Delta Air Lines values Wheels Up at $890 million

By Doug Gollan, October 17, 2020

The airline’s Q3 SEC filing valued its 27% stake from combining Delta Private Jets into Wheels Up at $240 million

Delta’s stake in Wheels Up is now worth nearly twice its 9% in Air France-KLM, one of Europe three largest airline conglomerates

When Delta Air Lines announced the deal to combine its Delta Private Jets unit into Wheels Up in December 2019, and then it closed in January 2020, terms were not disclosed.

However, in the airline’s 10-Q filing for the quarter ended Sept. 30, 2020, a number of details were revealed for the first time.

It notes, “Upon closing, we received a 27% equity stake in Wheels Up, which we have elected to record using the fair value option as this is expected to better reflect the economics of our ownership interest.”

The filing continues, “This transaction resulted in a gain of $240 million which was recorded within miscellaneous, net in our income statement in the March 2020 quarter.”

It said the 27% interest has since been reduced to 25%. It cited additional share issuances to Wheels Up employees. That reduced the carrying value to $234 million.

Interestingly, Delta’s Wheels Up stake is now more valuable than its 9% holding in Air France-KLM. That’s valued at $130 million, after dropping from $419 million at the end of 2019.

Delta Private Jets’ revenues

It also provided some insight into Delta Private Jet’s revenues before being sold. For the September 2019 quarter, it noted DPJ had registered $47 million in sales. For Q3 2019, it was $49 million. It also indicates the private jet unit was marginally profitable.

It had been estimated Wheels Up annual revenues last year were approaching $400 million. Since the DPJ deal, Wheels Up acquired Gama Aviation Signature, giving it the second-largest for-hire fleet behind NetJets.

The $240 million value for its 27% in Wheels Up infers a value for the combined business at $890 million.

Benefits so far for Wheels Up members include Medallion status in Delta’s SkyMiles frequent flyer program. There are also discounts when they buy airline tickets. It’s believed future synergy could be international expansion. Wheels Up could access Delta’s international equity partners like Air France and Korean Air as launch platforms. Shared flights and by-the-seat shuttles on Wheels Up sold through Delta’s app could add reach to millions of travelers. The two could also offer corporate accounts a combined airline-private travel solution.

Your can review the filing here.

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