Law firms are soliciting Wheels Up Experience shareholders after the private jet membership provider filed a restatement of earnings on March 31, 2023.
At least four law firms are soliciting shareholders of Wheels Up Experience for possible class action lawsuits against the private jet provider.
A spokesperson for Wheels Up tells Private Jet Card Comparisons, “These types of solicitations by plaintiffs’ attorneys are common, and we aren’t going to comment on them specifically. We recognize that a number of concerns, chief among them macroeconomic issues such as a potential recession, rate hikes, and instability in the banking sector, have pushed all sectors lower, including ours. Given the levels at which Wheels Up shares have been trading, we’ve proposed a reverse split to help support our share price.”
The notices from law firms were spurred by an 8-K filing on March 23, 2023, after the markets closed.
“Wheels Up fell by more than 11.3% on April 3, 2023 (when the market reopened),” according to the law firms’ solicitations.
In the filing, Wheels Up said a “restatement of the prior financial statements was necessary due to the identification of errors related to a non-cash goodwill impairment charge that should have been recognized in the prior financial statements.”
The private jet flight provider said it had “determined that a material weakness existed in the company’s internal control over financial reporting related to the financial statement close process for the quarter ended September 30, 2022.”
Faruqi & Faruqi, in its notice, said it was seeking shareholders who “suffered losses exceeding $50,000.”
According to Forbes, requirements for Class Action lawsuits vary between states and at the federal level.
“Generally, the minimum number of people required to have a shared claim is 40 in order for a case to qualify for a class action. However, many class actions have far larger numbers of potential unnamed plaintiffs,” according to How To Start A Class Action Lawsuit: 2023 Guide.
The article notes, “The court must certify a class action lawsuit, which means the court determines that all of the unnamed plaintiffs share a common claim with the named plaintiffs, that there is a large group of potential plaintiffs, and that the named plaintiffs have claims that are representative of the entire class.”
It adds, “In many cases, a defendant will settle after a class action lawsuit is filed. This means the defendant will offer some type of legal remedy that will be available to all class members. If the case proceeds to court instead of settling, the court will make a decision on the outcome that applies to all class members.”
Facing a possible delisting notice for the New York Stock Exchange, Wheels Up recently told shareholders it intends to ask them to approve a possible reverse stock split at its annual meeting in May.
Wheels Up has said it is taking actions to cut its losses, including reducing non-operational staff.
It has also been working to streamline operations with a new consolidated operations center in Atlanta and focusing on increasing flying in areas requiring fewer repositioning flights.
In its Q4 earning call, CFO Todd Smith said the company still expects to be profitable on an Adjusted EBITDA basis in 2024.
It has sought to reassure members by pointing to cash and cash equivalents of $586 million it held at the beginning of the year.
Its next update will be when it reports Q1 2023 earnings, which should be next month.
Wheels Up is the third-largest private jet operator based on charter and fractional flight hours.
While beating revenue targets, losses have mounted.
It has struggled to consolidate its half-dozen acquisitions over the last several years, including Delta Private Jets, TMC Jets, Gama Aviation Signature, and Mountain Aviation.