CNBC: Wheels Up weighing going private, cash infusion from Delta

By Doug Gollan, April 28, 2023

After announcing a possible reverse stock split to avoid a delisting from the New York Stock Exchange, CNBC says Wheels Up is ‘talking to advisors about a range of alternatives’

Wheels Up is “talking to advisors about a range of alternatives,” CNBC reported this morning during Squawk on the Street.

“Sources tell CNBC the company is talking to advisors about a range of alternatives, maybe going private, maybe getting a cash infusion from Delta, which has a 20% stake in Wheels Up, or some kind of restructuring,” according to the report.

Wheels Up CNBC

Asked about bankruptcy, the reporter, Robert Frank, said the company is “not talking about bankruptcy right now.”

He said the company is telling shareholders and customers they are “staying the course” and still on target to reach Adjusted EBITDA profitability in 2024.

The private aviation provider had already said it would seek shareholder approval for a reverse stock split. The move is designed to boost its share price back over one dollar.

It recently received a delisting notice from the New York Stock Exchange. That came after its shares traded below the century mark for 30 consecutive days.

It is also being hit with the prospect of shareholder class action lawsuits after it had to restate financials in March.

After the restatement, the non-cash net loss for Q4 increased to $331 million from $239 million. Q3 net loss widened from $86 million to $149 million.

According to the filing, the adjustments “were necessary to reflect the diminished fair value of (Wheels Up legacy acquisitions) as of the applicable measurement dates.”

Its Q4 earnings call showed it started 2023 with cash, and cash equivalents of $586 million at the end of 2022, up from $545 million at the end of Q3 2022.

It expects to lose between $110-$130 million on an Adjusted EBITDA basis in 2023. Revenues are forecast to be essentially flat at around $1.5 billion.

Improving operations

The company has struggled to merge the operations of five different charter operators it acquired over the past several years.

Executives say it has been improving reliability in the past year, something it believes will continue as it opens a central operations center in Atlanta next month.

Its on-time performance is up 11% this year. 89% of its flight departed within 60 minutes of the time members scheduled, with 74% within 30 minutes. That includes delays due to members showing up late.

It has also been looking to cut losses for operations. CFO Todd Smith says it is focusing on high-density markets with fewer and shorter repositioning flights.

It launched a discounted King Air program restricted to east of the Mississippi River in March.

A $30 million cut in non-operational headcount expenses was announced earlier this year.

A spokesperson tells Private Jet Card Comparisons, “While as a matter of company policy, we do not comment on rumors or speculation, Wheels Up is always focused on evaluating a full range of business strategies to enhance our profitability and shareholder value while continuing to provide exceptional service, safety, and reliability to our members. We will remain focused on business decisions and priorities that support these goals.”

Wheels Up said it would report Q1 2023 financial results before the market opens on Tuesday, May 9, 2023.

Wheels Up said it would report Q1 2023 financial results before the market opens on Tuesday, May 9, 2023.

Updated @12:55pm on April 28: Delta currently holds a 20% stake in Wheels Up. An earlier version stated it was 24%.

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