Top 3 SPAC Targets – Post-Pandemic Travel


Top 3 SPAC Targets – Post-Pandemic Travel

SPACInsider contributors Anthony Sozzi and Sam Beattie this week compiled their three favorite potential SPAC targets among companies in the sphere of travel. We look at why they are compelling and why each could be a fit for a blank-check merger.

Friday, June 11 probably didn’t feel much different to most people, but it marked a significant milestone in the normalization of the world as we know it post-COVID-19. It marked the first time that more than 2 million travelers were logged as passing through airport security by the Transportation Security Administration (TSA) since March 7, 2020, which was, you know, right about the time the world seemed to be falling apart.

Although this throughput was still 25% lower than the 2,727,860 people that went through airport security on same day in 2019, it was a nearly a four-fold increase over the traveler volume from June 11, 2020. As such, travel is back, but it may not be too late for SPAC teams to get travel companies impacted by the long lull of the pandemic at a bargain.


While many of us plebs will still be taking off our shoes and belts in lines, a big part of the reopening will be in elite and business travelers on private planes.

Flexjet touches upon all angles of the private jet picture, selling fractional shares of aircraft as well as operating as an app-based travel-booking service for private trips, whether business or pleasure. Luxury travel as a market is expected to expand at a CAGR of 11.1% over the next six years to about $1.2 trillion in 2027.

But, much like mainstream commercial travel, bookings in luxury travel fell to about 10% of their average value in 2020, owing to lockdowns and uncertainty. And, where there is stress in the market, there are bargains to be had.

SPACs have already dabbled in this space with Aspirational Consumer Lifestyle (NYSE:ASPL) announcing a deal to combine with Flexjet peer Wheels Up in February. But, while Wheels Up primarily hosts a marketplace for private flights, Flexjet is more deeply involved in the ownership picture for the planes themselves.

In addition to providing membership options for access to flights, Flexjet manages corporate fleets with assets that are leased, sold or owned by a number of different parties. Although technology is changing rapidly in the aviation space and nimble electric planes (eVTOLs) may be the future, marketplaces like Flexjet could stand to be beneficiaries, whichever way the airplanes fly.

Flight bookers don’t need any specific eVTOL-maker to succeed, just one of them in order to benefit. Perhaps as a reflection of this, urban air mobility operator Blade (NASDAQ:BLDE) has traded well following its de-SPAC earlier this year and closed yesterday at $11.47, while SPACs that have announced transactions with eVTOL manufacturers – QELL, ACIC, RTP and BSN – all ended the day at $10 even, or below.

Flexjet also has SPAC networking connections as a portfolio company of Directional Aviation Capital, which acquired it at a $195 million valuation in 2013, according to PitchBook. Zanite Acquisition Corp. (NASDAQ:ZNTE) Co-CEO Kenneth Ricci also serves as a principal at Directional Aviation.

XTI Aircraft

Although the eVTOL makers have not necessarily traded well amid a down market for SPACs, the opportunity for getting in on the ground floor on the next generation of aircraft hasn’t lost its allure from a business proposition standpoint.

XTI is among the last companies standing that have designs on putting out a more sustainable aircraft model that has not already gotten some SPAC love. Initially designed as a hybrid-fueled plane, XTI’s Trifan 600 could still transition to an all-electric or hydrogen fuel source.

In the meantime, its hybrid nature may give it fewer uncertainties to work through with regulators as a part of its path to market. Even with some non-electric fuel in its lines, XTI’s TriFan 600 is expected to deliver 50% operational cost savings with 40% lower CO2 emissions and about half the noise of a comparable class of plane.

TriFan 600’s propulsion systems have been developed in partnership with GE (NYSE:GE)’s aviation division, and the company already has about $793 million-worth of pre-orders in hand, although these are likely non-binding. Nonetheless, the company counts $260 million of these agreements as “firm purchase orders” so it may well have some hay in the barn on these deals.

XTI’s timeline for deploying its next generation aircraft follow a similar trajectory for the eVTOLs targeted by SPACs so far this year with testing running through the next two years and potential commercial launch in 2024. From an investor standpoint, there’s no harm in putting chips on multiple squares when it comes to what could be the replacement for all air transportation in the future.

Peek Travel

Travel is not just returning, it is evolving. Even before the pandemic, experience-related spending was growing 50% faster than general consumption and Millennials were leading the trend with 62% more spent by them on experiences than their generational counterparts.

One of the upsides of the Millennial generation finding barriers to owning assets like cars and homes has been a greater share of money available to spend on more immediate pleasures. Despite this, there are few listed experience-focused companies amid a crowded field of listed flight, rental car and accommodation-bookers.

Peek Travel is a two-sided marketplace connecting users with experience providers and has attracted some prodigious backing with investors including the founders of Twitter (NYSE:TWTR), Google (NASDAQ:GOOGL) and Kayak. By 2019, more than 8 million activities lasting over 1.4 billion hours had been booked on the platform.

In addition to connecting users with its curated experience catalog, Peek also processes payments on the transactions giving it a variety of monetization options.

Many SPACs could be interested in getting in on the experience of buying Peek, but one of the two Khosla SPACs – KVSB, KVSC – could be the most immediate fit. Khosla Ventures has some familiarity with Peek as an investor in its early rounds.

Peek has not raised outside equity capital since 2018 and may have had to delay fundraising plans amid the pandemic. The company is also largely US-focused, but has used past funding rounds to explore foreign markets. A SPAC deal could put a much larger map at its finger tips.