Four years ago, Steven Hankin, an executive at a Starwood Hotels division, joined Sentient Jet, an independent jet card and charter brokerage firm that was growing rapidly into a national brand. Sentient didn’t operate aircraft itself but created demand for lift by brokering charters and selling hours in business jets in the rapidly growing jet card marketplace.
The demand for lift that Sentient created attracted the attention of JetDirect Aviation, a growing force in the charter business. Last year, JetDirect bought Sentient Jet in an attempt to match the demand generated by Hankin’s company with the supply available from JetDirect’s fleet of managed airplanes. The newly merged company was named Sentient Jet Holdings, and late last year Hankin became CEO of the combined companies.
Although merging the two companies’ operations made sense on paper, the execution proved challenging. In July, Sentient Jet Holdings revealed that it was having cash-flow problems, which it attributed in part to the complexity of merging the two companies’ operations. Hankin stepped aside and Gregory Campbell, former CEO of Jet Direct and former CEO of the merged companies, took the position.
A New Owner for Sentient
The cash-flow problems continued, blamed in part on the difficulty of merging the disparate accounting systems from all the acquired companies in the Sentient fold. In late August Sentient and JetDirect were again separated. First, a new company called JetDirect Holdings was formed. That company sold the former Sentient jet card and charter brokerage businesses to Australia’s Macquarie Global Opportunities Partners. JetDirect Aviation Holdings retained the charter/management and aircraft maintenance and airport services businesses that used to be part of the Jet-Direct portfolio.
In essence, the two companies, in joining together, bet that the charter industry would continue to grow rapidly and they would be able to fulfill each other’s needs efficiently, but the downturn in the economy has cut charter flying substantially, and one of the results is the cash-flow problems and the eventual separation of the two companies.
Hankin is now back at the helm as CEO of the new Sentient Flight Group, which consists of Sentient Jet Membership (jet cards), Sentient Jet Charter (charter brokerage) and AvBuy, a discount fuel-buying network for companies that work with Sentient. “I’m excited,” Hankin told AIN. “I love building businesses, I love building the team we have, and I’m excited to be here and have a team that is focused, committed and passionate about what we’re doing.”
The sale to Macquarie Global Opportunities Partners was expected to help JetDirect meet its financial obligations to vendors. From the standpoint of the new Sentient, Hankin said, by early last month the company had “largely completed the logistics of catching up on the payments we owed, and we expect to have that completed relatively soon. We’re confident of the businesses in the Sentient brand now. Our goal is to have a good financial partner, make the payments we needed to make and get back to normal operations.”
As to why the combination of Sentient and JetDirect failed to yield the expected synergistic benefits of aggregating the demand and supply sides of the charter business, Hankin said, “It was a very difficult thing to do. There were different perspectives on the direction to go, and those forces were always powerful.”
Hankin still believes that despite the complexity of the formerly combined Sentient/JetDirect, “the destination was an appealing and attractive value proposition.” But it was decided that the best way to move forward was to separate the two companies again. “For a variety of reasons,” he said, “some we’ll never know, this was viewed as the right answer.”
Hankin appreciates the financial backing of Macquarie Global Opportunities Partners. “I’ve worked closely with them a long time,” he said. “They’re good people, fair and have a lot of experience around the world. They know the aviation business and have proved to be great partners. I couldn’t be happier about our financial partners. The company’s value proposition is quite clear now.”