Rating Action Commentary
ֳ Affirms Vista Global at 'B+'; Outlook Stable
Tue 18 Mar, 2025 - 1:47 PM ET
ֳ - London - 18 Mar 2025: ֳ has affirmed Vista Global Holding Limited's (Vista) Long-Term Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. We have also affirmed the senior unsecured ratings on the bonds issued by VistaJet Malta Finance P.L.C. and Vista Management Holding Inc. at 'BB-' with a Recovery Rating of 'RR3'. The notes are guaranteed by Vista and key operating companies Vista (US) Group Holdings Limited and VistaJet Group Holding Limited.
The IDR reflects Vista's global market position in a fragmented market, diversification and growing share of contracted revenue, but also niche operations, concentrated ownership with key man risk and volatility in on-demand services.
Vista recently announced a USD600 million equity-like injection, pro forma for which we deem the company to be better positioned for a 'B+' rating, and expect EBITDAR leverage to decline from about 5.9x in 2024 to around 5x in 2025 (negative sensitivity 5.5x). This supports the Stable Outlook.
Key Rating Drivers
High Leverage to Decrease: We estimate Vista's EBITDAR leverage at 5.9x in 2024, down from 6.4x in 2023. This is above our negative rating sensitivity of 5.5x, but the USD600 million equity-like transaction will support deleveraging in 2025. Considering our expectations of a moderate operational and profitability growth and some normalisation of working-capital movements, we forecast EBITDAR leverage to decline to 4.9x in 2025.
Equity-like Funding Improves Financial Structure: Vista aims to prepay close to USD900 million of debt (including about USD300 million of lease liabilities) with the proceeds of the USD600 million equity-like funding and the upcoming new debt issuance. In addition to reducing leverage, these transactions will improve the debt maturity profile, benefit liquidity, increase the unencumbered fleet, as well as increase the EBITDA margin from a reduction in lease payments, as part of the lease debt will be repaid from equity proceeds.
Cash Generation Moderately Positive: We estimate the company remained free cash flow (FCF) negative in 2024, albeit with a much lower outflow than in 2023. Negative FCF was mostly driven by higher-than-expected capex as well as a material working-capital outflow. We expect EBITDAR growth and working capital normalisation to lead to consistently positive FCFs (before lease debt repayment above P&L lease expense), supporting leverage consistent with the rating. We do not forecast material external growth in our rating case.
Stable Profitability: We estimate Vista's ֳ-defined EBITDAR at about USD760 million in 2024 (USD704 million in 2023) with a margin of around 28%, which we forecast at about 28.5% in 2025-2028. We expect EBITDAR growth in 2024 to derive from a moderate revenue increase, somewhat offset by a rise in semi-variable costs, partially due to higher salaries and training expenses. We forecast EBITDAR growth of about USD40 million in 2025, driven by higher aircraft utilisation following the disposal of less profitable aircraft and an increase in 'Program' live hours.
Increasing Revenue and Profit Visibility: We estimate the share of contracted 'Program' revenues to gradually rise to around 60% in 2028 from 47% in 2023, consistent with the company's strategy. Under the 'Program', customers underwrite use-it-or-lose-it three-year (on average) contracts, providing more visibility of the company's results. We anticipate gradually increasing EBITDAR to around USD900 million in 2028 as a result of this strategy.
Solid Competitive Performance: In 2024 Vista outperformed the market in flight hours growth, with an increase of about 5%, compared with a 1% decrease for the global market, driven primarily by the growth in 'Program' live hours. This was partially offset by lower On Demand hours due to divestment of the inefficient Citation fleet. Market flight activity in most regions weakened, but Vista's global coverage provided some resilience relative to its peers and the company recorded growth in on-fleet flight hours in most regions of its operations.
Highly Fragmented Sector: The global private aviation market is highly fragmented and Vista's market share is about 5%, despite being one of the leading operators. The market structure provides growth opportunities for the best performers, but there are strong competitive pressures. We note that Vista has historically expanded more quickly than providers proposing fractional or full ownership aviation services to customers.
Full Spectrum of Asset-light Services: Vista's business profile benefits from its full spectrum of asset-light services as an alternative to aircraft ownership for customers. It offers different size and range of aircraft types, various membership benefits and a global footprint, especially after the acquisitions of the last years. Our forecasts do not assume further M&A and further debt-funded M&A could put pressure on the rating.
Peer Analysis
In ֳ's view, Vista operates a niche product, which differentiates the company from airlines in its business model and cost structure. More broadly, Vista's large share of revenue under fixed contracts, with a customer base that is more resilient than the general public to economic cycles and a floating fleet (aircraft not anchored to certain airports) are key differentiating factors from commercial airlines. This all supports the company's higher debt capacity than some second-tier commercial airlines at a given rating.
Within the private aviation sector, compared with providers with fractional or full asset ownership, Vista offers lower all-in costs and higher flexibility as well as no asset residual risk to customers.
Key Assumptions
- Average number of aircraft in service at 210 aircraft in 2025, increasing to 225 in 2028
- Average fleet yield to slightly increase in 2025-2028
- Aircraft utilisation to grow gradually during 2025-2028
- Share of 'Program' live hours in total live hours to increase from 50% in 2024 to 61% in 2025-2028
- All cost factors to grow in line with their nature (fixed versus variable) to 2028
- Average EBITDAR at USD846 million in 2025-2028
- Average capex at USD280 million on annual basis in 2025-2028
- Average interest costs (excluding leases) at USD232 million in 2025-2028
- Total working capital outflow at USD115 million in 2025-2028
- No dividend pay-out during 2025-2028, post the USD600 million equity-like funding
Recovery Analysis
The recovery analysis assumes that Vista would be recognised as a going concern in bankruptcy rather than liquidated. We have assumed a 10% administrative claim.
Going-concern EBITDA of USD590 million assumes a significant downturn in the private-aviation industry where Vista's utilisation by aircraft remains subdued, and is 9% lower than the average of our 2024 and 2025 EBITDA forecast.
ֳ applies a distressed enterprise value/EBITDA multiple of 5x to calculate a going-concern enterprise value, reflecting Vista's leading niche market position, high customer retention rate of around 90% and a large proportion of contracted revenue, albeit partially limited by its moderate scale.
The waterfall analysis output percentage for senior unsecured debt on current metrics and assumptions is commensurate with 'RR3'.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
- EBITDAR leverage above 5.5x by end-2025
- EBITDAR fixed-charge coverage below 2.0x
- Reduction in contracted revenue to below 30% of total revenue, resulting in weaker cash flow visibility
- The notes' rating could be downgraded if our expectation for recovery rates falls below 51%
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
- EBITDAR leverage lower than 4.5x
- EBITDAR fixed-charge coverage above 2.5x
- Increase in the share of contracted revenue ('Program' revenue) and maintenance of high member retention rates
Liquidity and Debt Structure
At end-2024, Vista had short-term financial debt obligations of around 2x its cash balance, excluding lease payments. In 2025, we expect the company to generate more than USD100 million of FCF (after lease expense), which together with the initial readily available cash that we estimate at USD130 million, USD600million equity-like proceeds and planned debt issuance, would be sufficient for scheduled debt repayment and leave the USD265 million committed RCF available and undrawn. In addition to debt maturities, Vista also has about USD65 million of deferred consideration payable in 2025 for past acquisitions.
Vista had a sizeable working-capital outflow in 9M24, while for the full year 2024 we estimate another material outflow of about USD100 million. We have conservatively forecast working-capital outflows, at a lower level than in 2024, and there could be upside from prepayments on incremental 'Program' live hours.
Issuer Profile
Vista is a global provider of private aviation services through its market-leading asset-light and technology-driven platform. As of end-2024, it operated a fleet of 214 aircraft.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
to access ֳ's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. ֳ's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
Vista Global Holding Limited has an ESG Relevance Score of '4' for Governance Structure due to concentrated ownership, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ֳ's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on ֳ's ESG Relevance Scores, visit /topics/esg/products#esg-relevance-scores.
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PARTICIPATION STATUS
The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.
APPLICABLE CRITERIA
APPLICABLE MODELS
Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).
- Corporate Monitoring & Forecasting Model (COMFORT Model), v8.1.0 (1)
ADDITIONAL DISCLOSURES
ENDORSEMENT STATUS
| Vista Global Holding Limited | UK Issued, EU Endorsed |
| Vista Management Holding Inc. | UK Issued, EU Endorsed |
| VistaJet Malta Finance P.L.C. | UK Issued, EU Endorsed |