With its stock trading below $1, private jet provider Wheels Up will ask shareholders to approve a possible reverse stock split at its annual meeting on May 31

Wheels Up will ask shareholders to approve a potential reverse stock split ahead of a possible delisting notice.

According to a proxy statement filed this morning, the private jet provider will ask shareholders to vote on the measure at its annual meeting of stockholders scheduled for May 31.

The filing calls for a possible “reverse stock split of our outstanding shares of Common Stock, at a reverse stock split ratio of not less than 1-for-5 and not greater than 1-for-10, with an exact ratio within that range as may be determined by the Board at a later date (the “Reverse Stock Split”) and (ii) contemporaneously with the Reverse Stock Split, a reduction in the number of authorized shares of Common Stock by a ratio corresponding to the reverse stock split ratio.”

The move comes as Wheels Up faces a possible delisting from the New York Stock Exchange.

Its share price has been trading below $1 since early March.

Shares closed yesterday at $0.56.

After 30 days below $1, the company would receive a notice that it is being delisted from the exchange.

It would then have up to 180 days to cure the deficiency, with a reverse stock split as a typical method.

Investopedia says, “A reverse stock split does not directly impact a company’s value – only its stock price.”

It adds, “Remaining relevant and avoiding being delisted are the most common reasons for corporations to pursue this strategy.”

Wheels Up restatement

On Friday, Wheels Up announced a restatement of goodwill impairment, increasing its net loss from 2022, although it says cash on hand at the end of Q4 remained unaffected with $586 million.

With the restatement, Wheels Up’s net loss rose to $555 million in 2022 from $197 million in 2021.

On an Adjusted EBITA basis, it lost $185 million in 2022.

It projects that loss to drop to $110-to-$130 million this year and has said it will be EBITDA profitable in 2024.

Last month it launched a new King Air program east of the Mississippi designed to reduce loss-making empty legs.

The company has over 12,000 members, according to its Q4 earnings call.

%d bloggers like this: