00:55:51 · David Senra, Kenn Ricci
[00:55:51] S0: Why did they want to get rid of it? [00:55:52] S1: Well, because again, they're in the manufacturing business. To be honest with you, they were financially struggling after the crisis. So picking up, I paid 180,000,000 for Flexjet. Picking that up was 180,000,000 they probably needed at the time. With the $180,000,000 came an order to buy 20 more aircraft. By the way, with the deal, they made me expand the order to have Globals, which I had no idea how I was gonna pay for. I had to buy 15 Globals and they were $40,000,000 a piece. And I did not have that $100,000,000 So where'd you come [00:56:21] S0: up with that 600,000,000
00:56:21 · Kenn Ricci
[00:56:21] S1: That's again, life is, life is funny. So we signed the deal. We're gonna buy Flexjet. Sign the deal, not knowing how you're gonna pay for the globals. Well, knew how to pay the 180. No. Like I did not know I was gonna pay for the global. I did not know how to do. So with the buying of 180,000,000, I placed a billion dollar order for Challenger 300s and Globals. And actually some Learjets, which they owned at the time too. So I placed the order, fingers crossed that we'll ever be able, we'll figure out how to pay for those airplanes later. I gotta get Flexjet in here. They call me up. We're going to close like in October. They call me up in September and I get the, by the way, I need to come see you. And I'm like, I'm toasted. I'm fucked on this deal because they're coming to tell me NetJets has beaten my offer. Because there's only three companies left at the time. There's Flexjet, Flight Options, and NetJets. These are the, or the citation shares too. But there's three big companies and that number two and number three are about to merge. And I figure Warren Buffett isn't gonna let this happen. He's gonna, he's in there. He's coming in to So up, take my I know they're coming to tell me. And they sure enough, they sit down and they go, we have a problem with NetJets. And I'm like, oh no. They had globals there also. And they were not, and Bombardier claims they were not aware that in the contract when they sold the globals to NetJets, it prohibited them selling them to me. So the message they had to convey was, We can't sell you the globals.
00:57:46 · David Senra, Kenn Ricci
[00:57:46] S0: That's not [00:57:47] S1: a bad... Woah, 600,000,000 I didn't have to worry about. And of course I went, Oh, suck. Are you kidding me? This destroys everything I needed a vision of. And now fast forward, right? Two years later, we do the Gulfstream. And part of that deal, we get exclusivity. So now we're the only people that can operate Gulfstreams. [00:58:08] S0: Oh, didn't know this. Wait, Flexjet's had... So NetJets uses global to this day? [00:58:12] S1: Well, what would have happened if they didn't pull that card on me, I would have had to be committed in each category, light jet, mid jet, and heavy jet to buy them the Bombardier product. That was the deal. They didn't want to lose their distribution channel, but they took heavy off the plane, off the tarmac. They took that away because they couldn't sell me the globals. That opened me the opportunity to go ahead and buy the Gulfstreams, which I did in 2017. [00:58:35] S0: Awesome. [00:58:36] S1: And now we still buy them today. I mean, we're the largest Gulfstream operator in the world. We have 85 of them. Wow. Yeah. We have more than the U. Government. That's a great start. So now I own Flexjet. [00:58:46] S0: Yeah. And then why do you [00:58:46] S1: decide, okay, I'm gonna use that name instead of? Well, because Flight Options were for shit. Okay. Flexjet is a better name. It had a bad reputation. It wasn't paying its bills. Bought the... Flight Options because... [00:58:56] S0: Yeah. Because they had fucked it up. Yeah. They, the, the, the, they had
00:58:56 · David Senra, Kenn Ricci
[00:58:56] S0: Yeah. Because they had fucked it up. Yeah. They, the, the, the, they had [00:58:59] S1: lost half their customer base because they gave shitty service. The planes lost capital. They never invested in the plane. So the seats were torn. I mean, it just, the name had a bad reputation and they were unionized. Yeah. And so this bad union reputation and so Flexjet was the much better way to go forward. [00:59:14] S0: Okay, what year do you, are you buying for 2014. 2014. [00:59:17] S1: Yeah, okay. Okay. It takes me the next four years to integrate the two companies, including getting rid of the union. Why four years? Well, culturally, the companies were different. Exactly the same size about, like 300 pilots each, 600 pilots total between the two customers. Remember, you got the shitty hawkers over at Flexjet and you have the nice challengers at Flexjet. I mean, the shitty fight options and the challengers at Flexjet. And the Flexjet customer doesn't want to be on the shitty hawker. So the integration of trying to get the systems, the economics of putting the systems together weren't that easy. [00:59:51] S0: It was a lot harder than you expected. [00:59:52] S1: Yeah. A lot harder. Culturally, Flexjet was like, we hate the union and everybody identified themselves. Well, I'm I'm a flight options pilot. I'm a Flexjet pilot. Just think about how do how do you get uniforms to 600 pilots? [01:00:04] S0: Yeah.
01:00:04 · David Senra, Kenn Ricci
[01:00:04] S0: Yeah. [01:00:04] S1: Right? What do you have to pick? Uniform crossover day. Like, so for a while, you got two different colored pilots flying. You got the blue pilots and the brown pilots. I mean, it just was it just was very complicated, But [01:00:16] S0: even though you're going through this difficult four year period, and this makes more sense now, I've got, like, the whole history of why you hate mergers and acquisitions, and you have a couple experiences that are bad. [01:00:25] S1: Yeah. I have one. [01:00:26] S0: Are still really... You you strike me as a a supremely optimistic guy. You're just like, yeah, I'm gonna sell this contract. I'll figure out where the 600,000,000 is coming later. [01:00:33] S1: Right? Yeah. [01:00:34] S0: Do you still have a lot of faith in the fractional ownership business? Absolutely. So you're like, do you know this is what you're gonna do for, this is like your life's work. [01:00:40] S1: Yeah, not for this program. But if I showed you the economics of how a charter operator works, how a management company works and how a fractional company works and showed you top line, bottom line and margin. It's the only operationally dynamic model. It's the best model. Rich Santulli, he invented this model and it was brilliant. [01:00:59] S0: Okay. So the four year period, now we're in 2018. [01:01:02] S1: Yeah. [01:01:02] S0: Now you're on the Flexjet. You have the uniformed pilots. [01:01:05] S1: The union's gone. The union's gone. [01:01:06] S0: The time we've ever...
01:01:06 · David Senra, Kenn Ricci
[01:01:06] S0: The time we've ever... [01:01:07] S1: Only time a union's ever voted to to for self representation in the history of pilots. Oh, wow. Okay. Only time? [01:01:14] S0: Yep. Now you have the planes that you want. Yep. The kind of planes that you want. Yep. Okay. The state of the business there though, I feel from, let's say, let's say that's eight years ago. Yeah. Has the business like doubled in size? Well... Quadrupled. [01:01:27] S1: Quadrupled. Quadrupled. Okay. [01:01:29] S0: It's a private company where I'm gonna get into the fact that you almost like, took it public and... Yeah. Fuck [01:01:34] S1: shoot me, but [01:01:34] S0: go on. Yeah. And you paid, like, I think $60,000,000 to [01:01:37] S1: get out of it. Yeah. It's a $30,000,000 mistake. [01:01:40] S0: Well, first of all, why why is it so important to you? Because I'm obsessed with, like, family owned businesses, private companies. Like, it's just like, to me, like, the ideal situation, you know, I have a bunch of friends that are public company CEOs. Yeah. And they all secretly hate it, by the way. But like, why was it so important to like, in addition to... Let's take away like the reporting and how difficult it is running a public company, but like, why did you wanna keep your company private?