Private jet charter company Wheels Up Experience has revealed its plan to surrender 95% of its common stock as it seeks a lifeline of $500 million from its lenders. The company, which offers private jet charters by the hour, has faced significant financial challenges due to decreased demand for private jets amid the pandemic.
Wheels Up has grappled with financial losses, compelling it to implement various measures to stabilize its finances throughout the year. These measures have included workforce reductions and changes to its management team.
In its latest non-binding agreement, Wheels Up aims to secure a $400 million term loan from its partners, including Delta Air Lines, Certares Management, and Knighthead Capital Management. Additionally, Delta will provide a $100 million liquidity facility, bringing the total funding potential to $500 million.
The expanded partnership between Wheels Up and its investors is expected to leverage their expertise and resources to drive strategic, operational, and customer service enhancements, according to a company press release. Delta’s CEO, Ed Bastian, expressed optimism about the collaboration, noting the potential for shared strengths to accelerate Wheels Up’s path toward profitability.
Todd Smith, the interim CEO and CFO of Wheels Up, emphasized the importance of this partnership, thanking their members and customers for their unwavering support. He underscored the positive results already emerging from recent efforts to improve their offerings and operational efficiency.
Wheels Up’s announcement follows their recent acknowledgment that they were considering various options, including the possibility of bankruptcy. This decision was prompted by the company’s report of a larger net loss in the second quarter compared to the same period the previous year.
Founded in 2013 with the goal of making private air travel more affordable through hourly leasing, Wheels Up has sought to democratize access to private jets. The company achieved a significant milestone in 2021 when it became the first private aviation company to trade on the New York Stock Exchange.
The move to dilute a substantial portion of its common stock and secure substantial funding reflects Wheels Up’s determination to weather the challenges faced by the private jet charter industry due to the pandemic. The infusion of funds and collaboration with experienced partners is expected to bolster Wheels Up’s recovery efforts and reshape the future of private air travel.
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