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".[30]
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.[31] On January 29, 2020, Wheels Up said its deal with Delta Air Lines to acquire Delta Private Jets had closed.[32]
On July 14, 2021, Wheels Up became the first private aviation company to be publicly traded on the New York Stock Exchange [33] under the ticker symbol of $UP following a merger with special-purpose acquisition company, Aspirational Consumer Lifestyle Corp. in the second quarter.[34]
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.[35]
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.[36][37]
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.[38]
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."[38]
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.[39]
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 the company has never been profitable.[40]
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.[39]
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.[41]
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]
