addition to managing Volato’s retail and wholesale business, flyExclusive will execute flights for Volato’s customer base of approximately 184 fractional customers and 265 block customers until they are moved over to FLYX agreements. 

The release states that this agreement will significantly increase the FLYX direct-to-customer facing business in the United States. FlyExclusive expects approximately $75 million in revenues from Volato—excluding aircraft sales—to transfer to FLYX. FlyExclusive states in the release that it is confident these flights can be executed with minimal additional overhead. 

The AMS will also provide flyExclusive with access to Volato’s technology through a software license agreement.

“FlyExclusive is a proven operator with a robust platform and unwavering focus on the customer experience,” said Volato CEO Matt Liotta in the release. “This agreement provides mutual benefit to both of our companies and, most importantly, our customers benefit by increased flight and service options with the reliable and high-quality service they have come to expect from best-in-class operators.”

Volato did not immediately respond to FLYING’s request for comment.

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A Form 10-Q—a quarterly financial report submitted to the Securities and Exchange Commission— filed by Volato on August 14 showed the company spiraling into the red, recording a net loss of $34.3 million for the six months ending June 30. The same form stated Volato has a negative working capital of $18.2 million and an accumulated deficit of $98 million as of June 30. Net cash used in operating activities for the six months was $7.4 million.

“These above matters raise substantial doubt about the company’s ability to continue as a going concern,” the form stated. “During the next [12] months, the company intends to fund its operations through a combination of issuing debt and equity as well as the sale of aircraft at a premium to cost.”

Additionally, the form stated that management believes that its current cash position will allow Volato to continue as a going concern and to fund its operations for at least one year from the date the financials were made available.

The filing also stated that on June 18 Volato received a notice from the New York Stock Exchange (NYSE) advising the company that it is not in compliance with NYSE American continued listing standards, requiring it to have stockholders’ equity of at least $2 million if it has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years.

Section 1003(a)(ii) of the Company Guide also requires a company to have stockholders’ equity of at least $4 million if it has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years.

Volato stated in the form that the company has submitted a plan to the NYSE American LLC on July 18, outlining actions the company will take to regain compliance by December 18, 2025.

“The notice does not affect [Volato’s] ongoing business operations or its reporting requirements with the United States Securities and Exchange Commission,” the form stated.

‘Rightsizing’

In a company letter from Volato CEO Matt Liotta obtained by FLYING, Liotta explained the decision to “rightsize” the company’s fleet and crew by removing five leased planes and furloughing some of its pilots.

“This is not a decision we take lightly, and it is the first time we have taken such a step,” Liotta stated in the letter. “However, I want to emphasize that this decision is based on our need to align with both the timing of new HondaJet deliveries, in which we have full confidence, and the pace of demand growth.”

In that statement, Liotta referenced Volato’s 2023 purchase of 25 HondaJets from Honda Aircraft company. These jets were slated to be delivered by 2025, but Liotta said delayed deliveries of the new aircraft and lower than expected sales have put financial pressure on Volato.

He also said demand for Volato’s services, while up, aren’t as high as anticipated.

“This situation requires us to make some difficult but necessary adjustments,” Liotta said.

He went on to say that Volato had been working closely with Honda to increase the availability and utilization of Volato’s fleet.

“…We’ve made substantial progress that allows us to fly individual planes more efficiently, meaning we can meet our flight hour needs with fewer planes,” Liotta said. “This not only strengthens our financial position but also benefits our fractional customers by delivering more revenue share to them—a true win-win.”

After attempts to renegotiate Volato’s more expensive plane leases, Liotta said that the company was unable to reach acceptable terms and decided to end those leases. By flying more hours per plane, he said the company aims to enhance its profitability and attract more interest in its fractional ownership program.

“This decision is about managing our business wisely and positioning Volato for long-term success,” Liotta said. “By rightsizing our fleet and crew now, we’re setting ourselves up to navigate these challenges effectively and prepare for future growth. Thank you for your continued dedication and resilience. We will get through this together and come out stronger on the other side.”

Volato lost over $17 million last quarter and currently has $5.8 million in cash. Volato did not immediately respond to FLYING’s request for comment.

Jet It Déjà Vu

Readers may recall FLYING parent company Firecrown owner and CEO Craig Fuller’s article last summer detailing the demise of Jet It, another fractional ownership charter jet operator. 

“Jet It generated revenue through several major sources— fractional-owner hourly fees; monthly maintenance fees; up-front selling of aircraft fractional positions; and off-network charter flights,” Fuller, who was also a Jet It fractional owner, wrote in the article analyzing its business model.

The flaws in this model emerged when Jet It—-contractually obligated to guarantee fractional owners aircraft availability within 72 hours advance notice—was required to go into the charter market and purchase aircraft time at the charter market’s clearing rate. Fuller stated that these rates were often five times the rate that the fractional owner was paying Jet It for the same service.

Additionally, a key driver of Jet It’s cash flow was in selling fractional aircraft positions—especially during the start of the pandemic.

“In the early days of COVID, as interest around personal aviation exploded, so did cash flow opportunities for Jet It,”  Fuller wrote. “In fact, it is likely that the company relied too heavily on this source of cash to fund its operations.”

Fuller wrote that in 2021, and 2022 supply chain issues started to impact Honda Aircraft Company, and Jet It could not source as many airplanes to sell to members. This caused cash flow from new fractional sales to dry up, severely impacting Jet It’s business model.

Jet It closed down on May 24, 2023.

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According to Volato, the agreement covers “full-scale maintenance services” for its HondaJets along with the sublease of a Volato hangar at Northeast Florida Regional Airport (KSGJ) in St. Augustine. Banyan will initially be subleasing the space for three years and service integration is already underway. Volto noted the move also establishes a new authorized HondaJet service facility in Florida.

“We are thrilled to partner with Banyan, increasing maintenance capacity for our expanding HondaJet fleet in the Southeast right in our own backyard,” said Volato co-founder and CEO Matt Liotta. “This initiative streamlines Volato’s operations and will support our fleet expansion, delivering both operational efficiency and cost savings compared to our previous in-house maintenance.”

Volato, based in Atlanta, grew its HondaJet fleet by 50 percent last year, finishing 2023 with 24 aircraft. The company, which calls itself the largest HondaJet operator in the United States, also has orders for 22 additional HondaJets with 10 scheduled for delivery in 2024. In addition, it has signed a letter of intent for HondaJet’s Echelon transcontinental light jet, which is still in development.

• READ MORE: Volato HondaJet Fleet Expands by 50 Percent in 2023

Volato officially went public late last year, with its stock trading on the New York Stock Exchange beginning December 4. The company offers fractional ownership, aircraft management, jet card, deposit, and charter programs. 

An FAA and EASA-approved repair station, Banyan Air Service is based at Fort Lauderdale Executive Airport (KFXE) in Florida. It provides services including heavy maintenance, interior modifications, turbine engine service, structural repairs, avionics services, aircraft parts, and aircraft sales and management. The company has been in operation for 40 years.

The post Volato Signs HondaJet Maintenance Agreement with Banyan Air Service appeared first on FLYING Magazine.

The company, which operates primarily HondaJets, took delivery of eight aircraft this year, three of which came on board this month. According to Volato, its growth strategy involves both acquiring new aircraft from Honda Aircraft Company and contracting with owners to manage their airplanes. Between new deliveries and management contracts, the company’s fleet now totals 24 aircraft.

“Volato’s measured and thoughtful approach to fleet expansion is critical to achieving our long-term plan for sustainable growth,” said Volato co-founder and CEO Matt Liotta. “We have been creative and judicious in acquiring HondaJets through the open market while continuing to receive new aircraft from our HondaJet factory order. The recent deliveries allow us to expand our capacity at a pivotal time in Volato’s growth and increase our capacity to support our growing customer base.”

Volato currently has orders for 22 additional HondaJet Elite IIs with 10 scheduled for delivery in 2024. The company noted that it has also signed a letter of intent with HondaJet for its new Echelon transcontinental light jet design. Currently in development, the HondaJet Echelon was introduced as the HondaJet 2600 at the 2021 National Business Aviation Association’s Business Aviation Conference & Expo with its official name announced at this year’s show.

• READ MORE: Volato Closes Deal for 25 HondaJets

About Volato

Volato offers fractional ownership, aircraft management, jet card, deposit, and charter programs. The company recently went public via a special purpose acquisition company (SPAC) merger with Proof Acquisition Corp I (PACI). Volato’s stock began trading on the New York Stock Exchange on December 4.

The post Volato HondaJet Fleet Expands by 50 Percent in 2023 appeared first on FLYING Magazine.

Volato, which offers fractional ownership, aircraft management, jet card, deposit, and charter programs, announced its plans to become a publicly traded company last August. PACI shareholders approved the move at a special shareholders meeting on November 28. Volato’s common stock and warrants are set to begin trading on the New York Stock Exchange on December 4.

“We believe that this transaction provides not only the capital to accelerate our fleet growth and strategy, but also a level of transparency and institutional support that should make our product even more attractive to new fractional owners and private fliers,” said Volato CEO and co-founder Matt Liotta. “After founding the company in 2021 and quickly ramping to nearly $100 million of revenue in 2022, we are now positioned to build on this momentum as a public company.”

PACI also announced the closing of $12 million in private investments. Combined with funding from an earlier Series A funding round and the conversion of Volato convertible debt, the company reports that it has raised over $60 million in capital. The money is expected to be used to fund business operations and grow Volato’s fleet, which is made up primarily of HondaJets.

• READ MORE: Volato Closes Deal for 25 HondaJets

“This transaction and recent new investments come at an ideal time for Volato, as we see strong demand for our product in the market,” said Volato chief commercial officer and co-founder Nicholas Cooper. “The private aviation industry has undergone a secular expansion in recent years due to changes in customer behavior along with greater customer awareness of the options and solutions available for private travel.”

The post Volato Completes PACI Merger, Prepares to Go Public appeared first on FLYING Magazine.

Once the SPAC merger is completed, Volato is expected to have an enterprise value of $261 million and will trade under the symbol of NYSE: SOAR. Matt Liotta, CEO and co-founder of Volato will continue to lead the company as a public entity. Volato’s executive management team is also expected to stay in their current positions post-merger. 

Volato primarily operates HondaJets.

• READ MORE: Volato Closes Deal for 25 HondaJets

Including one-time aircraft sales and annual recurring revenue (ARR), Volato finished 2022 with $96 million in gross revenues. 

Volato generates revenue through three primary sources: initial aircraft sales for $7.7 million per aircraft, which generate a 16 percent margin; an annual management fee of $1 million per aircraft per year, which the company considers a break-even; and flight operations, which generate $4 million per aircraft per year at a 31 percent margin. 

The best way to think about the unit economics of the business is that the annual management fee and flight operations revenue generate approximately $5 million in ARR for each HondaJet under management, with a 25 percent margin. 

• READ MORE: Volato Launches Aircraft Management Program

Volato finished 2022 with 12 aircraft under management, but it currently has 18 HondaJets under management, with another 23 HondaJets under firm order. With a total fleet expected to be at 41, the current proforma ARR run-rate would expand from $90 million to $205 million by December 2025. 

In addition to the SPAC merger, Volato also announced that it raised $48.4 million in a Series A venture capital round that will be converted into common equity once the merger is completed. The company had raised $38 million in convertible notes that will also be converted to common equity at the same time. 

The company expects the SPAC merger to be completed in 2023. 

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Volato said it has developed a strong relationship with Honda since acquiring its first HondaJet in 2021. The company currently has 17 of the Honda aircraft in its fleet and said it has worked with Honda to improve customer satisfaction with upgrades to the aircrafts’ galley and improvements to its maintenance programs.

“We are delighted to strengthen our relationship with Honda Aircraft Company, and we thank them for their continued support of Volato,” said Volato CEO Matt Liotta. “This new order will allow us to meet the growing demand for private air travel customers who are looking for the most efficient and most luxurious cabin in the very light jet class.”

• READ MORE: Volato Bumps First-Year Captains’ Pay to $150,000

Volato, which touts itself as the world’s largest operator of HondaJets, also said it is experiencing strong demand for its fractional program, the Stretch Jet Card, Insider Deposit Program, and its charter services.

Volato said it also plans to add four Gulfstream G280s to its fleet next year to give its members a greater range of flight options.

The post Volato Closes Deal for 25 HondaJets appeared first on FLYING Magazine.

Case in point: Bombardier. Though the Montreal-based company has contracted over the past five years through divestment of its Q400 and de Havilland product lines and shifted its focus away from commercial aviation, it appears to be coming through all right, having made sound decisions. The first delivery of the Challenger 3500 took place in September 2022, going to launch customer Les Goldberg, chairman and CEO of Entertainment Technology Partners. “As a previous owner of a Challenger 350 business jet, I can say with confidence that Bombardier has hit all the right notes in creating a next-generation aircraft,” Goldbergsays. “The cabin interior is spectacular, and I appreciate the added comfort and productivity that these new features will bring to our worldwide travels.”

According to the latest projection by Bombardier CEO Éric Martel, the company is taking advantage of the continued attractiveness of business aviation through Q3 2022 to both private individuals and corporations looking to avoid the squeeze of airline travel. In fact, the company expects to deliver more than 120 units by the end of the year.

The 3500 is distinguished by its auto throttle system—which received approval under TransportCanada in April—and the fact that Bombardier has published an Environmental Product Declaration for the model, making it the first of the super midsize jets to launch with this transparent life-cycle impact state-ment that outlines its projected potential for smog creation, ozone depletion, and water pollution.

Those key drivers—the pivot to business and personal travel by private aviation, the focus on sustainability, and the targeting of niche segments within the turbine market—are reflected in the owner-flown turbine segment as well.

Owner-Flown Mounts

Historically low interest rates recently have seen upward pressure, and those rising mortgage rates will surely slow the market as access to capital wanes. At press time, the federal funds rate bumped up to 3.25 percent, with an anticipated rise to up to 4 or 4.25 percent at meetings in November and December, according to kiplinger.com.

But Jim Blessing, president of AirFleet Capital—which writes loans on all models of owner-flown aircraft from pistons to jets—hasn’t seen the needle move just yet, though he admits it could change at any point. “It’s been a wild ride,” Blessing says. “Activity levels are still a little ahead of what they were in 2018,” even considering the interest rate cuts ahead of the COVID-19 crisis.

Though Blessing says that AirFleet’s activity overall is transitioning back to “more normal levels,” with fewer new transactions and more refinancing, there’s still a bright horizon. New aircraft make up 30 percent of AirFleet’s annual volume, and Blessing reports those activity levels are “a bit higher this year [in 2022]. Are interest rates going to upset buying habits?” Hard to tell, but Blessing says there is still ample cash out there earmarked for aircraft purchases. “Our biggest competitor [as a loan underwriter] is a cash buyer.”

If you want a new turbine mount, in most cases you’ll need to negotiate a substantial waiting list. Manufacturers, such as Textron Aviation, Pilatus, and Gulfstream, all register backlogs into 2024 or later—a point reflected in Blessing’s assessment: “We’re not seeing any inventory on the OEM side. Cancellations are an opportunity for the OEM,” allowing them to accommodate a new buyer at a better price than the one previously negotiated when material and workforce costs were lower.

What does this mean for the pilot or flight department that wants a new jet for the fleet, or to enter business aircraft ownership for the first time? You have a wide range of exciting platforms with incredible long-range, high-speed performance—and a “greener” signature—but you might have to plan carefully in order to secure one on your preferred timeline.

Fractional Fleet Updates

Another part of the jet market that has benefited from the continued development of niche turbine mounts are fractional jet operations. Volato, based in Atlanta, Georgia, recently announced that it would expand from its current fleet of 11 HondaJet Elites to add the Gulfstream G280. The company placed an order for four units in September.

With these incoming aircraft, Volato said it would be able to expand its business model to serve a wider share of the market. “When we launched Volato, our strategy was to initially target the largest segment of the market that was not being directly addressed: short-haul flights with only a few passengers,” Volato CEO Matt Liotta says.

“From listening to our customers’ needs and recognizing that our innovative business model is not just limited to light jets, we are excited to expand our model to larger aircraft,” Liotta adds. “This would also ensure that existing HondaJet customers would be able to fly their edge case missions that are farther or with more passengers.” The jump from six seats to the 10-passenger configuration in the G280 allows for that growth, making it the first company to operate the super midsized jet in a fractional model.

The post A Hot and High Market appeared first on FLYING Magazine.

HondaJet unveiled the new Elite II in October during the National Business Aviation Association’s Business Aviation Convention and Exhibition (NBAA-BACE) in Orlando, Florida.

Watch: CEO Matt Liotta on Business Air TV

Volato currently has 17 HondaJets in its fleet, and the 25-unit order announced Thursday is incremental and firm, the company said. The company also recently announced it has ordered four Gulfstream G280 super midsize jets.

• READ MORE: Private Jet Company Volato Adds Gulfstream’s G280 to Its Fleet

Volato said in a statement that its fractional owners would have immediate access to the wider fleet upon delivery.

“We believe in the vision and future of Honda Aircraft Company as they continue to optimize the private jet experience with the HondaJet,” Matt Liotta, CEO, and co-founder of Volato said.

Volato’s news comes on the heels of its competitor, Jet It, announcing last week that it was pivoting away from the HondaJet because of what it described as poor service.

• READ MORE: Jet It Pivots Away From HondaJet to Phenom 300

In a scathing letter sent to customers, Glenn Gonzales, the founder and CEO of fractional company Jet It, accused the Honda Aircraft Company of costing the company tens of millions of dollars due to its gaps in customer service. 

In Volato’s case, Liotta said his company is taking a different approach.

“Every business decision we make aims to deliver the best experience for our customers,” Liotta said. “Volato’s fractional ownership program provides an unmatched offering in the industry, and it makes sense that one of our key partners would have the equivalent offering in aircraft manufacturing. Receiving such a large order from HACI is a big win for Volato and further reinforces our strong working relationship.” 

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