Preston Holland: All right. Well, it is time for our favorite part of the podcast, which is Mile High Madness. And we have a special guest on the podcast this week, John Owen from AirShare, went viral and got a bunch of earned media over the weekend by to fly Freddy and his pals from Oklahoma to Canada for the Germany World Cup match. So, John.

Jessie: Good morning and welcome back to the VIP seat. Tons of stories today for you. Sit back, buckle up, and let's take off. All right, Preston, so it is big money to be in the aircraft leasing business as we just found that global jet capital raised six hundred and fifty nine million dollars in bond revenue to fund its operations, which was oversubscribed by forty one investors.

Preston Holland: tell us what happened. I'm gonna share my screen and show kind of the original tweet, but ⁓ us what happened with Freddy.

John O: Yeah. Well, you know, it all started the first day was I think it was last Wednesday when ⁓ the ⁓ president of our fractional operations who sits right next to me in the office came in. He's like, Hey, I got crazy idea. We're like, okay, what is it? He's there's this guy, Freddy. I'm like, I know Freddy. I got I got three basically teenagers, and we all know Freddy. And he's Hey, Freddy's going from Houston to Oklahoma City to get to go to an Ella Langley concert.

Preston Holland: this is the other side of the M&A Gong. So you can see the M&A Gong sitting behind me. Speaking which, we have a surprising, some surprising news about the M&A Gong coming up. but this is the other side of M&A. So is a bond transaction backed by and securitized by the aircraft in the global jet portfolio. The way that their business works for those people that don't live in this world is they will they

John O: And so we're like, all let's go get the marketing team involved. And so we got a couple marketing team involved, and and we're like, okay, let's do it. So that that was kind of the first tranche of it, which was which went pretty heavy out there, but it not nearly as as much as the second one. And so then, when was that? Was that Friday night, like six o'clock, I think, is when you texted me and said, Hey, like Freddy's missing his flight to the Germany game. So I I was in a stretcher road that pretty much gets zero service.

Preston Holland: They have a short-term credit facility in which they will load up full of high-quality airplanes with high quality credits. will package all of those together and then they sell them off as a lump investors. So those investors have to have exposure to one aircraft. It's 20 to 30 aircraft ⁓ that they'll up, typically super mid and large cabin aircraft, always a corporate on the other side. And then they allow for investors to. Yeah.

Jessie: You

John O: And so I finally got two bars. I pulled into this random subdivision and got on the text string with the same president of actional operations, our VP that runs the operations center, our CMO and our marketing manager. I was like, okay, like here's the here. I think this one's more fun. This one he's actually missing a flight. It's to Germany. it's impossible to get there. Like, can we it?

Preston Holland: ⁓ basically by the revenue stream of the interest of those aircraft. So pays interest. you know, I give you a million dollars and you pay interest on that. And then I get my million dollars back. I keep the interest. That's the right to use my money. That is essentially what global jet capital does.

Jessie: Yeah, and I gotta say, I mean, the numbers are just unbelievable. We're talking about six point seven billion dollars in securitized assets. and really, I mean, this is all corporate aircraft, Fortune five hundred company backed. You know, I was trying to find out were there any fleets, but they are not in that business at all. ⁓ not charter fleets, not airlines. This is solely Fortune five hundreds. I also want to know, because Preston, you're much more in this world than I am. If you know, it used to be corporations didn't love to have private jets on the books, you know, it's not like the

John O: And so it's first, hey, make sure operations can do it. Make sure we have an airplane and and you know that that's available that can get them up to Toronto. And that took about 15 minutes. And after 15 minutes, our ops team said, yep, we're good. So then we're like, okay, let's get the marketing all spooled up. And you know, we didn't ⁓ we do this for for some from PR, but we just thought it'd be kind of fun. You know, we're a Midwestern company, we like to do fun things. you know, it's it's kind of fun to do things that your kids think you're cool doing.

Jessie: most PR friendly thing to do, even though we all know that they have to use them. So is this partially a strategy of kind of putting leasing costs somewhere else so the public isn't as ⁓ picky on them?

John O: ⁓ so it's you know, it was just kind of in the spirit of of the World Cup in general and everything that's going on. and then, you know, we started posting and and I'm I'm a little new to the to the X Twitter game. I think I've probably been on it for fifteen years, but for the first fourteen and a half years of it was purely for news and I don't I don't think I posted anything up until just a few months ago when you kind of got me sucked into this stuff.

Preston Holland: Yeah, there is in in an operating lease scenario with the Fortune 500. If you look at the balance sheet of a large company like that, like look at Home Depot, for instance. Let's just take an example. Okay. Depot market cap is $324.55 billion. Okay. if they bought a ⁓

John O: And so I d I I was actually on my way, I was by myself and I was just on my way to dinner. So after we got these guys involved and all spooled up, our marketing started posting and I finally got to dinner and I started playing around on there a little bit. And then it was starting to and I honestly getting a little frustrated after about a an hour, new to new to the whole thing. And finally, you know, it's starting to build.

Preston Holland: Fleet of brand new G700s that would be like point zero zero zero zero one percent ⁓ point zero zero zero zero one percent of their market capitalization tied up in an airplane. When that up on the balance sheet and it then shows up in corporate earnings as an asset of the company. And when you have an earnings call, you don't really to have to answer for something that

John O: And so I'm I'm at dinner by myself for three hours tweeting all this stuff out at and the same time communicating with with our team and it's going crazy and you know, all the comments are popping up and and all of a sudden I'm getting texts from people I haven't seen in forever. They're like, ⁓ my god, I saw you in the New York Post, I saw this, I saw that. ⁓ obviously it didn't end up taking it. I think American figured out how to get him up there, but it was fun. You know, it was ⁓ and actually I was I'm in the office today and

Jessie: Hahaha

Preston Holland: Really, in the grand scheme of things, doesn't move the needle for you. And so you will do what is a lease transaction. So you will hold title of the aircraft. The will be held by Global Jet Capital. They will immediately turn around and sign a lease back to you, where typically they are kind of a triple net lease type structure. If you think of like real estate as very similar, where all costs are by company.

Jessie: Mm-hmm. airlines.

John O: I took, you know, sometimes I'll just text the whole office and say, Hey, I'm going to get a coffee. Coffee's on me. So today I think we had about 10 people. you never knew who kind of sees it and who thinks it's fun. And somebody that was in our operations center was just like, This was great. We loved it. You know, it it's so fun to kind of be involved in somebody like that. Everybody knows who Freddy is. So I think I think we all enjoy, even though we didn't end up flying him anywhere, I think we all enjoyed the experience of it and trying to get him up there. And you know, I we I

Preston Holland: All maintenance costs, all operating costs, everything like that. then the residual value is ⁓ the balance sheet of Global Jet Capital. What does is then you just have a lease obligation, which gets lumped into a really, really large group of lease obligations that so not gonna get some. ⁓

John O: We've got Kansas or in Kansas City, we've got some World Cup games here now too. So there's a handful of us that have been and we're just all caught up in the whole World Cup experience and to have been involved in that

Jessie: So did Freddy ever you back or Freddy just ghosted you when you offered him a private jet? ⁓

Preston Holland: You know, some young kid who's like, hey, I'm gonna make a name for myself and I'm gonna ask the CEO of Home Depot about their G700 purchases they just bought, right? So like it a shield. What it does is it increases your cost of capital. But again, in the grand scheme of things, it's a blip. and what you're doing is is that GlobalJet is then selling the margin and the yield on those leases. ⁓

John O: Yeah. Yeah. So so our marketing manager was the one that was direct messaging him on the side. And so we're like, Maddie, Maddie, is he has has he responded yet? finally after a while he has and you know, hey, he's taken care of and but yeah, so she she both tranches, the the initial one and then the one where he was missing his flights to Toronto, it was our it was our marketing manager pretty much communicating with them through through messaging. But yeah, he was very nice guy, very apologetic, really turning it down. So but it was it was a good time.

Jessie: Mm-hmm. it.

Preston Holland: To these investors. So these investors are then saying, okay, cool. They're essentially buying out the lease, if you will, or they're giving the capital for the lease and then they're getting that interest the back end. So super congrats. ⁓ Globaljet runs a fantastic business. ⁓ they are very good at what they do. They are one of the only groups that exactly what they do in that service. They're really competing against some of the big investment grade banks.

Jessie: Nice.

Preston Holland: So you so to put into perspective, got 562,000 impressions on his reply to Freddy's tweet. Okay. So tweeted, we missed our flight. And that's actually, I saw it in a comment. And I text and was like, Hey, I think this is your chance. ⁓ so connecting flight from Dallas to Canada, ⁓ I tagged John AirShare. I said, We got to get Freddy to see Germany. ⁓ John just replies,

Jessie: you Mm-hmm.

John O: Yeah.

Preston Holland: In these types of transactions. So would see global jet capital competing with Bank of America for these operating leases type thing type things. The thing to think about and to understand is that the residual value risk ⁓ does over to global jet capital. So these are bonds securitized by aircraft assets, but they have to maintain value. So it means that you're only putting really high quality assets into these portfolios. One of the most all time replies, what time do you need to get there by? Right. Just like, what time do you need to get there? Here's your chariot to Toronto awaits. So you have any idea? Has your marketing team told you how many like the New York Post is a, you know, huge publication that's a that's gotta be worth something, you know, from earned media. Like, also this costs you zero dollars. I mean zero net new dollars, right?

Jessie: Course with these days with asset values rising the way they are across almost every single model, think they're doing pretty well with the residual values there.

John O: It did it honestly cost us a thousand bucks because the only thing that we ended up committing to was the slot in Toronto that we had to get because the airport was so busy. I think it was like eleven eleven hundred and thirty dollars. And they're like, Should we do it? We don't even know. I'm like, This is an eleven hundred dollar marketing expense. Like this is worth it all day long. But yeah, that's it. Eleven hundred bucks. Yep.

Preston Holland: Yeah. Yeah, exactly. And it's a is a great service for their customers. They also do loans. So it's not just leases. They also do loans for for certain corporations. And they're able to sell that off as investment grade IOUs, if will, right? Like on the back end. Really at the end of the it's like I owe you this much money. and so they'll sell those off on the back end. But they have they've been doing this for a long time. Their team is really great. So congratulations. Over subscribed is huge. and it's also really for

Jessie: ⁓ my gosh. Yeah. Wow.

Preston Holland: Eleven hundred bucks. New pro how many do did your marketing team have any idea how much like what the impression lift was?

John O: I haven't looked at that. He showed me how to look on my analytics and X and I think I had like three point eight million that day. they're still kind of gathering the information of where it's all coming from. But yeah, it was I think everybody was just kind of shocked by the whole thing.

Preston Holland: aviation in general, because there is a trickle down effect. And the more exposure that we have at the top end of the credit spectrum, both M&A and equity acquisitions as well as on the debt piece, it good for our industry. So this is something to be celebrated that there's that much interest in a product like this.

Jessie: I just loved watching all the comments and they're saying like, my gosh, Freddy, you have a private jet, come on man. Everyone was on the bandwagon like, let's It's just such a fun story. ⁓

Preston Holland: Did you also

John O: I I did get the full experience of of people, you know, talking a little smack on you, you're like, ⁓ why don't you do like okay, like you obviously don't know us very well. We're we're pretty good people. but that's okay. I th I think it was all I mean, I sat there reading the comments all night long and just giggling at the good ones and the bad ones. It was just it was kind of fun to see how everybody, you know, relates to that whole thing.

Jessie: Yeah, I mean heck, if it was a a public bond, I probably would throw a few of my dollars in it as well. But unfortunately, other people with more important ⁓ investors and institutional capital than me out there.

Preston Holland: Yep, exactly. speaking of larger cabin, higher quality airplanes, that reminds me of our sponsor this week, A B Jets, who has a fleet of brand new Challenger thirty five hundreds that are absolutely top of the line, very aircraft. And then you find the like eat the rich crowd and they're all like, you, like we we hate private jets, so we have to use paper straws. And it's like, Yeah, we gotta get Freddy C Germany. Well, that was cool. John, well, thanks for coming on the VIP Seat podcast. If anybody wants to follow along that listens to the podcast, where sh where should they follow you? Is is Twitter the best place?

Jessie: Inevitably. Yeah, these airplanes fit perfectly when the corporate jet is not available to the Fortune 500s. They can easily hop on A-B jets Challenger and enjoy a similar experience. They're gorgeous. We've been on them. We can personally vouch for just how good of an operation this is and how nice those planes are.

John O: Twitter's the only thing I you know I am not a big social media guy. I'm not on Facebook. I'm not on Instagram. like I said, I got on X just for news. So yeah, I'm on X. It's at J E Owen. pretty simple. I got a I got a nice little handle because I got it fifteen plus years ago. And then at FlyAirShare is our is our X handle ⁓ for the for the business. And then flyairshare.com.

Jessie: You

Preston Holland: Little bit y you've got other fractional CEOs who are very big on Instagram, but John is the big X guy. So ⁓ yeah, Well, John, thanks for coming on for this special edition of Mile High Madness.

Jessie: He's viral. ⁓

John O: I guess. No, thanks for having me.

Jessie: All right, well, we have said goodbye to Air Force One this week, one of the Air Force Ones, the 747200s. yes, that have been in service 1990s, have official was retired this week, and the ⁓ Qatari donated seven four seven eight ⁓ is now going is now in service here in the US to fly Trump around and his cabinet.

Preston Holland: I just want to say that the new paint job is fantastic. I always thought that the Air Force One paint job was so dorky and like and not not the not the blue that you find in the flag of the United States of America. I was always like, why is this so baby blue? This makes absolutely no sense. Maybe was like to try and disguise it if it was upside down or something. I don't know. but yeah, ⁓ it has in. There is some heat,

Jessie: Mm-hmm. Dated. Right.

Preston Holland: based on having a Qatari seven forty seven dash eight. thing that I want to out is that like eight of these in existence peri Like a seven forty seven in a V V IP config that even would be candidate. Like there's not that many that are even available or that are flying.

Jessie: Yeah. And the funding story is really interesting here too. I started to do a deep dive on this thinking, okay, it's maybe an interesting story, but actually is a really interesting story. The more you dig on this, cost did not come out to a billion dollars as people were originally saying. ⁓ the Air Force is now saying it was less than four hundred million dollars. Still not cheap. ⁓ but ⁓

Preston Holland: Saving money. Do look at Doge out Doge in action.

Jessie: Yeah, but not only that, it didn't even come out of new budget money. Apparently, some of this was siphoned from overages that were available from the Sentinal Intercontinental Ballistic Missile Program. So apparently that mission in under cost and they used some of this leftover funding to actually do the modifications, which is fascinating. apparently missile money went to the airplane somehow. but yeah, he's gonna be it. Once his n not his the government's new Air Force ones become available Which they're hoping will be by the end of Trump presidency, this airplane will go into the museum that is planned for Trump at some point. People are saying, ⁓ he gets, you know, personal use of Air Force One. Sort of, I think the intent at this point is to literally put it into a museum. Like Reagan has a 707 in his museum. That's the idea here. Because this thing is not new. It's from 2012. but ⁓ it doesn't seem Trump will actually be flying it once the presidency is over.

Preston Holland: Yeah, he does like to leave some vagueness so that they let so that you can jump in there and make your own assumptions. ⁓ but I would imagine, do you know the story behind the call sign Air Force One? I learned this this week. It was pretty interesting. So first time the phrase Air Force One was ever used was 1953, when an Eastern Airlines commercial flight and President Dwight Eisenhower's military transport both had the same

Jessie: Right. No.

Preston Holland: flight number and entered the same airspace. they were getting confused of who it was. And so that was when the was from whatever the call sign was ⁓ to Force One. And it a sorry, but that the super interesting fact. And the aircraft was the Lockheed VC 121A constellation, Columbine and then it has been a Air Force One has been a lot of different over the years. the first built presidential jet is was the Boeing VC 137C Stratoliner.

Jessie: Mm-hmm.

Preston Holland: ⁓ during John F. Kennedy's administration. So Air Force One been around a long time. you know, it's on it's on Boeing, really. All the anger can be pointed straight at one company and the it is Boeing. So

Jessie: Yeah. Yeah. Right. It is. I mean, I think there's also, you know, some scuttle butt around there about, well, isn't it interesting that the free airplane from Qatar also coincides with these nice negotiations that we're having that involve Qatar? ⁓ but we'll leave that speculation for a political show. but it's ⁓ definitely an interesting story and I you know, he had to have it at the end of the day. Like we can't have our president flying around on an airplane from the nineteen nineties, like it was time.

Preston Holland: Yeah, exactly. So it up, Boeing. We would love to see you actually bring something in on time, but what do we know?

Jessie: All right. Well, and more depressing news this week. NetJets has experienced its first fatality ever since inception. And I think, you know, look, we don't speculate about crashes on the show or what happened, whatnot, but I think I can speak for everyone when I say that we are just I think the whole industry is shocked by this because of NetJet's incredible reputation. And the way in which they operate, you know, not completely like an airline, but pretty dang close ⁓ in terms of the things that they do. everyone's really going to be watching this to figure out what happened. Prayers with the family, of you know, the the man's whose life was lost, ⁓ just really tragic all around and pretty unbelievable, truly.

Preston Holland: Yeah, Josh Bayer is who the guy who passed away. He was a really well-known venture capitalist in Austin. I have a couple of friends that are in kind of the venture capital ecosystem in Austin that were pretty close with him. one guy named Nick Gray was very close with him and he was telling me a little bit about it and how sad that it was. I that there's a lot of speculation, and I think that there's a lot of people that were saying, I know exactly what happened. I think this scenario. ⁓ There are some assumptions that can be drawn from it, but it really is going to be, I think that we need some analysis the I think we need some analysis of conditions. A lot people are saying, hey, is the latitude a safe airplane? There is a bunch of them out there and they fly a lot. I mean, NetJets has the largest fleet of latitudes and you know, have lot of successful takeoffs and landings. So, you know.

Jessie: Yeah, and it and if I had to guess, like w you know, I think the preliminary report on this one will come out pretty quickly just because of how high profile it is. But at the end of the day, like NetJets has so much monitoring monitoring on these aircraft. I guarantee you they know a lot already. It's just we don't know yet as the public and we just kind of need to wait until NTSB releases of that to to really understand.

Preston Holland: I wonder if this is going to be similar to Greg Biffle crash in that the publicity drove a lot of ⁓ speed. I wonder if this being a NetJets I NetJets is gonna want it out fast. They want it in the public of what happened ⁓ for own repu reputational stuff and all the people who fly NetJets. I would imagine that it moves quickly for those reasons. ⁓

Jessie: Mm-hmm. Mm-hmm. Mm hmm. For sure.

Preston Holland: And I think that there's a lot of people in the industry that really want to know. I mean, NetJet's lead line was we've never had a fatality. I mean, Warren Buffett has said it in, know, Berkshire meetings. It's, you know, it's it it's it ⁓ it's just really sad. I mean, it's kudos the pilots. The thing saw it in half. I mean, it was it was crazy. And the fact that you had one fatality and not everyone on board, mad mad kudos to the pilots on that one.

Jessie: Mm-hmm. Yeah, and I think, you know, this is something I've been trying to normalize a bit through our work at PASA. people do have accidents that are beyond their control. Look, we don't know what happened with this one. I can't say that for sure. but I I think there is a stigma around incidents and accidents unfairly sometimes. ⁓ Again, necessarily in this case. We just don't know what happened. But I think it is You know, i having an isolated incident is a completely different situation than something happening repeatedly. You know, when you have a company of this size and scale that's operated at the level that it has for so long, and they have accidents and incidents, you know, everyone out there saying, ⁓ NetJet's never had an an accident. Yes, they do. They're just pretty small. You know, they're not things that ⁓ and and given the scope and size of their company, of course they're gonna have things that happen. Like statistically impossible for things not to happen, especially things like bird strikes, turbulence, things that we can't control. So

Preston Holland: I mean run runway incursions. There was a there was ATC audio that released that someone shared on Twitter. was the only place I ever saw it. So I'm not even saying that this is a hundred percent factual. But they released the ATC audio of a net jets airplane having a runway incursion when was another airplane either taking off or landing. And it was a close call, right? Like these companies have these issues ⁓ these happen. ⁓

Jessie: I yeah. Yeah. Yes.

Preston Holland: It's how do you respond and are you doing to be able to prevent them? ⁓ arguably, NetJets being the largest operator in the world of private jets, there's no one better to there's probably no one who is doing more to prevent those types of accidents. So it's just super sad.

Jessie: Mm-hmm. And I think yeah, and I think they're doing the right thing too in that they report everything. You know, all of the thing all of the mistakes that are made because we are humans and we all make mistakes, it all gets reported. And I think all the operators in our space should look to them a lot more. you know, to not be afraid to share things sometimes or to kind of, ⁓ you know, we had this little ding over here, but we're not gonna file it with anybody. Like that's the industry needs that. And I think NetJets has done better than anybody else on that. We'll we'll just have to see what happens with this report. but truly tragic and and shocking for for all of us that look up to

Preston Holland: Yeah, and there was another preliminary report that came out with regards to GPS spoofing and you dove really deep into this one.

Jessie: Yeah. Yeah, so and I I we sent out a release at Private Aviation Safety Alliance too on this because this is the first confirmed now because the report did come out from NTSB of a crash that it has involved GPS jamming. We don't know what all the factors are, but the NTSB did at least say that you know there was some significant interference at this flight because of GPS jamming. so just a reminder for everyone out there, go take a look at this report. this was a medevac aircraft. this happened in May of 2026. killed all four people on board and military training activities were going on, causing a lot of GPS issues. it's you know spoken about at length in the report. ⁓ even though this is preliminary, again, it came out a month after, which is very, very fast and shows you that NTSB wants you to take a look at their findings because this is a critical safety issue that we all need to be paying attention to right now and not in two years when the final comes out.

Preston Holland: Yeah, pretty crazy. So what can you give us like the quick ninety second background of of what kind of what it says?

Jessie: Yeah. It was a middle of the night flight, ⁓ zero moonlight by the way, which is affecting visibility, C fit. ⁓ so they crashed into a mountain. The there's a spider tracks device on board, which was, you know, their GPS device in addition to whatever the aircraft had on board. All of them were saying different things. There was communications back and forth air traffic control and the crew trying to navigate because they were having issues with the GPS. They had asked the military base to stop jamming the signal and they did and it came back on. So there was a lot of like back and forth in the middle of the night, you know, high risk operation already because you're flying, you know, a Medevac team. so look, it it's not all the the pieces of this had not been decided, but we can look at this and say, okay, GPS jamming, we've known that this is gonna be a problem for a while, but here's a definitive case where this probably had a pretty big impact on what happened.

Preston Holland: Yeah, and it looks like took the ILS approach. mean, this is just tragic.

Jessie: They had to yeah, they had to go visual, because they were having so many problems with with their equipment. So

Preston Holland: Yeah, no kidding. Well, anyways, shall we move on to the bit of news, which is good news, the pilot who was stuck in New Guinea or in Guinea, sorry, not New Guinea, Guinea, the other part of the world, stuck in is home now after being in for a really long time, then in house arrest another really long time, he's back. So according to

Jessie: Jimmy.

Preston Holland: MSMB ⁓ what was it? MSNBC Chicago, he did an interview with them and he said, Hey, I'm back. It's good to be back. it was basically for that haven't followed, there was a pilot who was flying a trip from two locations kind over in that area. landed at Guinea, was cleared everything, told them they were coming. We just need fuel, everything's fine, landed. Opened the door to machine guns in their face and everybody yelling, get down, get down. The principal was not on board. It was just the two pilots. then they got put into jail. while were in jail, no food, no American no, not a whole lot of anything really happened other than them just getting tortured. ⁓ There was riot that killed 33 people while they were in prison. Also crazy. ⁓ Then they were released on house arrest after the principal paid a twenty thousand dollar per head basically bounty. I mean it was you know, it was like technically called it what, ⁓ a bond, right? Like, ⁓ yeah, this is a fee, twenty which feels like probably should just paid that pretty early in this process and like gotten them out of there. But like, I don't know. I'm sure that there's a lot of having ⁓ you had to back channel a few ways to even get that as an opportunity.

Jessie: A fee. Yeah, sure. Sure. Right. I don't know. Maybe it took a while. ⁓ Yeah.

Preston Holland: Then they were on house arrest there. And then finally in June, first week of June, they were able to actually come back to the States and ⁓ are now back home. But pretty that like no one really went over and helped them from the State Department. Like the State acknowledged that it happened and then that was about it.

Jessie: Yeah. Yeah, you know, and again it's one of those things where like if it's not like I don't know, there's just certain things that get picked up by the media and certain things that don't. And I was always surprised that the story wasn't all over the place, but it just it just didn't get there. Very happy to hear they're home. but man, what a crazy experience. You're doing a technical stop and then all of a sudden you're surrounded by like f different factions trying to control the government or whatever they were doing. But crazy. ⁓ I guess don't take fuel in Guinea is the moral of this story, and maybe other countries as well. you should look at for these kinds of risks.

Preston Holland: Yeah. And also look out for people and your employees because if get stuck in Guinea, you need wire the money now. You know who I feel like would definitely wire the money now if their employees got in Guinea? That's RealJet. Because if remember a couple of weeks ago, our new sponsor, RealJet, we did a interview with Robert Withers and Ditcher and they were all about the people behind the brand and talking about and taking care of the people.

Jessie: Absolutely. Yeah, RealJet is in the business of relationships. They have been for a long time. If you missed that episode, make sure you go check it out because it was very informative, little contentious out there too. So, but we we liked it, we enjoyed it, and their insights were very fascinating. So go check it.

Preston Holland: Yeah, thanks to RealJet for sponsoring this week's episode of the podcast. it time to warm up M&A gong that has not rung yet, but apparently it is going to ring at some point in the future because Magellan Jets starting to make executive moves that are going bring some M&A to that group.

Jessie: Yeah, so this is a really interesting story because Stratos Jets had already begun a similar kind of process recently. think we've had discussions on this show before. ⁓ There's certain of businesses that are more difficult to either sell or to get good multiples on your exit for because of key man risk. And charter brokerages specifically, you know, the one person usually holds all of those relationships. So there's a couple of companies now Magellan Jets is kind of joining this effort too, trying to figure out, you know, how do you turn a charter brokerage into something that's not just a brokerage where you know your individual salespeople just hold those those relationships and continue them forever. they're going to go through a of acquisitions targeting different firms. And the pitch is kind of similar to what Stratos Jets was kind of pitching is we'll be your back office, we'll do your marketing, we'll do your, you know, what all the stuff that you don't want to do, we'll take care of. You just take care of your customers and you can plug into our platform.

Preston Holland: Yeah. And I think you look at what Flyhouse is doing, and I think they're trying to do something like this as I think that that is one of the promises and the pitches of the brand. I a couple of things. ⁓ One, on their way to 200 million in revenues. We have got to get rid of GMV being a being ⁓ in for revenues in charter brokerages because it's not ⁓ fair.

Jessie: Mm-hmm.

Preston Holland: Let's say billion dollars worth of Airbnbs got booked and Airbnb said we had $10 billion in revenue, that not be fair. Okay. Uber does claim the top line revenue number ⁓ before the ⁓ Or if do, they kind of carve it out and say, Hey, look, ⁓ here's the

Jessie: Yeah.

Preston Holland: So like Uber has a GMV, which for those that don't know, GMV means gross value. So that means how much money flowed through the platform, and then marketplaces shave off a little bit. And that's what charter brokers do. They flow a hundred thousand dollar flight through their platform and they shave off eight grand or ten grand or twelve or fifteen or twenty or whatever or forty percent, which is criminal. but if you claim the full hundred thousand as a revenue and you have ⁓ pretty percentage of s of cogs, like that's fair. Because then you say, ⁓ here's this charter brokerage company ⁓ that has million in revenue. ⁓

Jessie: Or forty percent sometimes.

Preston Holland: And at, you know, the thin margins that people run out in these business, like that may not be all that big of a business, but you hear two hundred million, you're like, ⁓ that's a really big business. As if, know, I had two hundred million dollars of, you know, manufacturing widgets. So there's my there's my soapbox rant. I get there's gonna be a lot of charter there's gonna be a lot of charter brokers that are mad that I said that, but I it I I think it's unfair, frankly.

Jessie: Mm-hmm. I think it's a very good call out. Yeah. Yeah. No, I think it's a good call out. And yeah, peop some people get mad at the things that we say on the show, but that's why you watch it, because we're honest. I mean I think it's interesting because I think we th for years they have all been trying to figure out, okay, like we can't just be a brokerage, like we can't just be a brokerage. But there is precedent for this. You know, I was starting to think about this from like a wealth management perspective, and you think about the ways in which there have been Platforms for wealth management groups that have actually succeeded and gotten some PE funding. So I think I see the vision who will be able to execute and who will be able to actually do it the right way because it's not just building together a whole bunch of brokers into one place. They need to all agree on the same standards, the same practices. There needs to be something really proprietary within the system that makes them sticky and stay and continue that recurring revenue. but Interesting and I'm interested to see how this actually plays out for them and who is kind of the first to be the big boy out there in this specific space.

Preston Holland: Yeah, they're kind of taking the RAA R I A model where you can buy these small independent firms and then bulk them all together and create a lot of enterprise value. And get it. I think that it's an interesting idea. I would that the model in which is going out, gonna do something. I'm gonna take a stance and say which one I prefer. I think how Magellan is doing it, I think has a better chance.

Jessie: Mm-hmm.

Preston Holland: Than the franchise model. And I think it has a better chance than just trying to do it organically. by doing this and clearly signaling to the market that you're going to buy up these small brokerages and you're going to say basically, hey, ⁓ will pull forward your earnings, right? you're going to buy a $10 million book of business that makes million dollars a year, let's say $500K a year, not even that good. And we're going to you ⁓ one or two times that to. pull you into our ecosystem kind of build up this big book. I think that makes a lot of sense. I to see where the franchise model makes sense. I've I've read about it. I understand generally what it is is that you have a back office, you have marketing support. I just know if running an independent franchise if it's that much better than having than than having your own brand. I think Goodwin actually fits in these buckets as well. Cause what Goodwin's doing is doing the book buying and the payment processing in the background. And really, Goodwin is lumped in there because they're doing this for small independent brokerages. They'll do your sourcing, they'll do your payments, they'll do your contracts, which is the stuff that ever nobody wants to do. and so it fits into that bucket too. I think there's four five different groups trying to figure out how do you get this scale model. But then you look to sentient jet, huge, right? Massive, massive And how do they do it? They've got a big jet card business. Like that's how they reach their

Jessie: Mm-hmm.

Preston Holland: scale. So then you have air charter services, which is a huge global behemoth of buying power and across the entire spectrum. And that's also a big business that they grew kind of organically. these all these kind of mid-market players are trying to bulk up the mid-market and kind of increase the brokerage space. And think that they're all novel, interesting, ideas. I just think that the M&A model. As long as it's executed right. And frankly, I mean they're they're building up their team do so, right? Like ⁓ have got they a former NetJets and Milestone Aviation Group executive to lead acquisition,

Jessie: Mm-hmm.

Preston Holland: So they hired Matthew, Matthew Harris, who is a guy and has an M&A background. So they are signaling to market, hey, we are serious. I would be interested how what's their target size? Like how big of a book do they want? Do they want

Jessie: think twenty five million was the their business that they want to buy. Yeah.

Preston Holland: Yeah, so they're adding, yeah, twenty twenty five the company is targeting brokerages that are a cultural and service fit, ⁓ a strong reputation and generate at least twenty five million in sales, ⁓ is ten percent of what they are doing, mind you. So they're trying to grow. I mean, you could double you do ten acquisitions, you could double. Be pretty interesting. so yeah, I don't know. I think that it's interesting.

Jessie: Mm-hmm. Mm-hmm. Yeah. No, and I think they have a really strong jet card business. I I think everyone's kind of centering this around the jet card businesses. it sense. Will these be successful? I think it's all gonna depend on, like you said, a really successful integration. Cause let me tell you, you can go buy somebody, but actually getting everybody on the same sheet of music and agreeing with each other to the same values and principles and way of doing things, that's a difficult task.

Preston Holland: Yep, exactly. And they are really good SEO. So good for them. well, that has brought us to the end of another awesome episode of the VIP Seat. Thanks to John Owen for coming on as a guest. We really appreciate that. if you want to help our show, we need you to share it. Growing a podcast is incredibly hard. we need your help in order to do that. So please share it with someone who is like-minded in business aviation that wants to get smarter.

Jessie: Mm-hmm.

Preston Holland: About the top five stories in business aviation each and every week. You can subscribe to the newsletter at the VIPseat.com. Just in case you don't have time to listen, write the whole thing out. You get, I would say, 70% and as many jokes, but you do so get some gifts in there. So subscribe to newsletter. thank you to A B Jets and to RealJet for sponsoring this week's episode of the podcast. Stay cool out there. hot this summer. We will see you all next week.