VistaJet: get rich or fly trying

In today’s newsletter

Can Europe’s private jet maverick stay in flight?

What’s a fair reward for ordering a flashy private jet that might turn out to be a white elephant?

The question arises from Dan McCrum’s deep dive into the private airline VistaJet, its $4.4bn debt pile, and founder Thomas Flohr’s unusual relationship with Bombardier.

Flohr has spent 19 years building VistaJet into an exclusive club for the moneyed traveller. Hand over cash for one of its “Jet Cards” and you can be whisked across an ocean in a luxurious silver Global 7500, the world’s fastest business jet — VistaJet has 18 of them in its fleet of more than 300 aircraft.

His capital-intensive strategy contrasts with market leader NetJets, which sells fractional ownership where customers pay for the jets. Charter firms typically manage aircraft for the super-rich, or buy second-hand ones.

So far the bond market, leasing companies and lenders that include the Canadian government have been willing to support lossmaking VistaJet’s strategy, even after auditor EY warned in its opinion on the 2022 accounts that “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”. 

They also helped fund a payday for Flohr, who has a side gig as an aircraft trader. He personally ordered the very fast jets from Bombardier in 2015, in effect acting as a middleman between the aircraft manufacturer and VistaJet.

The group’s disclosures to bond investors indicate that for the 18 Global 7500s it paid approximately $1.1bn to Bombardier, and $224mn to Flohr, who owns 84 per cent of VistaJet.

Flohr told the FT that his stakeholders were happy with VistaJet’s financial performance, because the business was “transparent and predictable”, and that he ordered the aircraft at a time when VistaJet did not have the resources to do so.

He said he had never taken a salary or dividend, had reinvested every dollar of profit, and that “if the company bought an aeroplane from me, then they paid the market price for it . . . Whatever I have given the company or the company has given to me is never more than the difference between cost and market value.”

Big pharma’s pipeline gets clogged

News that the Federal Trade Commission was suing to block Amgen’s $28bn acquisition of Horizon Therapeutics has sent shockwaves throughout the corporate world.

As we explained yesterday, FTC head Lina Khan and antitrust tsar Jonathan Kanter have — by many measures — been tough on dealmaking, but their decision to target Amgen/Horizon was unexpected because they weren’t thought to have much of an overlap.

The move has left pharma bosses feeling like no one is immune. William Pao, Pfizer’s chief development officer, called it a “disaster” for the system of innovation that underpins the industry.

Pao, of course, has a horse in this race. There is speculation that Pfizer’s proposed $43bn purchase of Seagen could be the FTC’s next target, though Pao said he remained confident it would be approved.

Pharma executives are up in arms about the FTC’s decision to block Amgen’s acquisition of Horizon because it cuts at the heart of the business model pursued by large pharmaceutical groups: buy small or midsize biotech companies to replenish drug pipelines.

What the FTC is taking issue with here is something called pharmacy benefit managers, businesses that determine which drug prescriptions are eligible for health insurance reimbursements.

As Lex explains, drugmakers fight to get PBMs to put their drugs on these lists and the bigger you are the more power you have.

One person in the pharma industry who is siding with the FTC is Regeneron boss Leonard Schleifer. “I’m glad the FTC is looking at this,” he told the FT US pharma and biotech summit in New York. “In some respects, [it’s] the worst thing for our industry and we’ve got to shine a brighter light on it.”

But Schleifer may be enjoying some schadenfreude. Regeneron is in a long-running legal dispute with Amgen over “bundling” of treatments.

Adani prepares charm offensive 

Four turbulent months since a bruising short seller attack, how does Indian billionaire Gautam Adani show his relationship bankers his appreciation? With a trip to see his unfinished airport near India’s financial capital of Mumbai.

In fairness, that’s just one item on a three-day agenda, which also includes dinner with Adani Group leaders at a five-star hotel near the Mumbai international airport that Adani is already running and a trip to its remote logistics hub on the coast of Gujarat. The FT viewed an emailed invitation.

The trip will give Adani a chance to showcase his prized assets, while giving financiers face time with Adani’s top executives.

The previously fast-growing group has been known for hosting elaborate trips for investors and bondholders — a person close to the company said similar events have been held for the past four years, albeit virtually during the pandemic.

But this junket is the first since New York-based short seller Hindenburg Research released a scathing report on Adani, accusing the group of accounting fraud and stock price manipulation.

Adani denied the allegations, but the group’s combined market valuation is still about $100bn down since the January short seller attack.

While some analysts believe the report made it more difficult for the group to borrow and grow at its previous breakneck pace, Adani may be hoping this trip can help steel its lenders’ confidence.

Job moves

• BMG, the music label owned by Bertelsmann, has appointed as its next chief executive Thomas Coesfeld. He is in the seventh generation of the dynasty that founded the company, and will take over from Hartwig Masuch. Read more here.

• Euronext head Stéphane Boujnah has been reappointed for a further four years, making him the longest-serving big stock exchange chief in Europe. Read more here.

• Citigroup has hired Terhi Paloheimo as country head and head of corporate banking for Finland. Paloheimo previously held senior positions at SEB. She succeeds Karolina Burmeister, who recently assumed a new role as Citi’s head of Nordic commercial banking.

Smart reads 

Second Act Rajeev Misra, who retains a role at SoftBank, has agreed to provide nearly $500mn of debt to WeWork through his new venture, The Wall Street Journal reports.

Theatre of Dreams Manchester United’s Old Trafford stadium is in need of refurbishment after years of under-investment. This is an opportunity for investors, the FT reports.

Going Infinite In a recent interview from the Bahamas, Michael Lewis spoke up about his upcoming book on FTX’s Sam Bankman-Fried, The New York Times reports.

News round-up

Forbes takeover bid gives foreign funding cover (Axios)

Investors blast Software AG for not considering rival bids (Bloomberg)

Scottish Mortgage defends strategy after shares take beating (FT)

UBS details lower than expected $35bn gain from Credit Suisse rescue (FT)

Deal-hungry Big Pharma is watching Argenx closely (Bloomberg)