Wheels Up forecasts full-year positive Adjusted EBITDA for 2025

In reporting its Q3 2024 financial results, Wheels Up executives say the private jet flight provider expects to achieve positive Adjusted EBITDA for the full year 2025.

The Delta Air Line-backed private jet flight provider also says its connection to the big airline is paying off.

Block sales targeting the airline’s corporate accounts were the highest mix of overall block sales during September.

Additionally, North America’s fourth-largest private jet charter/fractional operator stabilized revenue and expanded its margins over the past year.

Revenue stabilizes

“After seven consecutive quarters of revenue contraction leading into 2024, the intentional improvements we have made to our business over the last year have stabilized our top line, expanded margins to record levels, and positioned us for growth,” said CEO George Mattson.

He continued, “We expect our next phase of financial and operational improvement to be driven by the positive impact of our fleet transition, both immediately and over the next several years.”

Last month, Wheels Up unveiled an extension fleet renewal program.

It includes buying the Embraer Phenom 300 light jet fleet from GrandView Aviation.

It also secured a commitment from Bank of America for a new senior secured revolving credit facility of up to $332 million.

In terms of cash going out the door, Mattson noted, “We have continued to make great progress in reducing our cash burn, with operating cash flow improving 44% sequentially and 94% year over year, from a cash outflow of $250 million a year ago to $15 million in the current quarter.”

Interim CFO Eric Cabezas added, “This quarter’s Adjusted Contribution Margin was the highest in our history as a public company.”

He said, “We have made significant progress in reducing our operating cash burn and expect to achieve positive Adjusted EBITDA for the full year 2025, positioning the company for future profitability and long-term success.”

Wheels Up Q3 2024 financials

Wheels Up cut its Q3 2024 net loss to $57.7 million from $144.8 million, while Adjusted EBITDA loss ticked up from $18.5 million to $19.9 million despite revenue declining from $320.1 million to $193.9 million.

Through the first nine months, revenue fell from $981.6 million last year to $587.3 million.

Net loss declined to $252.1 million from $406.3 million for the first three quarters.

Adjusted EBITA loss was essentially flat, down slightly from $107.7 million to $106.6 million.

Wheels Up executives pointed to a sequential drop in Adjusted EBITDA loss, down from negative $37 million in Q2 and a negative $49 million result in Q1.

In May 2023, Wheels Up announced plans to shrink the area where it offers guaranteed rates.

The move has reduced unprofitable flying in large Midwest and Pacific Northwest swaths.

The occupied hour pricing model that most jet cards and fractional providers use and customers like means that the provider takes the cost of repositioning flights before and after the customer flies.

GAAP revenue was $197 million in Q1 and $196 million in Q2, compared to $193.9 million in Q3.

After posting its first-even positive Adjusted Contribution margin of 1.0% in Q1 and then 7.8% in Q2, it improved further to 14.8% in the latest quarter.

Adjusted Contribution Margin is found by dividing Adjusted Contribution by total revenue.

Adjusted Contribution reflects gross profit or loss, excluding depreciation and amortization. It is adjusted further for equity-based compensation included in the cost of revenue and other items included in the cost of revenue that are not indicative of ongoing operating performance.

Wheels Up YTD, Q3 Financial Results

Source: Wheels Up

On the earnings call, Mattson said, “Part of that success will depend on the continuation of the increased commercial momentum we saw this quarter, with block sales up over 85% year over year to $147 million.”

He added, “We are seeing strong traction in terms of our Delta corporate sales initiative, with joint Delta accounts representing the highest mix of overall block sales in the month of September.”

Mattson called it “The best monthly performance in over four years since we started tracking that data. We expect our recent fleet announcements to drive strong customer interest and continued commercial momentum in the fourth quarter and into 2025.”

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

Source:  Wheels Up

At the same time, active members fell sequentially from 8,268 to 6,669, reflecting the reduced guaranteed rate zone.

The company has been trying to shift its demand from mainly leisure customers to a more balanced mix of business travelers who fly midweek.

Wheels Up Active Members (2021-2024 by Quarter)

Source:  Wheels Up

The corporate sales come via block sales and ad hoc charters, utilizing Air Partner.

Improved Reliability

Wheels Up continues to report its completion percentage and on-time performance.

The completion percentage slipped slightly in Q3 to 98%.

On-time performance also dipped to 82%, below its target of 85%.

Mattson again challenged competitors to publish their performance numbers.

In a Private Jet Card Comparisons survey conducted between mid-July and mid-September, Wheels Up had the biggest gain in customers who rated its service over the past 12 months as Excellent or Very Good.

72.3% of Wheels Up members now rate its service as Excellent/Very Good, up from 48.9% a year ago.

The percentage of respondents who rated Wheels Up Excellent, Very Good, or Average increased from 77.2% to 87.7%.

Wheels Up struggled with reliability as it sought to handle the demand surge from Covid amid combining six charter airline certificates, a product of its acquisition stream.