logo
LVMH-backed investor group takes 20% stake in private jet company FlexJet

LVMH-backed investor group takes 20% stake in private jet company FlexJet

CNBC4 days ago
An investment group led by LVMH's private equity arm is buying 20% of private jet company FlexJet, marking the latest push by the luxury industry to expand into travel.
L Catterton, the private equity firm backed French luxury giant LVMH, is leading an $800 million investment in FlexJet that will also include brand partnerships and collaborations. The investment group also includes affiliates of KSL Capital Partners and the J Safra Group. FlexJet will continue to be controlled by parent company Directional Aviation Capital.
The deal highlights the luxury industry's rapid expansion into the experience economy as wealthy consumers increase their spending on travel, dining and special events. LVMH acquired hospitality group Belmond in 2018 for $3.2 billion, and has been building out its Cheval Blanc and Bulgari hotel and resort brands.
Global sales of luxury goods declined 2% last year to 363 billion euros as demand from Gen Z and Chinese consumers fell, according to a report from Bain and Altagamma. Luxury hospitality, however, grew by 4%, while gourmet food and fine dining surged 8% and sales of yachts and private jets grew 13%.
For Cleveland-based FlexJet, the deal creates a relationship with the world's largest luxury giant and its portfolio of more than 75 coveted brands, from Louis Vuitton and Dior to Dom Perignon and Tiffany.
With the private-jet industry becoming increasingly competitive and dominated by industry leader NetJets, FlexJet aims to be more like an exclusive membership club, offering luxury experiences and bespoke services. FlexJet already has partnerships with Belmond, yacht maker Ferretti Group and Bentley Motors, collaborating on jet interiors and curated events.
The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them.
Subscribe here to get access today.
"We have been trying to move Flexjet into an experiential role," said Kenn Ricci, chairman of FlexJet and principal of Directional Aviation. "If you think about luxury travel and where it is today, I keep thinking about a FlexJet community. When you have an experience at a hotel, you get to have it for a week, and you get to know what that experience is. But when you fly on a jet, it happens four hours, five hours. So how do we create that FlexJet community?"
Ricci said most of the proceeds of the deal will go to expanding and improving FlexJet's infrastructure. That includes buying larger, long-range planes to fill rapidly growing demand for international travel. The company will also build up its infrastructure overseas, with added maintenance facilities and ground handling. And FlexJet will continue adding and training flight crew through its special cabin attendant academy. About 25% of the proceeds will be used to pay a special dividend to shareholders.
Ricci said FlexJet is projecting EBITDA of about $425 million this year, up from $398 million in 2024 and more than double the levels in 2020. The company offers fractional ownership and leasing options, as well as jet cards. Its fleet of 318 aircraft is expected to reach 340 by the end of 2025, and it has over 2,000 FlexJet members under the fractional and leasing program, according to the company.
Ricci said L Catterton approached FlexJet with the potential deal as the private equity firm seeks to stay ahead of the changing definitions of luxury among the wealthy.
"(L Catterton) presented us some ideas about where they see the future of luxury," Ricci said. "They basically see that the luxury of the future is time. And they see that in private travel, you can recoup time."
Ricci said the details of potential brand partnerships or collaborations have yet to be announced. But he cited as a model FlexJet's partnership with Belmond, which includes special deals and enhanced stays at the company's luxury hotels in Venice and Ravello, Italy; and Mallorca, Spain, as well as other locations.
He said the company's bespoke aircraft cabins, modeled after individually designed rooms at the best hotels, would also continue to be a competitive advantage.
"When faced with a behemoth like NetJets, we don't need to be the largest," he said. "We want to be the boutique."
L Catterton is 40% owned by LVMH and the family office of CEO Bernard Arnault. It manages $37 billion in equity capital across consumer brands including Birkenstock, Thorne and ETRO.
Scott Dahnke, global CEO of L Catterton, said in a statement FlexJet's history "is one of never settling in pursuit of thoughtful innovation to best fulfill the desires of the consumers within their unique and exciting marketplace."
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Could this California company challenge SpaceX's Falcon 9? What to know about Rocket Lab
Could this California company challenge SpaceX's Falcon 9? What to know about Rocket Lab

USA Today

time18 minutes ago

  • USA Today

Could this California company challenge SpaceX's Falcon 9? What to know about Rocket Lab

Rocket Lab has increasingly been in the news over mounting anticipation for the first launch of its upcoming Neutron rocket. Rocket Lab, a spaceflight company based in California, has spent years building up a reputation as a reliable launch service provider for small satellites. Now, though, the venture has its sights set on bigger targets: Procuring some of those lucrative government and commercial contracts that have long been the domain of Elon Musk's Texas-based SpaceX. Maybe you've heard about Rocket Lab's diminutive Electron launch vehicle, which the company bills as the second-most active rocket in the U.S. Or maybe you've heard about its next-generation Neutron spacecraft, which could soon be making its inaugural flight from Virginia. Whichever may be the case, here's everything to know for those interested in Rocket Lab and its future plans for spaceflight. What is Rocket Lab? Rocket Lab is a launch service provider and spaceflight company founded in 2006 and based in Long Beach, California. The company operates out of three launch pads at two launch sites, including one in New Zealand and two in Virginia at the Mid-Atlantic Regional Spaceport within NASA's Wallops Flight Facility. Rocket Lab Neutron launch date Rocket Lab has increasingly been in the news over mounting anticipation for the first launch of its upcoming Neutron rocket. The satellite launch vehicle is central to Rocket Lab's plans to shift from small satellite deployments to missions with heavier payloads. But when exactly the Neutron rocket could make its orbital debut has yet to be determined. Rocket Lab continues to work through a checklist of requirements before Neutron can get off the ground for its maiden flight. That includes integrating – or stacking – the rocket stages and getting its commercial launch license from the Federal Aviation Administration, according to the company's first-quarter earnings presentation provided to the USA TODAY Network. The good news? Construction on infrastructure at the launch pad is on schedule, according to the report. Earlier in July, Rocket Lab also announced that the company had awarded a contract to shipbuilder Bollinger Shipyards to support the build of a 400-foot ocean landing platform named "Return On Investment." But the challenge for Rocket Lab will be in transporting the components of the Neutron to the facility, according to the website TechCrunch. The vehicle must be shipped in segments to Rocket Lab's Launch Complex 3 in Virginia, where it will be fully mated as a rocket. Could Neutron challenge SpaceX, Falcon 9? Many space industry analysts have said that Neutron could emerge as a credible challenger to SpaceX's Falcon 9 in the medium-lift launch market. Rocket Lab is developing the Neutron rocket – which already has contracts with the Department of Defense – for commercial, civil and military space operations. That includes satellite constellation deployments, cargo resupply missions to the International Space Station and interplanetary missions. The arena is one that SpaceX, founded by billionaire Elon Musk in 2002, has dominated for years with its Falcon 9 rocket – one of the most active rockets in the world. The Falcon 9 is routinely the rocket of choice to launch NASA astronaut missions to the International Space Station and is the exclusive launch provider for Musk's Starlink satellite deliveries. At 141-feet-tall, Neutron is smaller in stature than SpaceX's two-stage, 230-foot Falcon 9. But like the Falcon 9, Neutron is designed to be reusable so that it can launch more frequently. Its design features an integrated system that brings Neutron's first stage and payload fairings back to Earth as a single stage. Capable of delivering about a 14-ton (more than 28,600 pounds) payload to low-Earth before landing, Neutron is powered by Rocket Lab's newly developed Archimedes engine. Rocket Lab's emergence also comes at a time of mounting public discord between Musk and President Donald Trump. What is Rocket Lab's Electron rocket? Rocket Lab has already spent years reliably launching its smaller Electron rocket to deliver small satellites and other payloads to orbit for civil and commercial contractors. At 59 feet tall, Electron is capable of carrying just 661 pounds of cargo to space, according to Rocket Lab. A version of the rocket is also tailored for Rocket Lab's hypersonic HASTE launches. One of the two launch complexes where Electron can launch is right next door to the Neutron's new launch complex. Since its first orbital launch in January 2018, the Electron has delivered more than 200 satellites to orbit and become one of the most frequently launched U.S. rockets, second only to the Falcon 9, according to Rocket Lab. In June alone, the Electron launched four times on both government and commercial missions, according to Rocket Lab. The most recent mission came June 28 when the Electron launched a single satellite to space for "a confidential commercial customer," Rocket Lab announced in a press release. The mission was the second of two launches from the same launch site in less than 48 hours, a new launch record for the company. Is Rocket Lab a good stock to buy? Whether to invest Unlike SpaceX, Rocket Lab is publicly traded. While Rocket Lab's stock is up 800% over the past year, according to Forbes, the company is not yet profitable. "A lot hinges on Rocket Lab's ability to evolve its revenue model and reach sustained profitability," Sasirekha Subramanian, an equity research content expert, wrote for Forbes. Eric Lagatta is the Space Connect reporter for the USA TODAY Network. Reach him at elagatta@

Africa's richest man retires as chairman of Dangote Cement
Africa's richest man retires as chairman of Dangote Cement

Business Insider

time19 minutes ago

  • Business Insider

Africa's richest man retires as chairman of Dangote Cement

Africa's richest man, Aliko Dangote, has stepped down as Chairman of the Board of Directors at Dangote Cement Plc. Aliko Dangote, Africa's richest man, has resigned as Chairman of Dangote Cement Plc, with Emmanuel Ikazoboh succeeding him. Ikazoboh has extensive experience spanning over 40 years in senior management roles across several African countries. Dangote Cement significantly contributed to Nigeria transitioning from a major global cement importer to Africa's largest exporter. Africa's richest man, Aliko Dangote, has stepped down as Chairman of the Board of Directors at Dangote Cement Plc, marking the end of an era at one of the continent's largest cement producers. In his place, Emmanuel Ikazoboh has been appointed as the new board chairman, according to Premium Times. Ikazoboh, who previously served as an independent non-executive director, brings more than four decades of senior management experience across Nigeria, Côte d'Ivoire, Cameroon, and South Africa. Further details about the leadership change and its implications for the company's strategy are expected in the coming days. In June, Mr. Dangote stepped down as Chairman of Dangote Sugar Refinery Plc, marking the end of two decades of leadership at one of Nigeria's most profitable food companies. The move, according to the company, was 'in line with the principles of good corporate governance and succession planning.' Dangote Cement has played a significant role in transforming Nigeria's economy. In June, Dangote noted that Nigeria, once the second-largest importer of cement globally, now exports more cement than any other African country, thanks to massive local investment in production capacity. Nigerian-based Dangote Cement remains Africa's largest cement producer, with a total installed capacity of 48.6 million metric tonnes per annum (Mt/a) across the continent. Of this, 32.3 Mt/a is located in Nigeria, while the remaining 16.3 Mt/a spans nine other African countries: Tanzania, South Africa, Ethiopia, Cameroon, Republic of Congo, Ghana, Senegal, Zambia, and Sierra Leone.

OpenAI chairman says training your own AI model is a 'good way to burn through millions'
OpenAI chairman says training your own AI model is a 'good way to burn through millions'

Business Insider

time19 minutes ago

  • Business Insider

OpenAI chairman says training your own AI model is a 'good way to burn through millions'

There's a scene in "The Dark Knight" where the Joker sets ablaze a massive pile of money. Deciding to develop your own frontier AI model today may be a similar exercise in burning cash — just ask OpenAI chairman Bret Taylor. Taylor, who has worked for three companies that have trained LLMs, including Google, Facebook, and OpenAI, called training new AI models a "good way to burn through millions of dollars." On a recent episode of the Minus One podcast, Taylor advised AI founders to build services and use-cases, but not new frontier models entirely. "Unless you work at OpenAI or Anthropic or Google or Meta, you're probably not building one of those," said Taylor, who also cofounded Sierra AI. "It requires so much capital that it will tend towards consolidation." That high bar of capital has stopped any "indie data center market" from forming, Taylor said, because it simply costs too much. Taylor advised that founders work with the AI juggernauts instead — which, it's worth noting, is something that AI giants like OpenAI, where he's chairman, would directly benefit from. OpenAI sells "tokens" to access its API, which developers can build into their applications and programs. While the American LLM market remains largely consolidated, international players have tested Taylor's theory. In January, DeepSeek released its R1 reasoning model and a corresponding chatbot. DeepSeek used fewer, less advanced chips to build its LLM, minimizing capital costs. The Chinese AI app shot to No. 1 on the App Store charts, surpassing ChatGPT and igniting a debate in tech and on Wall Street about whether tech giants were overspending on AI model development. In his podcast interview, Taylor laid out other paths that entrepreneurs could take in the AI market, rather than training a new model. One was the "AI tools market." "This is the proverbial pickaxes in the gold rush," Taylor said. "It's a dangerous space because I think there's a lot of things that are scratching an itch today that the foundation model providers might do tomorrow." Entrepreneurs could also try to build what Taylor called an "applied AI company." "What were SaaS applications in 2010 will be agent companies in 2030, in my opinion," Taylor said. Building a model from scratch, though, is a sure-fire way to "destroy your capital," Taylor said. He called handmade models "fast-depreciating assets," and not cheap ones either, costing the builder millions of dollars.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store