One of the largest private aviation companies in the world, Wheels Up, just announced its results for the third quarter. Revenue increased 39% year-over-year to $420 million, making $1,171 million for the year to date. The number of active members grew 12% to 12,688.
The number of “Live Flight Legs” – revenue generating flights - increased 7% year-over-year to 21,025 in the quarter, and the flight revenue per Live Flight Leg was $13,266, up 20% year-over-year. The latter was due primarily to program changes, which included higher pricing and the introduction of a fuel surcharge (with rising aviation fuel prices), and a shift in the mix of cabin flying. At the same time the net loss increased by $27.4 million year-over-year due to higher operating expenses, including higher technology spend and a broad-based equity grant to the Wheels Up employee pilots.
From a financial perspective, Wheels Up emphasizes that it has a continued focus on delivering Adjusted EBITDA profitability in 2024 through cost reductions, streamlined organizational structure, and accelerated digital transformation. From a technology perspective it is working on creating a marketplace for private aviation, is building a new “Member Operations Center” in Atlanta and overall rationalizing all the acquisitions it has brought together over the last few years (See the Related Items below for articles about the acquisitions).
The combination of organic growth and acquisitions have made it the largest Part 135 charter operator in North America. As of September 30, 2022, the company has over 200 aircraft in their owned and leased fleet that includes Turboprops, Light, Midsize, Super-Midsize and Large-Cabin jets, approximately half of which are Wheels Up branded aircraft. They also have a managed fleet across all private aircraft cabin classes of approximately 150 aircraft and an extensive network of third-party operators available in the program fleet from whom they can access over 1,200 additional safety vetted and verified partner aircraft.
"Our strong foundation, with an iconic brand and large base of loyal customers, helped drive another record revenue performance in the third quarter, further reinforcing the strength of our demand, even in this uncertain macroeconomic environment," said Chairman and CEO Kenny Dichter. "We are implementing a streamlined organizational structure, with senior leadership focused on driving key initiatives at an accelerated pace, which is a significant step in delivering profitable growth and an enhanced experience for our members and customers."
For the full year, 2022, the company has a revenue forecast at $1.55 to $1.58 billion.
Raised $259m Through Equipment Loan
Just last month the company raised a net $259m through the issuance of equipment notes, secured by a primary lien on certain of Wheels Up's owned aircraft.
"These proceeds give us additional financial flexibility to invest in our business as we pursue our goal for positive adjusted EBITDA in 2024," said Todd Smith, CFO. "We believe we are in a strong competitive position to use the technology we're deploying and our improving operational capability to provide an unparalleled customer experience in private aviation."
The notes have a maturity of up to seven years and a coupon of 12%. At the end of September the company has cash and cash equivalents of $545 million.
Pilot Recruitment & Training
With the record demand for private flying and private pilots, Wheels Up has also been very active on the hiring front. It has partnered with ATP Flight School, offering ATP graduates with a streamlined pathway to First Officer positions and long-term careers in aviation. It also has a new partnership with Delta (NYSE: DAL) which will allow pilots in the airline’s Propel College Path Program to log flight hours with the private aviation operator.