December 20, 2024
‘In the next couple of years, I think you’re going to see that asset grow meaningfully’ – Ed Bastian on Wheels Up.
Delta Air Lines’ top executive continued his bullish outlook for Wheels Up during the airline’s recent Investor Day presentation.
The discussion of its private jet arm came after a question from Citigroup analyst Stephen Darrell Trent.
Asked if premium customers who exited the scheduled airlines due to Covid had returned, Delta CEO Ed Bastian said, “[W]e’ve seen them come back.”
He added, “In fact, (the flood of new customers to private aviation) was one of the things that drove Wheels Up into some duress because…the demand was pretty high during Covid.”
Bastian then talked about the future.
He reiterated previous comments, saying, “We’ve got some work to do, but eventually, it’s going to be our next step on our premium ladder. No airline has ever been able to integrate commercial with a private opportunity.”
READ: A brief history of Airlines and Private Jet partnerships
Talking about the current situation at the nation’s fourth-largest charter/fractional operator, Bastian said, “We have Delta people inside Wheels Up on loan, and learning about the business, and how we can schedule it, how we can price it, how we can operationalize it.”
The Delta CEO added, “We’re the world’s best at all that stuff. And while the market’s different, the customer base is a little different. It’s also something that’s easy to get your arms around.”
Bastian concluded, “In the next couple of years, I think you’re going to see that asset grow meaningfully, and I think you’re going to see a lot of value that we’re creating, not just for our business, but potentially as owners.”
According to the presentation, private aviation could also benefit from generational trends.
Bastian said Millennials have 36% more wealth than Gen X at the same age on an inflation-adjusted basis.
According to the presentation, two-thirds of millennials are willing to spend money on luxury travel.
At Delta, premium revenue is expected to bypass main cabin sales by 2027.
While executives didn’t discuss additional investment in Wheels Up, CFO Dan Janki said the company expects to reinvest 50% of its anticipated $9-to-11 billion in annual operating cash flow into growth opportunities.
Wheels Up executives have forecast positive Adjusted EBITDA for 2025.
READ: Q&A with Delta CEO Ed Bastian, Wheels Up CEO George Mattson
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