Weekend Update: Wheels Up And VistaJet Are Still Flying

11.05.2024 - 12:55 / forbes.com

In the 1970s, Chevy Chase and Garrett Morris had a regular skit on Saturday Night Live's Weekend Update. Chase, the anchor, would tell viewers, "Our top story tonight is Generalissimo Francisco Franco is still dead." That pronouncement, based on a premature report of the dictator’s passing, would be followed up with Garrett Morris, who would join Chase to repeat the news for listeners with hearing impairments. Instead of signing, Morris would cup his hands and scream at the top of his lungs the punch line that Franco was still deceased, even though he hadn’t yet passed. They repeated the skit week after week. It has been a year since we started seeing reports about the pending departures of Wheels Up and VistaJet. However, unlike the general who did succumb, both are still alive, and flying, although at what altitude is open for discussion.

The crux of the premature obituaries for customers was that both companies had six or seven times as much deferred revenue as cash. Deferred revenue is mainly jet card deposits from members who prepay for future flights. If their provider fails – and their funds haven't been escrowed, which is not a common practice - the members become unsecured creditors.

Wheels Up and VistaJet had nearly a billion dollars in deferred revenue at the time.

After JetSuite's 2020 bankruptcy, its jet card members, who had around $50 million in prepayments, received a few cents on the dollar.

When Jet It, a fractional operator, shuttered last May, share owners also took a haircut. They had the benefit of a buoyant market for preowned aircraft, and despite legal bills, having to put up money to pay off liens and other bills related to their aircraft, they recouped at least some money from selling their fractional jets.

Yet the commonality of both failures despite the differing models was that customers didn't hit the highways or head to Terminal C at Newark Airport. They licked their wounds and moved on to other private flight providers.

Indeed, the bankruptcy rumors spurred a host of promotions from other jet card sellers offering prospects who could show proof they had funds at Wheels Up flight credits and discounts for joining their programs. Vista competitors, in many cases private companies with no view to their ledgers, sent potential customers copies of an EY going concern letter.

Since Vista is privately held, it doesn't publish its financial results (although they are available via a non-disclosure to its bondholders and other investors). However, Bloomberg recently reported its adjusted EBITDA fell 5.2% to $801 million last year while its debt climbed by around $133 million to $3.9 billion.

After the initial report by the Financial Times, based mainly on Vista’s $500 million