Wheels Up large sales, corporate sales jump as losses continue

Despite red ink, Wheels Up executives painted a picture of progress as it focuses on its integrated premium strategy with Delta Air Lines.

By Doug Gollan, May 9, 2024

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

This brings more good news if that’s what you are looking for.

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)

Period Block Sales (in millions)
Q1 2024 $114
Q4 2023 $207
Q3 2023 $79
Q2 2023 $96
Q1 2023 $100
Q4 2022 $346
Q3 2022 $151
Q2 2022 $333
Q1 2022 $175
Q4 2021 $540
Q3 2021 $172
Q2 2021 $116
Q1 2021 $69

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)

Period Active Members
Q1 2024 9,155
Q4 2023 9,947
Q3 2023 10,755
Q2 2023 11,639
Q1 2023 12,285
Q4 2022 12,661
Q3 2022 12,668
Q2 2022 12,667
Q1 2022 12,424
Q4 2021 12,040
Q3 2021 11,375
Q2 2021 10,515
Q1 2021 9,896

Wheels Up outlook

Wheels Up certainly will continue to have its critics.

However, for those who last year were pounding the table about members potentially losing money if it shuttered, the fact is those flyers who have stuck with it have, in many cases, saved tens, if not hundreds of thousands, of dollars on their flights.

For flyers who can stay within its more limited PSA, it is often one of the most flexible programs when measured by what matters, such as cost, callouts, daily minimums, peak days (or lack of them), and its long-flight discounts.

Despite the fleet cuts and capped rate service area, Wheels Up ended 2023 as the fourth-largest fractional/charter flight provider, more than double the fifth spot.

Reliability has seemingly improved significantly.

Wheels Up also has brand awareness, which is only matched by NetJets, and now it has visibility via Delta’s corporate sales team and perhaps its marketing department, too.

Delta is a key sponsor of the upcoming Olympic games in Paris this summer, so it will be interesting to see if they can use the platform to highlight Wheels Up.

Doubters can plow through its 10-Q and pick at various shortcomings and shortfalls.

Despite headwinds, many flyers will find the Wheels Up program a good fit.

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