CNBC's Robert Frank joins 'Squawk on the Street' to discuss a new investment from LVMH in private jet company Flexjet.

LVMH, via its affiliated private equity firm Elkaterton, is leading an $800 million investment to acquire a 20% stake in FlexJet, representing the largest equity investment ever in a private jet company. The funds will be used to expand FlexJet's fleet, improve infrastructure, and strengthen its presence in Europe, where the market is experiencing rapid growth.

FlexJet plans to collaborate with LVMH's portfolio of over 75 brands to create a more exclusive luxury membership club. The private jet operator, which offers fractional leasing and jet card options, expects to see increased earnings and a growing, younger customer base. The industry is also set to benefit from new tax incentives for jet buyers and fractional owners.

LVMH expands reach into private jet market

One of the biggest names in luxury is about to take off with a big investment in private jets. Robert Frank is watching that this morning. Morning, Robert. Morning, Carl. Good to see you. Well, LVMH expanding its reach into the private jet market with FlexJet. Elkaterton, that's the private equity firm backed by LVMH and Bernard Arnault, is leading an investment of $800 million to buy 20% of FlexJet. That would be the largest ever equity investment in a private jet company. FlexJet will use the proceeds to buy more large planes and add infrastructure, especially in Europe, where they're seeing rapid growth. It's also going to form partnerships with LVMH's more than 75 brands to make FlexJet more of a luxury membership club. And that club is getting a lot younger. Our customer is 10 to 12 years younger than they were seven years ago. Now, I'm going to say there's two types of young. Our 70-year-olds are younger because they're living longer, but also we're getting a lot of 40-year-olds. And FlexJet offers fractional leasing and jet card options. It's expecting earnings of about $425 million this year, up from $398 million last year, and they have over 2,000 members. The private jet industry, of course, will also benefit from that new congressional spending bill, which brings back bonus depreciation. That's a tax break for jet buyers and fractional owners. Now, for more on the private jet industry and how the wealthy are spending, go to cnbc.com slash Inside Wealth. That's the new Inside Wealth newsletter at cnbc.com slash Inside Wealth. Guys? Is it still as expensive as ever to fly private? I mean, this feels like it's one that never comes down, even with more competition. Yeah, in fact, it got a little more expensive after COVID because labor, parts, everything got more expensive. It's about $6,000 per hour if you get a small Phenom plane that FlexJet operates, or up to $20,000 an hour for a big Gulfstream. So, yes, Sarah, it is expensive. But increasingly, people are so frustrated with the commercial flying these days that they continue to go to private. Okay. Thank you, Robert. If they can afford it, I guess. Robert Frank.

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