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Bangalore: XOJet, a private aviation company backed by buyout firm TPG, said it has arranged $2.5 billion of financing to expand its fleet and better compete with rivals such as NetJets, owned by Warren Buffett's Berkshire Hathaway.
The company yesterday said the funds will come largely from investors in the Middle East, a region it expects will be a big driver of future growth.
XOJet's funding package comes just two years since the company started, and at a time when tight credit markets worldwide make it difficult for even many established companies to raise money.
San Carlos, California-based XOJet said it is teaming up with Tasameem, an Abu Dhabi Investment Authority real estate arm, to expand internationally. It said $85 million of the new funding will be an equity investment from TPG, Tasameem and XOJet management, with the rest coming from loans.
"For the first time, our aircraft are fully funded," XOJet's chief executive Paul Touw said in a telephone interview. "We now have an enormous balance sheet from which to grow the company."
XOJet said it expects to receive about $900 million in financing immediately. This includes $500 million from Abu Dhabi, and $400 million from Export Development Canada to fund the purchase of Challenger jets made by Bombardier.
International operations
The company expects Middle East investors to lend $1.5 billion later this year, and expects to launch an Abu Dhabi base for international operations by year-end. Touw declined to identify the investors.
XOJet said it has a fleet of 20 Cessna Citation X planes, is adding one or two planes a month, and expects to add 107 planes by 2012. It also said it conducts about 1,000 flights per month. NetJets, in contrast, has more than 750 planes and in excess of 1,000 flights per day, according to its website.
Touw said about 90 per cent of XOJet's 550 regular customers are in the US but that non-US customers may account for half of fliers within three years.
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