OUR QUIET table at Dover Street’s Arts Club is becoming a de facto confession box. A gin and tonic replacing the grill between priest and penitent, John Matthews peers through his glass – for he hath sinned.
The chief executive of AirX, who admits to being the least popular man in private aircraft chartering, has much on his mind.
“This interview is warts and all. Although I must say, it doesn’t have a pretty start.”
Nervy but shrewd, Matthews’ elocution is perfect, yet he is dyslexic and without formal qualifications. Expelled twice, he attended a “naughty boys school” where he was assigned a number, coldly referred to as “A39” for nearly six years. Parents divorced, his mother remarried a Concorde engineer, who inspired Matthews’ love of aviation.
Watching jets fly overhead was an escape from his curricular prison.
Aged 17, he flew solo for the first time. At 18, he was working as an airstrip fireman, without a driving licence. A year later, he launched his first airline.
“I said [to the boss of the airfield he worked on] ‘I want to start my own airline inside your company,’ and he just laughed his head off, the suggestion was ridiculous. So I reached out to a very wealthy student who ran a KFC franchise, borrowed £32,950 and started MS Airways at 19.”
No one wanted to fly in his noisy old twin-engined monster, so, after finding a stretcher in a hangar by chance, he converted MS Airways into a medical airline.
“We often flew down to Lourdes, the Catholic fountain of youth. We used to collect a lot of Irish Catholics with a great sense of humour – 80 year olds who had slipped into the fountain. You just couldn’t make it up.”
But MS Airways wasn’t to be. Growing the company as a “cocky, arrogant, I-know-best twenties entrepreneur” with “perhaps not too much documentation going on”, Matthews fell a cropper with an internal shareholders dispute, and was ousted.
“I lost a court case internally and went bankrupt at 27,” he says. “And to compound the problem even further, obviously I wasn’t in a great place – I got very drunk, crashed my car, and lied about it. I said it was stolen when it wasn’t. I was arrested for perverting the course of justice and spent 28 days in Brixton on a 10-week prison sentence. It’s an experience I won’t forget in a hurry. The room service was terrible.”
Leaving jail bankrupt, essentially homeless, with no qualifications and fewer prospects, Matthews moved to Lebanon to work in consultancy, but was never paid. Lehman Brothers had just collapsed and the world was falling apart. Borrowing the price of an airfare, he made a serendipitous journey to Munich to meet a friend, whose partner was friends with the former owner of AirX.
“She said ‘I’m just divorcing my husband, I own an airline and it’s probably going to go bankrupt’. I said ‘I simply need somewhere to eat and some food – I’ll run your airline for you. I’m running out of clothes and have no money, everything I own is in this bag.’ And next thing I know I’m working for AirX. It had three aircraft, all on repossession notice, £4m of debt, no future. When you’re bankrupt and have no money, that’s an opportunity. And I took it with both hands.”
Restructuring AirX from a fleet of private jets, which were suffering from an unwieldy combination of capital depreciation and lofty overheads, Matthews moved instead to converted airliners, which helped to turn the company around. After “bimbling along” for a couple of years, he then purchased the firm from its owners, sacking most of the staff on day one.
“And then one day an email came through from a company promoting Transport Malta, the Maltese aviation community. And I thought ‘well I can’t speak German, and these guys won’t let me run an Air Operator Certificate if I don’t speak German. We’re going to move to a new AirX in Malta’.”
When you’re bankrupt and have no money, that’s an opportunity. And I took it with both hands
Matthews’ move to Malta wasn’t about language barriers alone. This “new AirX” would have a fresh credit rating, meaning better chances of leasing aircraft, which he could use to rescue the German AirX, and put both firms under one holding company. It seems to have worked. The company turned over £100m last year.
But leasing aircraft was never sustainable long-term, and under the advice of a 72 year old industry veteran, Matthews started to expand AirX’s fleet dramatically. The aerospace industry was, and still is, he says, suffering from capital depreciation. For decades aircraft were seen as a worthy investment, increasing in value each year from 1971, until 2008. The banks over-financed the industry, which helped manufacturers build a glut of unnecessary planes. With the world in chaos, an opportunity arose.
“The aircraft I go for have been repossessed – the bank doesn’t know what to do with them. I’m usually the only buyer. I’m like an ambulance-chasing lawyer in America, but the equivalent for aircraft. If there’s a repossession, we’re on the hunt.”
But Matthew’s success has come at a price. Researching him before our interview, I stumbled across a forum accusing him of being imprisoned in Lebanon, a statement he decries as ludicrous. He is taking the forum to court over character assassination, which he believes is from competitors.
“They’re losing fights against us every day, we break the model. We’re selling a bigger cabin for a lesser price. We’re in a different category. They thought my exit from aviation the first time round was forever – the hatred level of coming back is huge.”
Undeterred, Matthews marches on. Today, the fleet consists of 18 aircraft, flying royal families, sports teams, governments, deportees, gold bullion – and what or whoever else – around the globe.
AirX has been “white-labelled” for the past five years – that is, plain aircraft with no branding – to engender loyalty with the flight brokers, which provide the firm with clientele. But this has proved somewhat counterproductive, and this year AirX is branding itself.
But Matthews’ priority for 2018 is lowering the cost of capital. “Last year was the first we made real money. It’s been flat every year I’ve had it, because I’ve been investing the profits back into growth. Last year we didn’t take any aircraft, we stopped at 18, and made £6.8m EBIT, whereas the year before we made £9,500,” he chuckles.
“There’s three options to lower capital: bring in a wealthy chap who can grow the company further, a public listing, or raise bonds. We would consider all of them.”
Finally, I ask whether Matthews would ever get in the cockpit again?
“I last flew in 2007,” he says. “I’m now studying for my exams again and hope to become a commercial pilot by next year, or the year after. I think AirX will take me on, there’s a pretty good chance. I don’t know how I’d do that interview really.”