EBACE Show News - May 20, 2008 - (Page 70) EBACE 2008 XOJET Wins a Record $2.46 Billion Financing The biggest financing in the history of business aviation—and one of the top ten in all of commercial aviation—has been completed by XOJET, which raised $2.46 billion to fund its fleet expansion from around 20 to 127 corporate jets. The major investor is Tasameem Real Estate of Abu Dhabi, which, through a mixture of debt and equity, will acquire a minority ownership stake in XOJET and a major share in a joint venture in the Middle East. “This is by far the largest financing in business jet history,” XOJET president & CEO Paul Touw told Show News. “It is highly unusual to have achieved it in the current credit climate where five airlines have recently gone under, and it shows a strong faith in our business model by investors who are known to be extremely discerning in where they put XOJET president & CEO Paul Touw is flying high after defying the credit crunch to secure major funding for the future. their money.” XOJET last year ordered 30 Citation X business immediately to XOJET, which has already secured that the company buys, maintains and operates its jets worth $600 million and 20 Bombardier Chal- more than $500 million in previous funding. The own aircraft and charges monthly fees for guarlenger 300s plus 60 options worth $1.9 billion. remaining $1.5 billion in additional financing anteed availability. “Our average contract is for ouw The California-based company plans to have w i l l b e m a d e available upon launch of the five years and 187 hours of guaranteed time,” T planned joint venture with Tasameem, which is said. XOJET then aggressively sells on-demand 127 business jets in operation by 2011. charter on airplanes that would be deadheading Touw would not say how much Tasameem is expected to occur later this year. “This comprehensive financing package will for their next destination. “Less than 3% of our investing but noted that its ownership in XOJET will be less than 10%. Other investors include enable XOJET to be the first large-scale business flights are deadheading,” he noted. His current fleet of 20 aircraft are each flying veteran aviation investor TPG, Export Devel- jet operator to fund the vast majority of its own ouw. “And it will enable us to go global 1,200 to 1,300 hours a year, “which is three times opment Canada (EDC), White Oak Global fleet,” said T Advisors, LLC and Touw himself. The equity with our business model starting in the rocket- the average,” Touw said. Those 20 are generating revenue like a fleet of 60 aircraft. “Think of the financing round was advised by Morgan Stanley. ship growth area of Abu Dhabi.” XOJET’s business model differs from most in capital tied up in those assets. If you can make Some $964 million will be made available $400 million work like $1.2 billion, you can see why all roads lead to aircraft utilization.” Touw has particularly harsh words to say about fractional ownership, which, like many other programs, requires the customers to buy the aircraft in one way or another. “If you buy 400 hours from a fractional it would be cheaper to buy your own aircraft,” he noted. “Those kinds of programs are using the timeshare plans of the 1970s really to sell aircraft.” In contrast, XOJET came in with a completely different system that’s economic and super efficient, Touw said, and it doesn’t ask its customers to finance the aircraft. Noting that U.S. consumers spend $30 billion a year on private aviation, he said the success of XOJET’s financing marks a big turning point in investors viewing business aviation as a commercially viable transportation solution. “A lot of us feel this could be the beginning,” Touw said. XOJET began with a fleet of Citation X jets and is adding Bombardier Challenger 300s too. —John Morris 70 May 20, 2008 www.aviationweek.com/shownews http://www.aviationweek.com/shownews
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