Wheels Up Nets $259 Million from Mortgaging Aircraft

Wheels Up recently announced that it will receive net proceeds of $259 million by mortgaging its primary owned aircraft. “We created some runway,” said CEO Kenny Dichter. “We are going to invest in our members, operations, and technology.” 

Wheels Up has concurrently been buoyed by record and quickly-rising revenues. Against that backdrop, the company also has posted large losses, which have amounted to more than $180 million for the first half of this year, and a stock that has lost nearly 90 percent of its value since going public in July 2021.

Dichter told BJT that part of the proceeds from the new capital raised will be used to build a new 34,000-sq-ft members operations center (MOC) in Atlanta that will employ 350 people and be fully operational by summer 2023. The new MOC will be managed by Dave Holtz, chairman of operations, who joined the company earlier this year after more than 40 years with Delta Air Lines. Currently, the MOC is located in Columbus, Ohio. 

Categorized as an enhanced equipment trust certificates loan structure, the financing will have a maturity of seven years and a coupon rate of 12 percent and covers the Wheels Up fleet of 134 owned aircraft including 72 King Airs, 31 Citations, and 31 Hawker 400As. Loan covenants require Wheels Up to maintain a minimum liquidity of $125 million. 

The new financing and MOC are just the latest developments in the fast-moving landscape at Wheels Up. Over the last five years, Wheels Up has made significant acquisitions and combinations. On June 3, 2019, Wheels Up acquired Elkhart, Indiana-based Travel Management Company and the company’s owned and leased fleet of 26 Hawker 400XPs; in December 2019, it merged with Delta Private Jets, acquiring its fleet of 70 managed aircraft in a deal that would eventually see Delta as the owner of 112 million shares of Wheels Up stock, making it the company’s largest institutional investor; on March 2, 2020, it acquired Gama Aviation, the operator of Wheels Up’s fleet of King Airs and Citations; and in November 2021, it acquired Mountain Aviation, including its fleet of Citation Xs.

Year-to-date, Wheels Up has acquired Scottsdale-based Alante Air and its fleet of 12 Cessna Citation CJs for $15.5 million; UK-based Air Partner, a global company that provides “private jet, group, and freight charter and aviation safety and security solutions to industry, commerce, governments, and private individuals, across civil and military organizations” for $109 million; and made a $10 million investment in Tropic Ocean Airways, a Florida-based company that operates a fleet of float-equipped Cessna Caravans. 

Holtz is just one of several high-profile fresh faces in the company’s executive suite. They include CFO Todd Smith, who joined Wheels Up in June from GE; Rob Cords, hired as executive v-p of fleet operations in July; Stevens Sante-Rose, who was appointed chief people officer in January; and Vinayak Hegde, who joined the company as chief marketplace officer in May of 2021 after tenures with Amazon and Airbnb and was promoted to president of Wheels Up in October 2021.