Global Airlines is grabbing plenty of attention of late, notably for its acquisition of a few A380s as part of plans to launch long-haul services. But behind the scenes the company has also been working to raise money for its operations. A review of a financial pitch deck from 2021 raises far more questions than it answers, especially around partnerships and basic math skills.
The company is the dream of James Asquith, famous mostly because he’s flown on planes a lot. But a large social media footprint does not translate into the business skills required to get an airline off the ground. And there are a few areas in which the business plan presented in an investor pitch deck simply do not add up.
A key claim made in the investor pitch is that the company will be able to acquire A380s for its fleet at pennies on the dollar. The low CapEx enables the company to “remove the 27% depreciation and 19% interest costs” from its budget.
Once acquired, the planes will undergo a full interior retrofit. Global Airlines expects to fly with five classes of service on board. On top of the traditional First, Business, Premium Economy, and Economy class cabins the company intends to add a new 15-seat “Gamer Class” option for passengers to play while in flight.
This full retrofit is expected to cost just under $4 million. That number is dramatically lower than typical industry costs for a full cabin retrofit with new seats. It is unclear how the company arrived at this number. Perhaps it is possible with used equipment, but that is counter to what the company is pitching.
The most impressive claim, however, comes as the company converts these aircraft from inexpensive acquisitions to top-dollar assets. An aircraft that cost just $8 million to acquire and retrofit is, by Global’s reasoning, fairly valued at $60 million in its balance sheet. The company offers zero justification for this appreciation in the value of the aircraft. It also appears to drop their value to just $15 million as the fleet grows to 90 frames. Again, no explanation is offered for this dramatic shift.
It does, however, claim to have backing for $50 million in loans, backed by three aircraft. There is no indication that the loan was ever drawn, mostly because until just a few weeks ago the company did not own three planes.
Operating Certificate Confusion
The very first page of Global’s pitch deck clearly states “Air Operating Certificate and License secured.” That is an impressive accomplishment for such a new company, operating without any owned aircraft at the time. That claim is repeated on the second page, adding in that slots to serve JFK were secured. Alas, none of that appears to be true.
On slide 28 of the deck the company states it is “negotiating our Air Operating License (AOC) through several companies…” The goal there is to save time in the process. But given the elapsed time since and still no indication of a valid UK AOC to carry passengers or cargo, the company appears to have missed that goal.
Moreover, launching a new AOC in the UK comes with certain additional post-Brexit challenges. These include access to international route authorities. Despite claiming it secured rights to fly to JFK, no airline could do that before the AOC is issued. Even once it is issued regulators on both sides of the Atlantic would have to approve its plans to operate internationally. While the US and UK have a treaty that generally makes such approvals an eventual sure-thing, it still takes time. And Global Airlines does not appear to have ever even applied on the US side. And it cannot until the AOC is issued (or very, very close).
Perhaps using leased aircraft, as suggested in the later pages of the pitch, could help. But Global is buying the planes cheap and retrofitting them cheap. Would it then sell or lease them to an AOC-holder to operate the services? That’s a lot of extra complexity that is likely to raise an eyebrow among regulators.
Like most influencer-based businesses, Global Airlines aims to deliver its product by having other people pay for it. Crew uniforms will be developed by “one of the world’s largest fashion brands…in a huge, free marketing collaboration.” The company specifically names Samsonite, Starbucks, Dolce & Gabanna, Zandra Rhodes, and Microsoft as potential collaborators. It name drops Chase, American Express, Flight Centre, Disney, Kiwi, Momondo, and easyJet on a page labeled “Industry Partnerships” despite not actually having yet established partnerships with any of them. And, in several cases, not intending to.
Some of the seats shown in the cabin interior pitches are real, though a relationship with Global Airlines is disavowed by the product manufacturers. Other seats shown are concepts almost certain to never take flight, and with no clear manufacturing partner even implied.
Recaro is listed as a likely supplier for the “Gamer Class” seats, with Global Airlines claiming to be in “advanced discussions” for that cabin. A Recaro spokesperson disagrees, noting “We are not in a business relationship with Global Airlines; they are using our brand name without our consent.”
The business class seat shown is a Collins Aerospace product (that is not certified to fly on the A380). That manufacturer, too, confirms it is not a supplier to Global Airlines.
Do & Co is listed as a catering partner, though it is misspelled as Do & Do. Indeed, the document is littered with typos, repetition, conflicting details, and incomplete thoughts.
It will paint planes for advertisers (“Free livery paid for more money saved,” whatever that means), leaning on plane spotters (apparently 120 million, worldwide??) to boost the branding.
It will create “pre-ticket sales frenzies that will create a global consumer buzz.”
Messed up math
What should Global Airlines be worth? The pitch deck is littered with charts showing hockey stick trajectories for nearly everything other than costs.
The company aims to sell “golden tickets” for $1 million at a $100 million valuation, giving the holder a 1% ownership stake and also free first class flights for life. That is not a sustainable business model, even if those passengers are tapped in to the social media world.
The pitched timeline shows a private offering at a $120 million valuation in January 2022. Just two months later Global projected a SPAC offering at a $500 million valuation. Much like the plans to invest $8 million in a plane and claim it to be worth $60 million, there’s no clear reasoning offered for this incredible and rapid jump in valuation, save for some oblique references to social media audience size – maybe 18 million, maybe 55 million, maybe 85 million – that will make the brand compelling.
The company predicts $7.6 billion in revenue for 2025 in one slide, operating 75 A380s. Another slide shows the same number of planes with revenue of just $5.4 billion. The P&L table predicts revenue of $9.3 billion when operating 65 A380s.
The company intended to “literally create the demand” by leaning into Asquith’s other recent endeavor, Holiday Swap. The deck shows a prediction of 10x increase in users to target over two years, topping 10 million in 2022. In early 2023 Holiday Swap issued a release noting it has just over 1 million users.
None of the numbers make any sense at all.
Oh, and once the company is established it intends to “place large and discount orders for aircraft at amazing low value deal Boeing/Airbus for a big order!” Putting aside the grammar challenges, there’s no way the company can reasonably get the A380s into service and build a successful operation on that structure, then immediately pivot to new planes. Nor is there a reason to believe Boeing and Airbus are going to cut an amazing deal for Global.
Or to believe any of this is really real.
Update: Director of Corporate Affairs Liam McKay now confirms that the “Gamer Class” product is no longer part of the company’s business plan. When pressed for additional details about the other issues with the pitch he declined to further comment on the 2021 document, noting instead “things, and the world, have moved on.”
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