Wheels Up Interim CEO Smith says the flight provider sold over $2 million in deposits from yesterday through noon today
Following a CNBC report, a spokesperson for Wheels Up tells Private Jet Card Comparisons, “We are not considering bankruptcy.” Separately, the company plans to roll out its new flight services agreement tomorrow. It will feature lower capped hourly rates.
Yesterday, the New York-based private jet provider announced continuing losses, lower cash reserves, major program changes, and that its Founder, Chairman and CEO Kenny Dichter was stepping aside.
CNBC then reported the company was facing “potential for bankruptcy.”
It said Wheels Up “has been consulting with bankruptcy advisors,” attributing it to “people familiar with the company’s dealings.”
The Wheels Up spokesperson continued, “While we realize our recently announced changes may create some short-term pressure, we have conviction that the long-term outcome is strong for our business. We want to emphasize that our first-quarter cash position reflects certain business realities – the first quarter is typically our slowest for block sales, and our block/cash position typically improves throughout the year. Moreover, we believe our new program changes are not only attractive to members, but will improve our competitive positioning and contribute to accelerated block sales, an important source of cash.”
He added, “We also appreciate there’s a near-term reality in terms of cash position. Beyond the adoption of the program changes and their benefits for our members, we are looking at divestitures of non-core assets and other cash-generating opportunities, and we also have the capacity to take on additional debt.”
Cash and Cash Equivalents fell from $586 million to $363 million during Q1.
Speaking at the Goldman Sachs Industrials and Materials Conference earlier today, Interim CEO Todd Smith said with its reduced primary service area, he also expects to raise cash by “pruning the fleet.”
“The fair value of our aircraft is substantially above the book value and the principal value of our debt, so there is equity value there that can be realized,” he told attendees.
Wheels Up deposit sales
Despite the turmoil, Smith said customers and prospects are showing confidence in the company.
Smith said Wheels Up sold over $1 million in jet card deposits yesterday. It took in more than $1 million by lunchtime today.
At the same time, he called Wheels Up’s past sales strategy of announcing new program pricing and rules and then allowing members and new joiners up to a month to lock in the old rule set for 12 to 30 months “a bit of a bad habit.”
As of tomorrow, all sales will be in the new program. The rules don’t go into effect until June 26, 2023. That means you fly under the current rule set until then.
At the same time, Wheels Up is honoring current contracts until funds are used, or the contract ends.
Yesterday, Smith told Private Jet Card Comparisons to expect lower capped rates.
He told the Goldman conference the new program’s capped rates will be “highly competitive.”
With the capped rates now limited to high-density geographies that can be served more efficiently and where there will be fewer and shorter repositioning flights, he said future sales will be “in the areas we want to win, and we will do so profitability.”