Private jet CEO reveals why his company acquired a competitor after taking $20 million PPP funds and furloughing employees at the start of the pandemic
- Private jet management firm Jet Linx decided to expand during the pandemic even though its business hasn't returned to normal and the future of
- The firm has received scrutiny for receiving federal
Paycheck Protection Programrelief funds despite having a wealthy clientele and is expecting more with its latest acquisition.
- CEO Jamie Walker told Business Insider why he would have moved forward with the deal whether or not his firm received the relief funds.
Omaha, Nebraska-based private jet firm Jet Linx just made a major acquisition of a competitor on Tuesday that will see 23 aircraft added to its fleet of managed aircraft available for private charter.
The deal establishes Jet Linx as the second-largest jet management company in the US and largest in the all-important New York tri-state area market, home to some of the busiest executive airports in the US.
Although his company hadn't fully recovered from the effects of the pandemic, Jet Linx CEO Jamie Walker decided to "charge ahead" with expansion by purchasing Teterboro, New Jersey-based competitor Meridian after his gamble in the last recession ended up paying off.
But while the acquisition is supposed to be a big win for Jet Linx and business aviation, the company now has to deal with a perception problem stemming from Paycheck Protection Program funds received in April.
Jet Linx had furloughed around 30% of its staff in March as business cratered and traffic had dried up by nearly 90%. Like most businesses, excess staff had nothing to do as potential customers were quarantining.
With the pandemic in full swing and the future of his business uncertain, Walker began to strategize how his firm would navigate the crisis.
"We immediately just started to use our time to think about how to strategically climb out of the pandemic," Walker told Business Insider in an interview.
Then, Congress passed the CARES Act and millions in federal relief funds became and Jet Linx received $20 million in funds after applying. The firm was able to prevent further furloughs but there was an unforeseen string attached the funds in the form of public scrutiny due to the nature of the firm's business.
"I know that when people hear the terminology 'private jet' they think that it's not for the public," Walker said. "We're an essential service for the public, just like the airlines are."
Walker's definition of essential, however, proved to be different from the media's with outlets like ProPublica calling out Jet Linx, which said the firm "caters to well-to-do CEOs and executives." The fact that some Jet Linx executives had donated to the Trump campaign and Republican Party made matters even worse, as ProPublica also reported that nearly $70,000 was donated by a company vice chairman to various GOP campaigns and committees.
Despite the optics, Walker asserted that the funds were specifically used to prevent furloughs and layoffs among his staff and not the wealthy aircraft owners who entrust Jet Linx to manage their million-dollar aerial assets.
"If it were not for those, those funds being received, I can very matter of factly say that we would have furloughed a large, large portion of our organization as we waited for the economy to recover," Walker said.
Not expanding was never an option for Walker as a 2009 decision to open a Dallas base and private terminal largely shaped his thinking on how to handle an economic recession. With the confidence that travel would eventually recover, the CEO said his company would have pursued expansion regardless of whether his firm had received relief funds but that he would have had to furlough in the short-term.
"If we had not received CARES Act money and the government didn't provide that stimulus, we would have furloughed but we would have still done this," Walker said, referring to Jet Linx's acquisition of Meridian. "We would not have pulled back. We would've charged ahead."
Walker also lamented the politicization of the issue, especially after having to make the tough decision to furlough workers who, he said, "by nothing that they did to disrupt our business, would be the casualties of this pandemic."
"I think it's unfortunate that people confuse the purpose of those steps that were taken by the government," Walker said. "We're very thankful for what was done by the government and we're living proof that we've kept people employed."
The new deal is still a gamble for Walker, who said that his business has not yet returned to 2019 levels and possibly won't until mid-2021. The CEO is now looking to September when leisure travel will likely drop off and the company will need to see an increase in business travel in order to prevent a long, hard winter.
Read about Business Insider's full interview with Walker on the deal here.
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