XOJet starting joint venture in Middle East
XOJet, the fast-growing on-demand charter company operating a fleet of Cessna Citation X and (starting this fall) Bombardier Challenger 300 aircraft, has secured $2.46 billion in financing to fund an ambitious plan to expand further both in North America and internationally, in what the company claims is the “largest publicly announced business aircraft financing package in history.” It is also evaluating larger aircraft, such as the Bombardier Global Express.
The main drive of the international expansion will be focused on the Middle East, and to that end the company has signed a deal with Tasameem Real Estate Co. of Abu Dhabi to create a new joint venture. XOJet CEO Paul Touw told EBACE Convention News that the business would start there “immediately” although he expects that getting an air operator’s certificate (AOC) from the UAE government will take around six months. In terms of other operations internationally, Touw said, “We haven’t decided because we want to focus on Abu Dhabi.”
Investors participating in the financing include Tasameem, TPG, Export Development Canada, White Oak Global Advisors and Touw, who founded XOJet in January 2006. Immediate funds of $964 million have been made available, with the other $1.5 billion to be generated when the Tasameem joint venture is launched.
Touw said that “despite the backdrop of high fuel prices, difficult credit markets and a looming recession, in face of all that we still raise the capital.” David Bonderman, founding partner of TPG, said, “XOJet’s business model is changing the industry as it continues to outperform our expectations.”
At present, the XOJet fleet is 20 aircraft with one to two aircraft being added each month over the next three and a half years, said Touw, with the company having ordered 127 aircraft so far. While these should all be in operation by 2012, Touw added: “We’re also looking at widebodies, such as the Bombardier Global Express, because we need the range.” The typical XOJet customer is from a bank or private equity firm, and although the “average passenger load is only one-two passengers, range is key,” said Touw. With the financing now in place the company is currently evaluating the available aircraft option.
Explaining the success of the XOJet business model to EBACE Convention News, Touw said that by combining two types of customers, on-demand charter and owners, and by having many aircraft of the same type to avoid “deadhead” repositioning time, aircraft utilization could reach 1,200 hours per annum with 98 percent of that time carrying passengers. This compares with the fractional model, which Touw views as outdated, where aircraft utilization is around 800 hours but with 30 percent “deadhead.”