Wheels Up reports Q3 2023 earnings, publishes on-time performance

Wheels Up, during its Q3 earnings call, said its joint corporate sales effort with principal backer Delta Air Lines, announced last week, yielded over 150 new prospects in the first six business days.

As part of the earnings calls, Wheels Up, for the first time, published its flight completion rate and on-time performance.

It included both metrics since 2021, laying down a marker for other private jet flight providers to do the same.

Our completion rate is approaching 99%, with almost 90% of our flights departing within 60 minutes of the scheduled time, inclusive of ATC, weather, maintenance, and customer delays

– George Mattson, CEO, Wheels Up

The additional transparency came two days after new CEO George Mattson tweaked competitors during the Corporate Jet Investor conference in Miami.

After being asked about the loss-making flight provider’s progress toward profitability, he told the audience, “I invite my private aviation brothers and sisters to open up your books too because we all know it’s a challenging industry.”

Selling Mountain Air?

Separately, sources tell Private Jet Card Comparisons that Wheels Up has decided against selling its Mountain Aviation business, which includes 26 Citation X jets.

It bought the Denver-based charter operator in January 2021.

Its super-midsize aircraft provide the backbone of the Wheels Up long-flight discount program for segments over 3.5 hours.

Last month, Wheels Up completed the sale of its management business to Airshare.

It had previously said it would consider the sale of assets non-core.

During a post-earnings call interview with Mattson and CFO Todd Smith, the executives declined to comment about Mountain Air.

However, Smith said, “We’re working on getting to the optimal fleet size in conjunction with moving down to one certificate.”

Following the recent Delta-led financing package, speculation was that Wheels Up would morph into a pure brokerage business.

Through June, Wheels Up ranked as the fourth-largest operator in North America based on charter and fractional flight hours.

It offers a hybrid, using both its aircraft and third-party operators.

Wheels Up Reliability

On the earnings call, Mattson acknowledged reliability issues that have dogged Wheels Up following its spate of acquisitions.

“Over the past couple of years, operational performance was challenged, exacerbated by the pandemic-driven demand spike,” he said.

Performance is improving following its move to a single ops center in Atlanta and reducing its operating certificates from six to three.

It expects to be down to only one operating certificate by next year.

The multiple certificates hamper efficiency.

For example, a pilot licensed to fly on a specific aircraft type with one operator cannot fly the exact same type of airplane on another certificate, even if the same company owns both operators.

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Smith and Mattson said operations benefit from Delta’s meteorological and maintenance expertise.

“Our completion rate is approaching 99%, with almost 90% of our flights departing within 60 minutes of the scheduled time, including ATC, weather, maintenance, and customer delays,” Mattson said.

Wheels Up Reliability Performance

Source:  Wheels Up

The D60 departure time metric is based on takeoff time, including the time spent taxing at busy airports or ATC holds.

It also includes flights on the Wheels Up operated fleet, referred to as 1P, and flights arranged via third-party operators for its members.

Asked if he was challenging other private jet flight providers to follow suit, Mattson said, “I think it would be healthy for the industry to provide a level of transparency around that.”

He added, “We’re holding ourselves accountable. We’re going to provide and share more information on this as we make our journey down this path that we’re on.”

In 2023, the company has outperformed its 2022 on-time performance every month, according to a spokesperson.

Wheels Up Q3 2023 Financials

Regarding financial results, Mattson and Smith pointed to quarterly progress in trimming EBITDA losses.

After securing $450 million in financing, the company is in “active conversations with potential investors on the remaining $50 million term loan.”

They also noted several one-time cash expenses in Q3, including repaying interim financing provided by Delta.

However, they said they expect the year-end cash balance to be flat to up.

Revenues will continue to be impacted due to its smaller PSA focused on the Eastern U.S., Texas, and select Western U.S. states.

The new PSA represents about 80% of previous flying.

The smaller PSA will reduce repositioning costs and drive efficiency.

Key earnings metrics are below.

Wheels Up 2023 Q3 Earnings Highlights

• Q3 revenue decreased by 24% to $320 million year-over-year from $420 million.
• YTD revenue dropped to $1.17 billion to $1.01 billion
• Active Members decreased year-over-year by 15% from 12,688 to 10,775
• Live Flight Legs decreased 21% year-over-year from 21,025 to 16,581
• Net loss decreased 3% year-over-year to $144.8 million, including a $56 million impairment charge, from $148.8 million in 2022
• YTD net loss increased by 23% to $406.3 million from $330.3 million in 2022
• Adjusted EBITDA improved 59% from a $45.2 million loss in Q3 2022 to a $18.5 million year-over-year loss and was down from a $40 million loss in Q2 2023
• YTD Adjusted EBITDA loss improved by 24%, with a $107.7 million deficit from $141.5 million
• Cash and Cash Equivalents increased from $151 million to $245 million, with $100 million in an undrawn revolver and $20 in an equipment note reserve deposit for $365 million in total liquidity.
• Wheels Up’s quarterly earnings report showed that it had $79 million in block sales, down from $96 million in Q2 2023 and block sales in Q3 compared to $151 million during the same period in 2022.

Wheels Up Historical Block Sales

Regarding block sales, Wheels Up’s version of a jet card deposit, the executives said that number was impacted by its reduced PSA and speculation about a possible bankruptcy.

Block sales during Q3 ended up at $79 million (table below), the lowest since Q1 of 2021.

However, Smith said since the Sept. 21 closing of its funding package from Delta, Certares, Knighthead, and Cox Enterprises, daily block sales have increased by more than 200%

Wheels Up Block Sales by Quarter (2021-23 by Quarter)

Source: Wheels Up

Block sales in Q4, according to Smith, are projected to be the strongest of the year. So far, Q1 was the high water market at $100 million.

Wheels Up Active Members

Also declining was the number of Wheels Up active members, which dropped for the third straight quarter.

In terms of revenue growth, Mattson pointed to the company’s focus on building its corporate business by leveraging Delta’s over 400 salespeople and more than 45,000 contracted accounts.

Wheels Up Active Members (as of Sept. 30, 2023)

Source: Wheels Up

Corporate business represents just 10% of customers and around 25% of revenue.

The goal is to increase its fleet’s utilization midweek to balance leisure customers’ flying patterns.

Wheels Up is currently running a promotion targeting Core memberships.

It offers up to $25,000 of flight credits and Diamond status in Delta’s SkyMiles loyalty program through the end of November.

During the earnings call, Mattson said, “We are going to be a show me company, not a tell me one. Our stated goal is to become the best-run private aviation company and deliver tangible, measurable progress every week, every month, one flight at a time.”

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