Wheels Up secures $332 million for fleet expansion

ATLANTA - Wheels Up Experience Inc. (NYSE: UP), a prominent player in on-demand private aviation, has secured a $332 million revolving equipment notes facility, supported by Delta Air Lines (NYSE:), to refinance and expand its fleet. The deal, which closed on Wednesday, includes the acquisition of GrandView Aviation's 17 Embraer Phenom 300 series aircraft, maintenance assets, and customer programs.

The strategic move aims to enhance Wheels Up's offerings with newer, more capable aircraft as it enters the peak holiday travel season. George Mattson, CEO of Wheels Up, stated, "By expanding our fleet with newer, more capable aircraft, we are positioning Wheels Up to remain at the forefront of our industry, offering our customers private aviation solutions that deliver greater flexibility, enhanced comfort, and the reliable access our customers expect."

The new facility arranged by Bank of America allows Wheels Up to refinance its existing owned fleet and provides additional borrowing access for the company's fleet transition. This acquisition marks a significant advancement in Wheels Up’s strategic growth goals, focusing on delivering an elevated and reliable experience for its customers.

Wheels Up, known for its large and diverse fleet, offers a global network of safety-vetted charter operators and a variety of aviation solutions, including freight, safety and security solutions, and managed services for individuals, industry, government, and civil organizations. The company maintains a strategic partnership with Delta Air Lines, offering unique commercial travel benefits.

The information regarding the financial transaction and fleet acquisition is based on a press release statement from Wheels Up. It is important to note that the press release also contains forward-looking statements, which involve risks and uncertainties. Wheels Up has cautioned that actual results could differ materially from those projected due to various factors. The company has stated that it does not intend to update any forward-looking statements post-publication, except as required by law.

In other recent news, Wheels Up Experience Inc. reported a stabilization in revenue and a significant reduction in losses for the third quarter of 2024, during its earnings call. The company's revenue was noted at $194 million, with an adjusted EBITDA loss of $20 million, marking a notable improvement from the previous year. Additionally, the company announced a strategic partnership with Delta Airlines and a plan for fleet modernization.

The fleet transition will involve a move to Embraer Phenom 300 and Bombardier (OTC:) Challenger 300 series aircraft, backed by a new $332 million credit facility from Bank of America. This modernization is expected to be completed within three years, enhancing operational performance and customer experience.

In further developments, Wheels Up is working towards achieving positive adjusted EBITDA by the full year 2025, driven by increased block sales and a strengthened management team. The company also reported an improvement in adjusted contribution margin to 14.8%, reflecting operational efficiencies.

However, it was also noted that the company experienced a 20% year-over-year decline in private jet gross bookings in Q3 2024. Despite this, the company's completion rate stands at 98%, with an on-time performance of 82%. These are the recent developments in the company's operations.

InvestingPro Insights

As Wheels Up Experience Inc. (NYSE: UP) makes strategic moves to refinance and expand its fleet, InvestingPro data provides additional context to the company's financial position and market performance.

According to InvestingPro, Wheels Up has a market capitalization of $1.51 billion USD, reflecting its significant presence in the private aviation industry. The company's revenue for the last twelve months as of Q3 2023 stood at $833.67 million USD. However, it's worth noting that the company experienced a revenue decline of 41.09% during this period, which may explain the need for strategic initiatives like the recent fleet expansion and refinancing.

InvestingPro Tips highlight that Wheels Up generally trades with high price volatility, which is consistent with the company's recent strategic moves and the dynamic nature of the aviation industry. Additionally, analysts anticipate sales growth in the current year, which aligns with the company's efforts to enhance its fleet and service offerings.

It's important to note that Wheels Up is currently not profitable over the last twelve months, with an operating income margin of -37.73%. This context underscores the significance of the company's recent financial maneuvers to strengthen its position in the market.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Wheels Up, providing a deeper understanding of the company's financial health and market position.

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