10-Q: flyExclusive Reports Strong Revenue Growth, Reduced Losses

flyExclusive, Inc. announced significant revenue increases and a substantial reduction in net losses for the first half of 2025, driven by fractional ownership and new aircraft management services.

Summary

• Revenue for the six months ended June 30, 2025, increased by 12.9% to $179.5 million, up from $159.0 million in the prior year period.
• Net loss improved by 35.6% to $(39.2) million for the six months ended June 30, 2025, compared to $(60.8) million in the same period last year.
• Net loss attributable to flyExclusive, Inc. improved by 7.1% to $(10.2) million for the six months ended June 30, 2025, from $(11.0) million in the prior year.
• Operating loss significantly narrowed by 45.0% to $(27.1) million for the six months ended June 30, 2025, from $(49.3) million in the previous year.
• Net cash used in operating activities improved substantially to $(10.1) million for the six months ended June 30, 2025, compared to $(42.2) million in the prior year.
• The company continues its fleet modernization efforts through fiscal 2025, selling older aircraft and replacing them with newer, more efficient models.
• flyExclusive entered into an Aircraft Management Services Agreement with Volato Group, Inc. in September 2024, contributing $1.3 million in revenue for the first half of 2025.
• The company is engaged in ongoing settlement discussions regarding the Wheels Up Partners, LLC (WUP) litigation, with a counterclaim seeking damages in excess of $75 million.

Sentiment

Score: 7

Explanation: The company demonstrated strong revenue growth and significantly reduced its net and operating losses, alongside substantial improvements in operating cash flow and key operational metrics. Strategic initiatives like fleet modernization and the Volato agreement are progressing. However, the persistent working capital deficit, reliance on refinancing, and ongoing significant litigation with Wheels Up introduce notable financial and operational uncertainties, preventing a higher score.

Positives

• Total revenue increased by 12.9% to $179.5 million for the six months ended June 30, 2025, demonstrating strong top-line growth.
• Fractional ownership revenue more than doubled, increasing by 104.6% to $17.1 million, indicating successful program expansion.
• Maintenance, Repair, and Overhaul (MRO) revenue grew by 24.1% to $4.6 million, reflecting increased external service demand.
• Net loss significantly decreased by 35.6% to $(39.2) million, showing improved financial performance.
• Loss from operations improved by 45.0% to $(27.1) million, indicating better operational efficiency.
• Net cash used in operating activities improved by over 75% to $(10.1) million, a strong indicator of improving cash flow generation.
• Adjusted EBITDA improved from $(35.5) million to $(11.6) million, and Adjusted EBITDAR improved from $(25.3) million to $(1.3) million, reflecting better underlying operational profitability.
• Members contributing to revenues increased by 32.0% to 1,077, and active members increased by 36.1% to 984, indicating strong customer acquisition and engagement.
• Total flight hours increased by 9.7% to 35,947, and total hours per aircraft increased by 12.4% to 374.8, showing higher aircraft utilization.
• Members per aircraft increased by 28.9% to 12.5, suggesting improved customer-to-aircraft ratio management.
• Successfully obtained waiver letters for non-compliance with certain debt covenants as of December 31, 2024, with the aggregate outstanding debt for which waivers were received being $0 as of June 30, 2025.

Negatives

• The company continues to operate with a significant working capital deficit, which increased to $194.7 million as of June 30, 2025, from $150.8 million at December 31, 2024.
• Cash and cash equivalents decreased by $15.9 million, from $31.7 million at December 31, 2024, to $15.8 million at June 30, 2025.
• Net cash used in financing activities shifted from a positive $36.4 million in H1 2024 to a negative $87.7 million in H1 2025, primarily due to debt repayment.
• Interest income decreased by $1.5 million, or 61.5%, for the six months ended June 30, 2025, primarily due to a decrease in interest income on U.S. Treasury bills.
• The company incurred a loss on extinguishment of debt of $4.2 million for the six months ended June 30, 2025, related to the cancellation of the EGA Sponsor Note.
• The company has material weaknesses in its internal control over financial reporting, as previously reported in its Annual Report on Form 10-K for the year ended December 31, 2024.

Risks

• Economic downturns could decrease demand for private aviation services, impacting jet club growth, membership renewals, and fractional/partnership program interest.
• Intense competition from existing private aircraft operators, expanding private aircraft ownership, and luxury commercial airline services could adversely affect market share.
• Significant volatility in pilot attrition rates, potentially higher than the ability to hire and retain replacement pilots, could materially and adversely affect operations and financial results.
• The termination of the agreement with Wheels Up (WUP) continues to have a material impact on financial statements if lost revenue is not replaced.
• Uncertainty exists regarding the company's eligibility for the Employee Retention Credit (ERC), potentially requiring repayment of $9.0 million received.
• The company might need additional capital to fund growth plans, and sufficient capital may not be readily available on acceptable terms, or at all, which could negatively impact the business.
• The proposed merger with Jet.AI, Inc. is subject to risks related to timing, satisfaction of closing conditions (including Jet.AI's net cash condition), and relative ownership levels.
• Limited liquidity and trading of the company's securities, along with potential price volatility due to industry changes, operating performance, and regulatory shifts.
• Risks associated with the company's indebtedness and its potential impact on business and financial condition.
• Downturns in the aviation industry, including increases in fuel costs due to global political and economic issues, could adversely affect operations.
• A changing regulatory landscape in the highly competitive aviation industry poses ongoing challenges.
• Risks associated with the overall economy, including future increases in interest rates and the potential for recession.
• A maximum of approximately $7 million could be payable to existing Equityholders under the Tax Receivable Agreement if an Early Termination Event occurs.
• The company has future repurchase contingencies under leases totaling $59.7 million, with $2.4 million due in the remainder of 2025.

Future Outlook

The company expects revenue to increase over time due to fleet additions and forecasted membership growth. Fleet modernization efforts are anticipated to continue through fiscal 2025 without a material decline in revenue, as newer aircraft are expected to offer increased availability and operating efficiency. Management believes existing cash, operating cash flows, and available borrowings will be sufficient to fund operations and meet obligations for at least the next 12 months, with expectations to secure necessary refinancing.

Management Comments

• Our mission is to be the world's most vertically integrated private aviation company through capital-efficient program growth, an industry-leading pricing model, optimal dispatch availability, in-house training, and a controlled premium customer experience on modernized aircraft.
• We expect our revenue to increase over time as a result of adding aircraft to our fleet and forecasted membership growth.
• We expect the fleet modernization to continue through fiscal 2025 and do not anticipate a material decline to revenue as we will replace sold models with the newer aircraft which offer increased availability and operating efficiency.
• We believe that our existing cash on hand, cash generated from operations and available borrowings under our debt arrangement will enable us to secure refinancing as needed to meet our obligations as they become due within the next 12 months.
• Based on our historical experience and the fact that we have not suffered any decline in creditworthiness, we expect that our cash on hand and cash earnings will enable us to secure the necessary refinancing.
• We believe that we have meritorious arguments in our current litigation matters and that any outcome, either individually or in the aggregate, will not be material to our financial position or results of operations.

Industry Context

The private aviation industry remains competitive, with flyExclusive focusing on vertical integration and a diversified business model to navigate market environments. The company's fleet modernization aligns with broader industry trends to enhance customer experience and operational efficiency. The Volato Agreement suggests a trend towards strategic partnerships or potential consolidation within the private aviation sector, as companies seek to expand services and fleet utilization. Pilot availability and attrition continue to be an industry-wide challenge, impacting operational capacity.

Comparison to Industry Standards

• The filing does not provide specific global benchmarks or comparisons to other comparable companies, projects, or results within the industry.

Legal Proceedings

• Exclusive Jets, LLC terminated its Fleet Guaranteed Revenue Program Agreement with Wheels Up Partners, LLC (WUP) due to material breaches by WUP.
• WUP filed a lawsuit against flyExclusive, alleging wrongful termination and seeking unspecified compensatory damages and attorneys' fees.
• Exclusive filed a counterclaim against WUP for breach of contract, seeking damages in excess of $75 million.
• Settlement discussions between the parties are currently ongoing.
• The company is subject to other claims and contingent liabilities in the normal course of business, which are not expected to have a material effect on financial position or results of operations.

Related Party Transactions

• Purchased $706,000 in fuel from subsidiaries of LGM Ventures, LLC (LGMV), an entity owned by the majority owner, for the six months ended June 30, 2025.
• Incurred $2.067 million in rent expense to subsidiaries of LGMV for real property and equipment leases for the six months ended June 30, 2025.
• Outstanding accounts payable to related parties for fuel and lease purchases from LGMV were $(145,000) as of June 30, 2025.
• Recorded $7.294 million in charter flight revenue from owners of subsidiaries and Lessor VIEs at reduced rates for the six months ended June 30, 2025.
• Recorded $110,000 in charter flight revenue from other related parties for the six months ended June 30, 2025.
• Short-term accounts receivable from related parties totaled $1.225 million as of June 30, 2025.
• Related party receivables from LGMV were $318,000 as of June 30, 2025.
• Holds $3.7 million in notes receivable from a related party's purchase of 99% ownership of a consolidated subsidiary.
• Issued $15.871 million in senior secured notes to the Sponsor in December 2023, with a 14% interest rate and extended maturity to January 1, 2027.
• The EGA Sponsor Note with a principal amount of $3.947 million was cancelled on March 21, 2025, in exchange for Series B Preferred Stock and warrants.
• Entered into a Senior Secured Note agreement with ETG FE LLC (a related party of the Company through its affiliation with the EGA Sponsor) for up to $25.773 million.
• Issued Series A Preferred Stock to EnTrust Emerald (Cayman) LP (a related party of the Company through its affiliation with the EGA Sponsor).
• Issued Series B Convertible Preferred Stock to EnTrust Emerald (Cayman) LP and the EGA Sponsor (related parties).

Stakeholder Impact

• **Shareholders**: Experienced improved financial performance with reduced losses and revenue growth, but face potential dilution from future equity raises and ongoing litigation risks. The waiver of lock-up restrictions for EG Sponsor LLC shares could impact market dynamics.
• **Employees**: Benefit from the 401(k) plan with company matching and health/welfare benefits. Pilot availability and attrition remain a key operational factor.
• **Customers**: Benefit from the ongoing fleet modernization, offering access to newer and more efficient aircraft, and diversified service offerings through jet club, fractional, MRO, and aircraft management programs.
• **Creditors**: The company's ability to secure waivers for debt covenant non-compliance and its stated expectation to refinance debt are critical. The significant working capital deficit and reliance on future financing remain a point of attention.
• **Suppliers**: Fuel and maintenance suppliers, including related parties, continue to be integral to operations, with changes in fleet size and utilization impacting demand.

Next Steps

• Continue fleet modernization efforts through fiscal 2025.
• Engage in ongoing settlement discussions for the Wheels Up Partners, LLC litigation.
• Refinance contractual principal payments for short-term debt as they become due.
• Accrue a liability for the Tax Receivable Agreement if an Early Termination Event becomes probable.
• Declare and pay Series A Preferred Stock dividends: at least 43% in cash on the third Dividend Payment Date, and 100% in cash on subsequent Dividend Payment Dates.
• Declare and pay Series B Preferred Stock dividends: 50% cash for Q1 2025 (Feb-Mar), 50% cash for Q2 2025, 50% cash for Q3 2025 (July), 100% cash for Q3 2025 (Aug-Sep), and 100% cash thereafter.
• Await automatic conversion of Series B Preferred Stock by the earlier of December 31, 2025, or the closing of a Subsequent Capital Raise.
• Attempt to have Class A common stock listed on the Russell 2000 Index following the waiver of lock-up restrictions on EG Sponsor LLC shares and warrants.

Key Dates

Recommendation

While flyExclusive has demonstrated strong revenue growth and a significant reduction in net losses, indicating improving operational efficiency and market demand, several factors warrant a 'hold' recommendation. The company continues to operate with a substantial working capital deficit and relies on refinancing existing debt, which introduces liquidity risk. The ongoing litigation with Wheels Up, involving a significant counterclaim, presents an unresolved financial contingency. Although strategic initiatives like fleet modernization and the Volato agreement are positive, and the company has successfully secured waivers for past debt covenant breaches, the overall financial structure and outstanding legal matters suggest a cautious approach. Investors should monitor the resolution of the WUP litigation, the company's ability to maintain liquidity, and the execution of its growth strategies before considering a stronger position.

Keywords

Private Aviation, Jet Charter, Fractional Ownership, MRO, Aircraft Management, SEC Filing, 10-Q, Financial Results, Revenue Growth, Net Loss Reduction, Fleet Modernization, Working Capital, Debt, Warrants, Volato Agreement, Wheels Up Litigation, FLYX