Wheels Up

Last updated

Wheels Up
Wheels Up Corporate Logo.svg
IATA ICAO Callsign
—WUPUP AVIATION
Founded2013;11 years ago (2013)
Fleet size215 jets
Parent company Delta Air Lines (since August 2023)
Traded as NYSE:  UP
Headquarters New York City, U.S.
Key people
  • George Mattson
  • (CEO)
  • (Chairman of the Board)
Founders
Revenue Increase2.svg US$1.19 billion (2021)
Operating income Increase2.svgUS$+203 million (2021)
Net income Decrease2.svgUS$−190 million (2021)
Total assets Increase2.svg US$1.98 billion (2021)
Total equity Increase2.svg US$730 million (2021)
Employees2,500+
Website wheelsup.com
Notes
Membership-based private aviation company
Financials as of December 31,2021 [1]

Wheels Up is a provider of "on demand" private aviation in the United States and one of the largest private aviation companies in the world. [2] It was founded in 2013 by Kenny Dichter, using a membership/on-demand business model. [3] Wheels Up members can book private aircraft from the company fleet and third-party operators using a mobile application. [4]

Contents

The company was purchased by Delta Air Lines in August 2023, who bought a 95% share to rescue the company from financial troubles. [5]

History

The company was founded in 2013 by Kenny Dichter. [6] [7] [8] The company announced its management team in August 2013. [9] [10] It confirmed a Beechcraft turboprop order for 105 King Air 350i aircraft in a transaction valued at US$1.4 billion, including maintenance. [11] The company focuses on non-hub markets that commercial airlines service less effectively. [12] Wheels Up's marketing strategy involves entertainment at major sports and cultural events for their VIP members throughout the year. [13]

By 2014, the company had more than 1,000 members and had taken possession of 27 new King Airs and 10 fully refurbished Cessna Citation jets. [11] After five years in business as a United States-only membership, the company had sold 5,379 individual and 379 corporate memberships and owned 72 King Airs and 20 Citations. In 2017, Wheels Up flew 59,960 hours and covered close to 15 million mi (24 million km). [14] Wheels Up also flies Beechcraft King Air 350i, which has good short field performance, cargo capacity and seats nine passengers. [12]

Wheels Up was a sponsor of American Pharoah at the 2015 Belmont Stakes, when the Thoroughbred won the racing Triple Crown, [15] and signed with the Miami Marlins as the team's Official Private Aviation Partner in 2018. [16] The company has also been involved in philanthropic activities for National Breast Cancer Awareness Month, when it took delivery of a pink King Air 350i, [17] and Ovarian Cancer Awareness Month. [18] In February 2018, Wheels Up announced a new flight sharing membership called Wheels Up Connect. Connect members can access members' only community boards to share flights with full program members. The goal is to democratize private flying by making it more affordable. In June 2019, Wheels Up announced it had acquired Travel Management Company, referred to as TMC Jets, a charter operator with 24 light jets. [19]

In September 2019, Wheels Up announced it had purchased Avianis, a B2B platform that streamlines communications between operators and brokers. [20] On March 2, 2020, Wheels Up announced it had acquired Gama Aviation Signature, the largest Part 135 charter operators in the U.S. [21] In April 2020, Wheels Up launched the "Meals Up" initiative with Russell Wilson and non-profit Feeding America to provide meals for those impacted by food insecurity. [22] [23] To date, Meals Up has donated over 80 Million meals to Feeding America.

Following its acquisitions of Delta Private Jets, Travel Management Company, Gama Aviation Signature, Mountain Aviation, and additional regional providers, Wheels Up Group is now the second-largest private aircraft operator in the U.S. behind NetJets. [24]

In January 2022, Wheels Up announced it had reached an agreement to acquire Air Partner PLC (LSE: AIR), a U.K.-based global aviation services group with operations in 18 locations and across four continents. [25]

In November 2022, Wheels Up partnered with AirMed International as their aviation partner to bring medical services to Wheels Up members. [26]

In October 2023, Wheels Up's private aircraft management division was acquired by Airshare, an aircraft provider based in Kansas. Airshare acquired 90 airplanes and 300 employees. Wheels Up still has 215 aircraft. [27] [28]

Financing

In January 2018, CEO Kenny Dichter announced on CNBC Squawk Box that the company had retained Bank of America and Goldman Sachs to explore "strategic initiatives". [29]

On December 9, 2019, Delta Air Lines announced it took a stake in Wheels Up, to become its largest investor and merge it in the first quarter of 2020 with its Delta Private Jets subsidiary, itself operating 70 business jets, for a 190 aircraft fleet. [30] On January 29, 2020, Wheels Up said its deal with Delta Air Lines to acquire Delta Private Jets had closed. [31]

On July 14, 2021, Wheels Up became the first private aviation company to be publicly traded on the New York Stock Exchange [32] under the ticker symbol of $UP following a merger with special-purpose acquisition company, Aspirational Consumer Lifestyle Corp. in the second quarter. [33]

By May 2023, the company had seen many executives depart and had lost hundreds of millions of dollars since it went public less than two years earlier. The company was at risk of being delisted by the New York Stock Exchange. It was hoping to limit its losses to a maximum of $130 million during 2023 and is planning to be profitable in 2024. [34]

On May 9, 2023 the founder and CEO, Kenny Dichter, resigned effective immediately, as the company faced mounting losses and potential bankruptcy. Board member Ravi Thakran became the executive chairman and Chief Financial Officer Todd Smith the interim CEO. The company's stock price had fallen to 40 cents from a high of $10 and the company value had fallen from $2 billion to $100 million. The 2023 first-quarter earnings report also released on May 9, indicated a loss of $101 million, $12 million more than its reported loss in the first quarter of 2022. [35] [36]

Dichter's departure arrangements were revealed in a May 9, 2023 Securities and Exchange Commission Form 8-K filing, which indicated will continue to receive his $950,000 annual salary for two years, he will remain a director on the company board, will receive a lump sum payment of $3 million, plus a prorated annual bonus based on the number of days he was employed, continue to receive company health insurance coverage and 200 hours per year travel on company aircraft, plus further benefits. [37]

Aviation consultant Brian Foley indicated that the company will face a choice of securing additional investment from its largest shareholder Delta Air Lines, taking the company private again or further fundraising. Foley wrote, "reorganizing through bankruptcy is another possibility, and if a private equity or other acquirer ever became involved, would presumably be a prerequisite", although, a Wheels Up spokesperson said, "we are not considering bankruptcy." [37]

The company's first-quarter 2023 financial report through May, indicated that though revenue increased $26 million year-over-year to $352 million, while net losses also increased $12 million year-over-year to $101 million. The adjusted earnings before interest taxes, depreciation and amortization (EBITDA) was similar year-over-year with a loss of $49 million, while the company's cash and cash equivalents fell from $586 million to $363 million. [38]

On Thursday, June 22, 2023 the company's stock lost half its value following a Wall Street Journal story that it had hired a law firm that specializes in financial distress restructuring. As of June 2023 the company has never been profitable. [39]

On Monday, July 3, 2023, in a Form 8-K filing with the Securities and Exchange Commission (SEC) made as the markets closed for the July 4 holiday indicated that Chief Financial Officer and interim CEO Todd Smith will receive a $150,000 raise in his annual salary and an increase in his bonus target from 100% of his salary to 150%. A week earlier board member Ravi Thakran was given $648,000 annual compensation, plus 50 hours of flight time in Wheels Up Beech King Airs. [38]

On Wednesday, August 9, 2023, the company stated that even with the capital provided by equity partner Delta Air Lines, that there was "substantial doubt" about the company's ability to continue to operate. The company also postponed its second-quarter earnings call on August 9, 2023. The company also said it would sell its aircraft management assets to Airshare, a charter management company. [40]

On August 14, 2023 the company filed a Form 10-Q with the SEC, reporting a working capital deficit of $720.8 million. The next day Delta Air Lines purchased 95% of the company with a $500 million price, assuming ownership, after previously having held a 20% share. As part of the purchase agreement, Wheels Up members can use funds on credit at Wheels Up to purchase tickets on Delta. Wheels Up customers also have access to Delta’s SkyMiles frequent flyer program and are given earn additional credits. These incentives are expected to bring more high-end travelers to Delta. [5]

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References

  1. ↑ "Wheels Up Experience Inc. 2021 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. March 10, 2022.
  2. ↑ "Wheels Up Announces Date of First Quarter 2022 Earnings Release and Conference Call". markets.businessinsider.com. Retrieved April 29, 2022.
  3. ↑ Louise, Nickie (August 9, 2019). "Private aviation startup Wheels Up raises $128 million funding at $1.1 billion". Tech Startups.
  4. ↑ "Wheels Up Announces Date of First Quarter 2022 Earnings Release and Conference Call". finance.yahoo.com. Retrieved April 29, 2022.
  5. 1 2 Phelps, Mark (August 15, 2023). "Delta Swoops In, Takes A 95 Percent Interest In Troubled Wheels Up". AVweb. Archived from the original on August 16, 2023. Retrieved August 16, 2023.
  6. ↑ "Wheels Up". wheelsup.com. Retrieved July 5, 2016.
  7. ↑ Sidibe, Nana (June 9, 2015). "Wheels Up flying high thanks to American Pharoah". CNBC. Retrieved June 17, 2020.
  8. ↑ Wile, Rob (February 1, 2021). "They invested early — and now Miamians like A-Rod will make bank as jet firm goes public". Miami Herald.
  9. ↑ Einhorn, Robert (August 20, 2013). "Wheels Up Announces World-Class Team of Seasoned Private Aviation Professionals". Business Wire . Retrieved August 21, 2018.
  10. ↑ Alcock, Charles (September 1, 2013). "Wheels Up Announces Seasoned Leadership Team". Aviation International News . Retrieved August 21, 2018.
  11. 1 2 "Everything you ever wanted to know about: Wheels Up". Corporate Jet Investor. March 18, 2015. Retrieved August 21, 2018.
  12. 1 2 Chapman, Lizette (September 28, 2015). "T. Rowe Price Leads $115M Round in Private Aviation Co. Wheels Up". The Wall Street Journal . Retrieved August 22, 2018.
  13. ↑ Sullivan, Paul (May 11, 2018). "From Super Bowl to David Bowie, V.I.P. Treatment Awaits". The New York Times . Retrieved August 24, 2018.
  14. ↑ Gordon, Lisa (August 7, 2018). "Wheels Up searches for Canadian partners". Skies . Retrieved August 22, 2018.
  15. ↑ Spruce, Terry (June 8, 2015). "Wheels Up sponsors American Pharoah at Belmont Stakes". Corporate Jet Investor. Retrieved October 25, 2018.
  16. ↑ Spruce, Terry (June 5, 2018). "Miami Marlins introduce Wheels Up as team's Private Aviation Partner". Corporate Jet Investor. Retrieved October 25, 2018.
  17. ↑ Davies, Alud (September 1, 2015). "Wheels Up takes delivery of pink King Air for breast cancer awareness". Corporate Jet Investor. Retrieved October 25, 2018.
  18. ↑ Spruce, Terry (September 20, 2016). "Wheels Up announces CARES Philanthropy program". Corporate Jet Investor. Retrieved October 25, 2018.
  19. ↑ Trautvetter, Chad. "Wheels Up Acquires Charter Operator TMC". Aviation International News. Retrieved November 22, 2020.
  20. ↑ "Wheels Up Acquires Avianis, Sets Sights on Ten-Figure Valuation". Aviation Today. September 24, 2019. Retrieved April 29, 2022.
  21. ↑ Gollan, Doug. "Wheels Up Buys Gama Aviation Signature, Ramping Up Its Challenge To NetJets". Forbes. Retrieved April 29, 2022.
  22. ↑ "Tom Brady donates 10 million meals through Wheels Up partnership amid COVID-19". ABC. Retrieved April 3, 2020.
  23. ↑ "Wheels Up, Russell Wilson team up with Feeding America as pandemic, layoffs create hunger crisis". CNBC. March 31, 2020. Retrieved April 3, 2020.
  24. ↑ Frank, Robert (March 2, 2020). "Wheels Up buys Gama, becoming top rival to NetJets". CNBC. Retrieved April 29, 2022.
  25. ↑ "Wheels Up Closes Acquisition of Air Partner | Business Travel News". www.businesstravelnews.com. Retrieved April 29, 2022.
  26. ↑ Up, Wheels. "Wheels Up and AirMed Announce Global Partnership to Offer Industry-Leading Suite of Medical-Travel Services to Members". www.prnewswire.com. Retrieved October 3, 2023.
  27. ↑ Cheung, Yiu-fai (2023), "Borderline Left Ventricle", Congenital and Paediatric Acquired Heart Disease in Practice, Singapore: Springer Nature Singapore, pp. 297–300, ISBN   978-981-99-2861-3 , retrieved October 3, 2023
  28. ↑ Daleo, Jack (October 2, 2023). "Airshare Quadruples Fleet in Deal for Wheels Up Private Management Business". FLYING Magazine. Retrieved October 5, 2023.
  29. ↑ "Wheels Up Hires Advisors for Strategic Initiatives". CNBC. January 30, 2019. Retrieved August 21, 2019.
  30. ↑ Kate Sarsfield (December 17, 2019). "Wheels Up merges with Delta Private Jets". Flightglobal.
  31. ↑ Siebenmark, Jerry. "Wheels Up Closes on Delta Private Jets Combination". Aviation International News. Retrieved April 29, 2022.
  32. ↑ Singh, Pia (July 14, 2021). "Wheels Up CEO looks to transform private jet industry as company goes public via SPAC". CNBC. Retrieved April 29, 2022.
  33. ↑ Frank, Robert (February 1, 2021). "Private jet company Wheels Up to go public in a $2 billion SPAC deal that could help it unlock new markets". CNBC . Retrieved February 5, 2021.
  34. ↑ Niles, Russ (May 3, 2023). "Wheels Up Adds Execs As It Faces Challenges". AVweb. Archived from the original on May 4, 2023. Retrieved May 4, 2023.
  35. ↑ Frank, Robert (May 9, 2023). "Wheels Up founder abruptly steps down as losses mount, potential bankruptcy looms". CNBC . Archived from the original on May 9, 2023. Retrieved May 9, 2023.
  36. ↑ O'Connor, Kate (May 9, 2023). "Wheels Up CEO To Step Down". AVweb. Archived from the original on May 10, 2023. Retrieved May 10, 2023.
  37. 1 2 Phelps, Mark (May 11, 2023). "Outgoing Wheels Up Exec's Exit Package Includes Salary, Flight Privileges". Mark. Archived from the original on May 12, 2023. Retrieved May 12, 2023.
  38. 1 2 Phelps, Mark (July 4, 2023). "Wheels Up CFO/Interim CEO Gets Salary And Bonus Increases". AVweb. Archived from the original on July 5, 2023. Retrieved July 5, 2023.
  39. ↑ Niles, Russ (June 25, 2023). "Wheels Up Stock Tanks On Restructuring Speculation". AVweb. Archived from the original on June 26, 2023. Retrieved June 25, 2023.
  40. ↑ Phelps, Mark (August 9, 2023). "Delta Cash Infusion Might Not Be Enough To Save Wheels Up". AVweb. Archived from the original on August 10, 2023. Retrieved August 10, 2023.
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