Wheels Up is an important part of Delta Air Lines’ strategy to offer a premium experience for its customers, according to the airline’s CEO Ed Bastian.
Delta Air Lines CEO Ed Bastian is voicing support for Wheels Up despite the private jet flight provider’s continued losses and stock price woes.
The comments, made at the Wings Club in New York on May 17, were first reported yesterday by Corporate Jet Investor in an article about how the companies are working together to target corporate accounts.
I support what they are doing– Ed Bastian, CEO, Delta Air Lines
The founder was replaced by CFO Todd Smith on an interim basis.
Speaking to CNBC’s Phil LeBeau, who was moderating the discussion, Bastian was asked if he regretted investing in Wheels Up.
Delta owns 20% of the private jet company. Its stake is the result of having sold its Delta Private Jets unit to Wheels Up in 2019.
Bastian told LeBeau, “Not at all. I won’t talk about the stock, and they are not unlike many SPACs. People talk about trouble, with it tends to be more stock related.”
He continued, “The relationship is strong. I think Kenny [Dichter] has done a masterful job over the last decade building a high-quality brand, great experience, (with) a lot of new members, and for us to be able to add that to our stack is the premium opportunity within the Delta experience, well no one has ever been able to do that before, and we have been attempting to pull that off.”
Bastian said the commercial partnership with Wheels Up is benefiting both companies.
He said, “It’s paying up in meaningful ways. First of all, people put their money on Wheels Up. They can use that same money on Delta in terms of the block sales. If you think the places WU has strength in places, we may not have natural strength in.”
Wheels Up members can gain status in Delta’s SkyMiles loyalty program driving high-yield customers to the airline.
Bastain also followed up on an expanded initiative announced by Smith during the Q1 earnings call.
“We have just launched a partnership with our corporate sales team where our corporates who may not be willing to put a big investment block up into private aviation or may have their own – can on a smaller – almost by the bite, by the menu option – take Wheels Up opportunities and makes that as frictionless and seamless to our Delta corporate contracts,” the Delta CEO noted.
Asked for an update on Bastian’s comments, Robert Bourrier, EVP of Global Corporate Sales, Wheels Up, tells Private Jet Card Comparisons, “In terms of interactions between Wheels Up and Delta corporate sales, there are no closer divisions within the partnership than the Global Corporate Sales teams at both companies. There is daily communication aimed at solving the needs of our mutual corporate customers.”
Bourrier told CJI that the corporate market has been a hot spot. He said, “Wheels Up’s corporate enterprise solutions (CES) customers – who spend more than $500,000 a year – are the company’s fastest-growing segment, with 117.6% growth compared with last year.”
Bastian told the Wings Club audience he is bullish that Wheels Up can get into the black.
He said, “The team there is very much on getting to profitability. They grew a great revenue stream. We see the network which we support. We see the work they are doing in building a single-member operations center based in Atlanta. Dave Holtz, who ran our operations for years, is leading that charge.”
Bastian acknowledged that Wheels Up, which grew through multiple acquisitions, has had a difficult time with the integration.
“They’re currently operating four or five different certificates and operating as separate airlines, and you think about the inefficiency and the inability to actually leverage staff and resources at scale in the face of high demand. It has been very frustrating coming through the pandemic,”
Bastian concluded by saying, “I support what they’re doing.”