LVMH-backed L Catterton takes 20% Flexjet stake

An investment group led by LVMH’s private equity arm is buying 20% of personal jet company Flexjet, marking the newest push by the posh industry to expand into travel.

L Catterton, the private equity firm backed by French luxury giant LVMH, is leading an $800 million investment in Flexjet that will even include brand partnerships and collaborations. The investment group also includes affiliates of KSL Capital Partners and the J. Safra Group. Flexjet will proceed to be controlled by parent company Directional Aviation Capital.

The deal highlights the posh 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 constructing out its Cheval Blanc and Bulgari hotel and resort brands.

Global sales of luxury goods declined 2% last yr to 363 billion euros ($424 billion) as demand from Gen Z and Chinese consumers fell, in response to a report from Bain and Altagamma. Luxury hospitality, nonetheless, grew by 4%, while gourmet food and tremendous dining surged 8% and sales of yachts and personal jets increased 13%.

For Cleveland-based Flexjet, the deal creates a relationship with the world’s largest luxury giant and its portfolio of greater 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 goals 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.

“Now we have been attempting to move Flexjet into an experiential role,” said Kenn Ricci, chairman of Flexjet and principal of Directional Aviation. “Should you take into consideration luxury travel and where it’s today, I keep occupied with a Flexjet community. When you will have an experience at a hotel, you get to have it for per week, and also you get to know what that have is. But if you fly on a jet, it happens 4 hours, five hours. So how can we create that Flexjet community?”

Ricci said many of the proceeds of the deal will go to expanding and improving Flexjet’s infrastructure. That features buying larger, long-range planes to fill rapidly growing demand for international travel. The corporate will even construct up its infrastructure overseas, with added maintenance facilities and ground handling. And Flexjet will proceed adding and training flight crews through its special cabin attendant academy. About 25% of the proceeds will probably be used to pay a special dividend to shareholders.

Ricci said Flexjet is projecting earnings before interest, taxes, depreciation and amortization of about $425 million this yr, up from $398 million in 2024 and greater than double the degrees in 2020. The corporate offers fractional ownership and leasing options, in addition to jet cards. Its fleet of 318 aircraft is anticipated to succeed in 340 by the tip of 2025, and it has greater than 2,000 Flexjet members under the fractional and leasing program, in response to the corporate.

Ricci said L Catterton approached Flexjet with the potential deal because the private equity firm seeks to remain ahead of the changing definitions of luxury among the many wealthy.

“(L Catterton) presented us some ideas about where they see the long run of luxury,” Ricci said. “They mainly see that the posh of the long run is time. They usually see that in private travel, you may recoup time.”

Ricci said the small print of potential brand partnerships or collaborations have yet to be announced. But he cited as a model Flexjet’s partnership with Belmond, which incorporates special deals and enhanced stays at the corporate’s luxury hotels in Venice and Ravello, Italy; and Mallorca, Spain, in addition to other locations.

He said the corporate’s bespoke aircraft cabins, modeled after individually designed rooms at the perfect hotels, would also proceed to be a competitive advantage.

“When faced with a behemoth like NetJets, we do not should be the most important,” he said. “We would like 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 press release that Flexjet’s history “is certainly one of never settling in pursuit of thoughtful innovation to best fulfill the desires of the consumers inside their unique and exciting marketplace.”