VistaJet founder and chairman Thomas Flohr spent a good part of this week countering reports that the private jet pre-paid aircraft charter subscription service provider is in any kind of financial difficulty. The denial came even as The Financial Times reported that the privately-held company’s auditor had issued a “going concern” warning, its debt doubled to $4.4 billion, cumulative net losses over the last four-year period were $436 million, and that cash on hand had dwindled to $134 million against $831 million in pre-paid flights.
A ”going concern” opinion is not necessarily a harbinger of bankruptcy, but it can adversely impact credit ratings and increase the cost of borrowing, according to a 2022 study in the Accounting Research Journal. VistaJet’s unsecured debt rating from Fitch earlier this year was “BB-,” defined as “debt instruments that are generally considered speculative in nature,” according to Investopedia. The new debt was assigned a recovery rating of RR3 by Fitch, meaning it has “characteristics consistent with securities historically recovering 51-70 percent of current principal and related interest.”
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