Jessie Naor: Good morning, welcome back to the VIP seat. We have a lot of stories today, earnings reports coming out. Sit back, buckle up, and let's take off. Alright Preston, before we kick off the show today, I just want to, we always have to do this we're talking about publicly traded companies. This is not investment advice, this is not financial advice, this is just two people in the industry with opinions, so do your own research.

Preston Holland: Yep, do not take this as investment advice. No investment is free of risk, yada, yada, yada. You know, the lawyers want us to say these things. let's jump into it. This is commentary. We are going to start with a publicly traded company that had kind of an interesting announcement come out. We talked to it. We actually talked about this last week and we might have jumped the gun by a couple of days, apparently.

Jessie Naor: so okay, we were wrong. Apparently it is not the death of ⁓ old ATG systems because there is some software issue and GoGo is now delaying the launch of its new system, which is the 4G, 5G system until November of this year, which for who don't realize this, this is now like seven years of delays to this program.

Preston Holland: Yeah, that feels like a long time. mean, I am not a go-to-market expert on connectivity devices, but that feels like a very long time.

Jessie Naor: Yeah, so I started digging into this, I'm like, what gives? You know, it's like, it's been delay after delay, first couple were like COVID related chip delays. And okay, you know, you can kind of go, all right, that's fine. Like the original announcement was 2019 that this new system was going to come out. And then, you know, they even thought last year. ⁓ Sure, ⁓ FCC.

Preston Holland: And give it the three year FAA premium, right? We'll give you three years. It's gonna be kind of a pain in the butt. It's fine, we get it.

Jessie Naor: Yeah, it's complicated. understand that. But, I'll preface this with, ⁓ so Bleecker Street, which is a capital group, had a short position against Gogo. So I'm gonna first put that out there because they have some ulterior But one the things that they did, they came out with a report, I think this was around last year. And the interesting thing to me is I didn't realize that a lot of this process has been outsourced to other companies. companies in Asia. One of them went out of business, which have been one of the original chip issues that they experienced. And the other one GCT Semiconductor, which is a pretty company as well. Korean chip designer. So it seems like what's going on, least from outside looking in. And if you take this for what it's worth, because this is from Bleecker Street Capital. is that they're really not in control of the process. They've outsourced the design and manufacturing in a lot of ways. And that's why we're seeing so many back to back to back to back to delays that they just can't keep up with.

Preston Holland: Yeah, also wonder if there's a lot of talk around national security. You think about ATG and you think about connecting to your phone and you think about the type of people who are connecting to private jet Wi-Fi. Okay, like let's just talk about this from a private aviation standpoint. At a certain point, you wonder if there is a national security question that comes in here. You the Trump administration really pushing for made in America chips.

Jessie Naor: Mm-hmm.

Preston Holland: and for things that are at least American friendly, right? And so if you have a Chinese company, and again, this is all complete speculation, but I just wonder if there is so many different inputs that are going into causing this delay. can only imagine that that could play a role in all of this.

Jessie Naor: Yeah, potentially, but the problem here is, you know, if it was me as the consumer and you're pushing me for, I don't know how long to upgrade to this new, you know, expensive equipment and then come switch time, then you tell me, ⁓ actually, sorry, there was a delay. I think that's got to rub people the wrong way. It would rub me the wrong way because it's like, you know, scheduled downtime. ⁓ I got the aircraft out of service because you told me there was going to be this cut date. And now the day the cut date arrives, you tell me it's going to be six months down the road. On top of all the other previous delays, I'm sure a lot of consumers are losing confidence and pretty frustrated with the situation.

Preston Holland: So is the L3 and L5 WiFi still running on the old infrastructure? Is it basically it's new stuff in the airplane but still old stuff on the ground?

Jessie Naor: Yeah, so essentially what's happening is that, you there's only ⁓ one spectrum that GoGo has to deliver service. So if they cut out turn on the new system and it doesn't in the way that they expected it to, they can't just flip back to the other. So that's why it's either it's one or the other. It has to be a complete switch or nothing. And the announcement this last week, which I think the CEO wrote on LinkedIn, I'm not sure if it was anywhere else, but you can see that post is that there was a software issue. So, you know, but we don't really know like what's the detail of that again, is it related to the chip problem and the supplier in Korea? Don't really know, but that's, that's pretty frustrating. ⁓

Preston Holland: Have you tried turning it off and turning it back on? Sometimes that'll work. I think that that's really interesting and frustrating for customers because from air to ground standpoint, there's not a ton of competition in that space. You have a lot of movement in the low Earth orbit and Starlink and Galileo and all of these different systems that are coming in. Whereas the base of ATG and now of L3 and L5 is so large. that the L3 and L5 people have all spent a lot of money for... it nothing? It of seems like a little bit of nothing up until this point.

Jessie Naor: Yeah, I mean, this kind of brings up fears. I think they're in a different position than SmartSky was, but look, we had SmartSky just kind of turn off its network one day, which was like shocking to everybody. I'm not saying that that's what's going to happen with GoGo, but I'm saying that there's a lot of confidence issues here. The CEO explained in the post, rigorous testing that showed certain partner provided software components were not yet meeting our performance and quality standards. But again, like why would you keep the press out there and keep the notice that it's going to be turned off if you already knew that there were testing issues? I think maybe some more heads up and giving people a little more time on their old equipment would have been more appropriate a couple months ago.

Preston Holland: Yeah, or maybe before the day that you said that it was going to shut off. ⁓ am reading this correctly, all of this news came out like four days later. If you remember last week, we paid homage to the ATG system and we said, rest in peace. It's gone. ⁓ just kidding. We're not. Yeah. Well, that unfortunate for those people who are operating these ATG systems. Our thoughts and prayers are with you as you continue to go through this challenging time.

Jessie Naor: But. Cause that was the planned date. That was the planned date. Yep. Yeah. Which is why if you work with a provider like ABJets, who has beautiful new Starlink terminals on their Challenger 3500s, you definitely will be connected. So good call, ABJets, on that one at least.

Preston Holland: Yeah, no kidding. You don't have to worry about Starlink maybe going to upgrade the systems. If anything, they're upgrading really fast and it's always getting better. So we experienced it on the airplane and it is really fast, lightning fast and a great So for your discerning customers who always need to be connected, call AB Jets for your Challenger 3500 supplemental or on-demand needs. Well, Jessie that brings us to everybody's favorite part of the podcast, which is Mile High Madness. week, Chad Gilson did give us a shout out and said, thanks so much for including my post on Mile High Madness. So thank you, Chad. That awesome. My Mile Madness is from maybe the most appearing account here on the VIP which is Biz Av Memes. And it is my favorite Instagram follow. I'm going to be honest with you. I'm calling it now. I've got a few that I follow all the time, but this one is a really good one. Better late than never FAA, FAA certified aircraft operators legal list. And it's the scene from the office where Dwight lights a fire and everybody's freaking out. And it's like, what's the procedure? What's the procedure? This is one of my favorite episodes of the office of all time. And that is hysterical. That's really good.

Jessie Naor: you Thank you Yeah. I just am really happy that everyone's been holding FAs feet to the fire on this freaking list. It seems like everyone's finally in the know that, we need this list. This should be fundamental for everyone to have. yes, all of our databases at Private Aviation Safety Alliance, a little plug there, are also updated, which is free to search. You can also support us in different ⁓ yeah, this was so over November when the list was turned off. And even ⁓ lists before that weren't even really accurate. So the last accurate data I had was like from August of last year.

Preston Holland: Yeah, and I was getting a lot of texts from operators that said, hey, here's six airplanes on here that are not on our certificate, and there's a couple certificates that no longer exist that definitely pop up in the database. So it is updated, which is great. can't help but say that putting this in an Excel spreadsheet feels like a bit of an archaic technology, but what do I know? Come somebody at FAA vibe code me a good database or something.

Jessie Naor: you So for those who don't know, there actually is, it's in a totally different page, but there's a list. like a ⁓ Power table ⁓ that all the operators and DOMs and all that stuff in another place. What I've done at my nonprofit is aggregate all that stuff so you don't have to go to five different pages to find it. But there is a Power BI system out there and I think you can filter and sort and do some other things. You just have to dig for it in the FAA site a little bit.

Preston Holland: I use your site all the time, by the way, when I'm looking up operators. double plug for the Private Aviation Safety Alliance, flyingprivate.org, free plug.

Jessie Naor: Thank you. ⁓ Okay, so my mile-high madness this week, usually I go to Instagram, but I actually had one on LinkedIn this week. And no offense to ⁓ the guy who posted this, but he made this video, which at first I was like, ⁓ this is really interesting and awesome. he was saying on this post that removing or installing a VHF antenna or like any antenna on an airplane may seem simple, but it's not. But then when I actually watched the video, like it actually does look kind of simple. I mean, you basically take the sealant off, you put the right screws in and plug it in. Am I wrong to say that that is kind of as simple as I thought it was going to be?

Preston Holland: It's not that simple. Let me show you how simple it is.

Jessie Naor: It is a cool video, I will admit that. Like, you know, you put like the seals on all the, you know, screws and everything. ⁓ But it is kind of simple looking, really.

Preston Holland: Yeah, I would put that at like medium grade difficulty. Like I wouldn't say it's super simple. Like it's not just plugging it in, but I would not say that that's the most complicated thing that I have ever seen done to an airplane.

Jessie Naor: you you Yeah, I've definitely seen more stuff with wiring and all sorts of things that seem a lot more complicated. But cool video. I do like this kind of content. up to more interactive things with maintenance especially because there's so many cool things that you guys out there do. I thought it was kind of funny because it was like, it's not as simple as it looks. And that one just did seem a little bit simple.

Preston Holland: Yeah, more maintenance content creation, although caveat, if you do something wrong, now it's on video. So just make sure it's all correct.

Jessie Naor: That's true.

Preston Holland: Well, it is earnings season, Jessie. So we have got a ton of earnings. And instead of doing line by line, each one being his own story, we're going to kind of lump everybody's earnings in together because the couple of publicly traded private aviation companies did report earnings in the last week. And it is a bit of a tale of two cities for the two largest providers that get the most coverage.

Jessie Naor: Mm-hmm. it's pretty interesting. The one that I kind did a deep dive on first, so I guess I'll kind of go through that a bit, was ⁓ Exclusive because one of the claims that they came out with is that their first ever positive adjusted EBITDA, where they, but I to a caveat in here and everybody should know this is that adjusted EBITDA is not EBITDA. So they are positive on their reports, but when you actually dig into the report, ⁓ one of the things I saw that was kind of interesting is 1.6 million is basically written off losses from fleet modernization. ⁓ take with a grain of salt that there is positive adjusted EBITDA, but that is one of the things that's in there that's kind of non-standard and ⁓

Preston Holland: So they added back a $1.6 million non-cash loss, I guess.

Jessie Naor: Yes, and that would bring them to a total adjusted EBITDA of $185,000, an adjusted EBITDA which puts the leases back in at $4.4 million or so for the quarter.

Preston Holland: Yeah, the journey adjustments to EBITDA is one of my favorite things to study in finance. I have seen some hilarious ones. We've talked about it on the show, but there's a lot of funny additions that you can make to EBITDA to make it positive. I don't know if that one's, ⁓ I know if that one's egregious necessarily. I think that that one's probably okay. You you modernized a fleet and maybe it didn't go so well.

Jessie Naor: is.

Preston Holland: you know, a couple of years ago and you need to write that off at some point, right? Like it's just.

Jessie Naor: But look, I mean, they're at least showing a positive number, which is not the case with Wheels Up this quarter. So there is positive movement for them. you can ⁓ them the kudos, where some kudos is due.

Preston Holland: Yeah, I think a couple of other interesting little nuggets from their earnings call a couple of different outlets have reported on this. I kind of pulled a little bit from different ones is the CJ3 plus and the XLS are very accretive. And so moving away from, you know, the excels and the encores and, ⁓ kind of old unreliable aircraft. And again, it proves a point that we have said many times in this podcast is that uptime is such a huge indicator of financial health. And so moving to aircraft that are more accretive because they're staying flying longer has been that positive for them. The other one that I want to point out is going to be the fact that the challenger so much more contribution margin. When look at the earnings call, kind of they called this out is that the challenger is adding significant contribution margin compared to all the other aircraft in their fleet.

Jessie Naor: Mm-hmm. Mm-hmm.

Preston Holland: And so they're really starting to double down on that and then moving to the fractional, right? So they're reducing their debt, reducing their own fleet, trying to become a little bit more efficient. I think that they're moving in the right direction ⁓ from my take on the thing, right? Again, not investment advice, but it seems like they're moving in the right direction. And again, vertically integrated, that really helps. They've got, you know, whatever their fast team equivalent is, right? Gulfstreams got the fast team. They've got some fancy name for it.

Jessie Naor: Mm-hmm.

Preston Holland: for on the ground support to be able to actually recover aircraft. all of this is in a quarter in which is not a very busy private aviation, other than, ⁓ know, a couple of events and things like that. Like it's not a very busy quarter for private aviation.

Jessie Naor: Yeah, Q1 is usually not like that exciting. I mean, you're coming off. You've got some like, you know, New Year's travel, but then it kind of takes a little dip a little bit. Maybe some ski stuff. Yeah, it's actually really interesting. If you look at their 8K filing, there's some really cool charts in here. We'll add those in the newsletter. But like it shows their charter revenue mix from 2020 to now. You look at 2020, it was like 91 percent wholesale charter to in 2025, about 52 percent and a lot more mix of fraction on other things. So really, really cool stuff in here, especially if you're an operator, can kind of benchmark, know, where should your revenue mix and where are they heading? It's interesting.

Preston Holland: Yeah, very cool. Publicly traded companies are always very interesting. Speaking of the other one, wheels up has reported again on time performance and metric that does not matter for private aviation. Like you're not on if you're not on time, it's like really windy. I like that's the only way I say that you're not on time.

Jessie Naor: you That one just made me so happy. What does on-time performance even mean in private aviation? On time is like whenever the passenger wants to leave, like there is no like on time I don't know. That's just swat.

Preston Holland: Is the on time number passengers showed up 92 % of the time in which they said they were going to show up like that would be on time. Sure. It's like, ⁓ you celebrate that? Sure. You know, our customers actually listen when we tell them that we're that we're leaving at this time.

Jessie Naor: I don't know. You know, I remember like, and now don't know if anybody's doing it right now or not because the market's a little softer than it used to be, but they were like doing like penalties for like departures things like that at some point. I don't know if anybody's still doing that. I wonder if they are.

Preston Holland: There's like, has to be egregiously late from ⁓ I've heard in the market. I think it's like if you show up 30 minutes late, then we're going to ding you. But if you show up three hours late, like probably going to hit you with something. Yeah, exactly.

Jessie Naor: ⁓ huh. fine. Yeah, that messes up the schedule. Yeah, I get that. get that. But I mean, look, again, they still have positive movement in the right direction. The story makes sense. Again, choosing the right airplane for the mission, choosing the highest dispatch reliability airplanes. That's all these companies. That's what it's all about. And they're both making that transition to the right fleet. But still burning a lot of cash. Still not cash flow positive. ⁓ Delta seems to still be supporting them.

Preston Holland: Yep, $100 million. And then mezzanine financing from sanctity jet capital 165 million, which is tied to the Bank of America. So I think, in my reading of this, is those are two different capital functions. I think the hundred million is more continuing operation and the mezzanine financing is more of the free up some cash to continue to expand the fleet. ⁓ You know, there's 10 %

Jessie Naor: Mm-hmm. And 12%.

Preston Holland: year over year gross bookings is up. That's a good thing. Got rid of the Hawker 400 XPs and Citation 10s finally. That's also looks like it's trending in the positive. Tie it back to what Fly Exclusive was talking about is, you know, the Challenger 350 adding a lot of margin, adding a lot of, you know, contribution. They're moving to the Challenger 300, 350s. That's positive, four wheels up. Couple of quotes.

Jessie Naor: Mm-hmm.

Preston Holland: from, you know, the CJI article, we've crossed the inflection point from George Matson on the other side of the transition plan that we put in place two and a half years ago. They front ran the legacy sale. Apparently that was supposed to be an 18 month and they just went ahead and did it. So they're totally off that fleet. 36 Phenom 300 and Challenger 300s at the end of March of 2025. They're trying to really grow that this year, like a lot. So.

Jessie Naor: Mm-hmm. Mm-hmm.

Preston Holland: It looks like it's heading in the right direction, I think. Yeah.

Jessie Naor: but we need a few more quarters to see if this is really manifesting or not. I mean, I will say the fleet change was fast. I think this was half the time that they were expecting it to be completed in. So it seems like maybe the pre-owned market that was so hot at the end of last year helped them a lot with that process. So yeah, they're getting there, but they still got a big old hole to come out of. That's the problem.

Preston Holland: Yeah, I mean, they said that, you know, we think the fundamental business contribution margin was ahead of last year's but for these transitory inefficiencies because the costs hit an apex in Q1. Sounds like an ad back. You know, cost and expenses fell 12%. That's good. You still have S you still have G&A of $26.8 million. Like that's a lot of G&A.

Jessie Naor: you They're also... Yeah, also for those who didn't catch it, you can now use your Wheels Up funds to book Delta flights directly through their application, which I was interested in.

Preston Holland: Hmm. is interesting. I ⁓ my question on that is if have, let's say, a million dollars of cash, just for round numbers, if I have a million dollars of cash and you book a Delta flight through my app, do I have to pay the cash for your Delta flight? Like, how does that work? Is that not so great?

Jessie Naor: Who knows? I don't know. mean, look, they're deeply integrated with Delta at this point. So I'm sure there's some sort of like discounted interchange rate. And maybe that's a strategy to kind of help offset, you know, all these prepaid cards that are there and have people, you know, go ahead and get through those funds so they don't have that liability anymore. who knows, I mean, only time will tell. Maybe it'll be in the full report. know this is not, like the full numbers have not come out yet. This was just a preliminary release.

Preston Holland: Yeah, I don't know. Well, that marks the end of earning season for the big two. ⁓ We're moving on to the next story, which this is really an interesting one. And I'm going to be honest, I didn't have the subscription to be able to read this story. So I'm going to be learning this just along with the audience as well. So Jessie, tell us about the hydrogen helicopter.

Jessie Naor: Mm-hmm. Okay, yes. So this is really interesting to me because one of my big problems with the eVTOL space is battery capacity and that just the energy density of a battery is nowhere near equivalent to the energy density of fuel. Hydrogen now, on the other hand, it's not perfect in every way, but it does have three times the amount of power per weight than jet fuel. So I've always seen hydrogen as like, okay, if we're going to really be sustainable, zero emissions, like maybe this is a way to get there. So the company, it's a Canadian company, Uniter Bioélectronique, French Canadian in Quebec. They did their, so they did a hover test last year, but it was basically just three minutes where they hovered and then came back down with hydrogen fuel cells. On ⁓ 11th week, they did an actual flight around the pattern, like did a full actual demo flight of the aircraft. Hydrogen fuel supplied over 90 % of the power of the flight. ⁓ Right now put the upgrades on an ⁓ R-44. They're to put it on an R-66 to ⁓ target a of up to 200 nautical miles, which when you look at the eVTOL comparison, you go, ⁓ okay, here's a range that actually makes sense.

Preston Holland: Yeah, with a technology that can renew, right? Like you can, you don't have to take all of the, don't have to take all of the battery packs off and charge them for eight hours and drop more battery packs on them. And that's what I think is really, yeah, I think it's really, that's what's really interesting about hydrogen is that you can refuel it. The big problem with hydrogen is that it has to be very pressurized. And so, ⁓ know, ⁓ do you,

Jessie Naor: Mm-hmm. Right, you can feel fast. Yeah. Mm-hmm. Mm-hmm. And it's very flammable.

Preston Holland: It's very flammable and very pressurized. so in a small platform like an R44, where do you put it? I think it takes up a lot of space and things like that.

Jessie Naor: Mm-hmm. It was 500 pounds and with a useful load of like 2000 something, that's a big, that's a big hit. Yeah.

Preston Holland: Yeah, no kidding. I think that that's, the is exciting to me. Battery is not as exciting to me currently. I just don't think that we're gonna get them light enough, but hydrogen is exciting. So ⁓ that's good news for those that are really trying to push the future. I guess question is, is how much of this can be moved over into the EV TOLs Like is this a tech, is this a technology that can get adopted by Joby Archer? I don't know which other ones are left.

Jessie Naor: Mm-hmm. Yeah.

Preston Holland: the other ones, that something that they can, is that something they can get done?

Jessie Naor: I don't know, but I think by them putting this on the Robinson platform, they're trying to show that, we can at least swap this out for traditional engines. But look at energy density. Compared to lithium ion batteries, hydrogen gas is 5 to 10 times more energy dense, which includes tank weights. So the only caveat too, though, is that hydrogen is currently two to three times more expensive than fuel. At least for the time being, they say, look, as fuel cell gets there's more demand, we can lower the price. But I it's at least not as constrained on the battery side from a weight and energy perspective. But yeah, I don't Can Joby and them swap out for fuel cells? I don't know. They're pretty heavy.

Preston Holland: Yeah, I don't know. We'll see. have to keep watching. I think that the EVTOL for the World Cup is going to be something to watch, because that's in like a month. So ⁓ see what happens.

Jessie Naor: Yeah, well, they were doing demos in New York City a couple weeks ago. So let's see.

Preston Holland: Yeah, no kidding. we have talked a lot about quarter over quarter movements. And here is a topic in which we are wondering, is the private jet market up or down in Q1? Because there's a few conflicting reports out there. And when I say conflicting, I mean, the sentiment feels mixed because we pulled two articles and kind of compared them side by side. One is that Amstat says that transaction volume in the secondary jet and turboprop market was down quarter of, you know, if you look first quarter 25 versus first quarter 26 was down some like 10 % ish, right? Somewhere right around in there. Yet values are holding up, supply is constrained.

Jessie Naor: Mm-hmm.

Preston Holland: and IOTA comes out right around the same time hey, transaction volume's up, things good, you know, gonna be steady, it's gonna hold steady, it's been a good first quarter. So which is it? That's, I think, the question that we had.

Jessie Naor: that's I would like to do. Yeah, think makes sense. mean, Q1 is always kind of a weird courting. And I want to know, I'm not in this space as much, Preston. How do they even record all this? Because aren't a lot of these transactions off market anyway? ⁓ Is the that we have even like, it's not perfect, but is it good?

Preston Holland: Yeah, think so Amstat pulls from a bunch of different data sources. And so while off market is a qualifier for supply, I think that you can look at FAA registration changes, right? Like that's where you would get the actual volume number from. And so when you look at Amstat, you and they're basically tracking the turnover, if you will, right? ⁓ And so Amstat is saying, hey,

Jessie Naor: Right. and

Preston Holland: you know, it's registration number ⁓ are down. You know, the pre pre owned inventory accounted for 5.9 % of the active fleet for sale, which is below the 10 year average. So it feels as though it's a supply issue as opposed to a demand issue, which is net positive for values, you know, if you think about over the long term holding residual value, that's net positive. I think that

Jessie Naor: Mm-hmm.

Preston Holland: The headlines read probably a little bit more doomsday than what the reality is. because I auto saying, Hey, look, transact time, time to transact is lowering. You know, from a, you know, for, for a couple of weeks, you know, from 150 days, you know, from 220 days down to like 150 days. If you kind of look, you know, over that dealer inventory is up for their accredited members. I think a little bit of that data you have to look at through a certain lens that IADA is growing. And so yes, you're going to pick up more market share with your users. you grow your users, if everything stays flat and you get more users, yes, IADA is going to represent more transactions the pie. so I think that I think that the Amstat headline may read a little bit more doomer than what the reality is, but it did call us to question and say, which is it? Right? Q1 fall in pre-owned sales despite demand strength. That doesn't sound great, right? Like demand is strong, but transactions are kind of lowering in the first quarter. Yeah, ⁓

Jessie Naor: Right. Mm-hmm. But anecdotally, that's not what I heard. I think there was a lot of overhang from Q4.

Preston Holland: Yeah, well, and I think too you have bonus depreciation playing a factor. Now, the one thing that I think is interesting thinking about that is Q1 last year did not have bonus depreciation. It was not in state until the summer of last year. So looking at it that way, it was probably some people saying, hey, we may not get it back, so I'm going to go ahead and transact. That's interesting. think the other, I think if you look in the used market, that's

Jessie Naor: Mm-hmm. Mm-hmm. Mm-hmm.

Preston Holland: you know, kind of one thing to observe. think the other sentiment, if you will, is look at the OEMs. And we've got kind of a, you know, we've got the three legged, you know, Embraer, Gulfstream, Bombardier, and everybody's reporting, hey, we're up. Everything's up. ⁓ Very strong.

Jessie Naor: Yeah, their earnings were fantastic. Huge backlogs continue to increase. Huge orders. Bombardier, think, by far, is winning with these huge orders, at least over last quarter. But yeah, mean, new is golden. ⁓

Preston Holland: Yeah, one ⁓ caveat in that new is golden is the Embraer's margins are like way like 280 bits down. Why you may ask? Because of tariffs, right? So 280 basis points of margin in the first quarter. they're, they by which ⁓ is

Jessie Naor: Hmm. I know. Yeah. Well, they'll get that back though, right?

Preston Holland: Their guidance is saying that they think it might be here to stay for them. Again, not advice, but basically they're saying, we don't near-term relief from the 10 % US tariff, but the backlog is up. that is indication of structural movement and positivity in the first quarter. Gulfstream was the bell of ball in the first quarter yet again.

Jessie Naor: Interesting. Yeah. American place.

Preston Holland: revenue is up $253 million more than last year's first quarter, 8.4 % increase, which was driven by two more aircraft deliveries and higher service revenue at both Gulfstream and Jet Aviation. And if you back into that math, it looks like Jet Aviation and Gulfstream services had a $100 million increase because let's say you delivered two more aircraft and they're both G700s at $75-ish million apiece. That only makes up 150 million of the $253 million increase. That's like, that's a huge increase in services revenue, which is probably pretty high margin.

Jessie Naor: Wow, good for them. That's amazing. What a different tale though. It's the OEM versus the operators. There's movement on the charter side, but I mean the OEMs are definitely the gorilla in the room.

Preston Holland: Yeah, also, I have heard people saying the OEMs are forgetting what happens when things turn. And so they are not playing ball. They're not doing discounts. They are not, you know, I wouldn't say they're not playing nice. What's that?

Jessie Naor: Also, I'll pull back from trade shows. The trade shows too, they're pulling out of those a lot.

Preston Holland: Right, they're pulling out of trade shows, right? And so this sentiment that the OEMs are forgetting how they need everybody else in downturn. So I that that's the one critique. Now, when times are good, it's something to be expected, right? I don't need more orders, so therefore I don't need to do more marketing, things like that. But I think that there's... ⁓ I don't know, I think that there's a little bit of sentiment in the market that, hey, we kind of need the OEMs to partner up with us because we're all in this together. And like, let's not be enemies here.

Jessie Naor: Yeah, going to be tough to do though when you have order books that big.

Preston Holland: Yeah, no kidding. Must be nice. Bombardy is refinancing all their debt because they're a huge order book. I mean, good for them. Well, the last story of the day is the Apocalypse Jet Tracker. And this is tinfoil hat territory. I mean, this is like, this is conspiracy gold.

Jessie Naor: you Yeah. Yeah, yeah. So apparently after Trump's infamous tweet about annihilating Iran, this guy, Kyle McDonald, who was an artist and a programmer, decided to launch an apocalypse early warning system that's tracking 11,000 aircraft. his philosophy is that if insiders and billionaires know that the end of the world is coming or nuclear winter or whatever it is, they're gonna hop in their airplanes and fly off to their bunkers. So he has five different levels of alerts based on how many people are on airplanes at any given time. I was like, this is, this is interesting. It's kind of crazy. And I hope I never see it get to level five. ⁓

Preston Holland: Yeah, can I say the quiet part out loud? For someone who is an artist, this website is Like, gonna share my screen really quick. ⁓ Like, you're an artist, I think you might be more programmer than artist, my friend. Because this website is hideous. ⁓ Like, bad bad.

Jessie Naor: Yes. you

Preston Holland: I wonder if it's not even mobile responsive.

Jessie Naor: No, well, you know, that's just, but you know, it's crazy to like this thing got picked up by like every single like outlet in the world out there. It's just so funny to me what the media like gets interested in in the private jet world the apocalypse annihilation of whole civilizations is apparently one that reads well.

Preston Holland: But yeah, the apocalypse early warning system. It's EWS dot Kyle McDonald dot net, bringing the dot net domain back into the forefront. So pretty, pretty interesting. It

Jessie Naor: Thank Enjoy.

Preston Holland: Again, I would be curious to see what actual airplanes he's tracking. Like he's, he's tracking, see the BD 100, 1A10. Is that, is that six, yeah, it's a challenge of 300s, phenom 300s. ⁓ like, you, are you tracking, are you tracking the net jets fleet? Like, you know, that's cool. I don't know. There's, there's a whole, there's a whole methodology behind it. So if you want to go read about it. ⁓

Jessie Naor: like super super superman super like well Yeah, I guess.

Preston Holland: It's interesting for the airplane nerds like Jessie and I, and probably most of the people listening here, will fall down a rabbit hole. And don't forget your tin hat on the way down. So, well, this has been another awesome episode of the VIP seat. As a reminder, we have a newsletter that goes out every week, fresh design website, fresh design newsletter. So it's really pretty. It is at thevipseat.com. You can sign up, just put your email on the top, hit sign up it will come to your inbox every week. It is the companion of this podcast. So if you don't have time to listen, you can read, scan, browse, and get a lot of the information that you get here on the podcast just in written format. Give us a share, send it to a friend. That's the best way to grow this show. Leave us a five-star review on Apple, Spotify. Leave us a positive comment on YouTube. Give us a thumbs up. Hit the subscribe button. All of those good things that you know from YouTube. again to AB Jets for sponsoring this week's episode of the VIP seat. If you're going to be at White Plains next week, we would love to see you. So come say hey us while we're there up at NBAA White Plains Regional. For Jessie Naor, my awesome co-host, I am Preston Holland. And we will see you all. next week.