Wheels Up large sales, corporate sales jump as losses continue

Wheels Up said this morning that it is “positioned for long-term profitable growth” as it continues to see red ink on a net and adjusted EBITDA basis.

During an earnings call, its CEO George Mattson and CFO Todd Smith pointed to several areas with signs of progress.

Most importantly, flyers who hand over cash for the promise of future flights with guaranteed availability at contracted capped rates seemingly have the assurances of Delta Air Lines CEO Ed Bastian.

Mattson, a former Delta Board Member, quoted Bastian, who recently said about Wheels Up, “We’re just getting started.”

Delta led a $500 million investment last summer that rerouted the 2013 start-up from possible bankruptcy to a vital part of the airline’s plan to position itself with premium flyers, particularly corporates.

Mattson offered several soundbites to support the fact that Wheels Up is indeed making progress.

Corporate Block Sales were its fastest growth segment, up 30%.

Overall, Block Sales were up 14% to $114 million year-over-year.

There was also a 40% increase in Block Sales of $1 million or more.

Delta has enlisted its sales team to pitch private jet flying via Wheels Up to its over 40,000 accounts, and last year, it relaunched its business travel jet card programs.

More recently, Wheels Up snagged Southwest Airlines’ Chief Sales Officer to continue that push as Chief Commercial Officer.

Of Southwest’s 10 top cities, only Orlando overlaps with Delta, all in the reduced Wheels Up Primary Service Area.

READ: A brief history of Airlines and Private Jet partnerships

Wheels Up progress

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Less than 20% of its current blocks are on the legacy rules, which Smith said enables it to reduce its fleet and concentrate on flying in the more dense Eastern U.S. and a more limited area in the West.

Mattson noted that Wheels Up has honored those legacy rules for members, which was far from universal across the jet card segment over the past several years as jet card flight providers changed their programs mid-contract to cut loss-making flights.

However, the most significant benefit for flyers of the more concentrated PSA is a more reliable service.

Mattson said during Q1, Wheels Up had 27 days in Q1 without any cancelations on its fleet – it also operates as a broker sourcing flights from third-party operators.

He said that number was “by far” the highest in the more than two years since it started tracking the metric.

In the quarter, Wheels Up matched its flight completion rate of 98% and beat its on-time performance goal by two points with an 87% mark.

On-time performance is the percentage of flights that depart within 60 minutes of the scheduled time, including air traffic control, weather, maintenance, and customer delays.

Most programmatic offerings give members a one-hour grace period to show up late without surcharges or leaving them behind.

Beyond corporate and block sales, the executives said its in-house broker, Air Partner, continues delivering profits.

While GAAP financials only allow Wheels Up to show the margin between the value of brokered flights and what it pays to operators, it also publishes the total value of those brokered flights.

They now equate to around 50% of its gross flight revenues.

The numbers are detailed below.

Wheels Up 2024 Q1 Earnings Highlights

• Q1 revenue decreased to $197 million from $352 million year-over-year, a 44%  drop. Excluding Wheels Up Aircraft Management (sold to Airshare) and Aircraft Sales (spun out to its management), revenues dropped to $193 million from $277 million, a 31% decline year-over-year. 
• Expenses were also down – from $448 million in Q1 2023 to $280 million in Q1 2024
• Net Loss for Q1 was essentially flat at $97 million compared to $101 million last year
• Q1 EBITDA loss was essentially flat at $49.2, up from $48.9 million year-over-year.
• Cash and Cash Equivalents to $301 million at the end of Q1 2024 from $384 million.
• Total Deferred Revenue decreased from $977 at the end of Q1 2023 to $699 million.
• Block Sales increased year-over-year from $100 million to $114 million in Q1.

Wheels Up Block Sales by Quarter (2021-24 by Quarter)

As Wheels Up focuses programmatic sales on its reduced Primary Service Area, it continued to see a drop in Active Members.

It marked the sixth straight quarterly decline.

Active members dropped to 9,155 at the end of Q1 2024, down from Q4’s 9,947.

At its peak in Q3 2022, there were 12,668 active members.

Wheels Up Active Members (as of March 31, 2024)