Private jet charter company Wheels Up Experience said Tuesday that it’s proposing to give up 95% of its common stock amid financial losses to receive a $500 million lifeline from its lenders.
Wheels Up charters private jets by the hour for its customers but has struggled financially as demand for private jets has cooled among wealthy travelers in the wake of the pandemic. The mounting financial losses have forced it to pursue a variety of restructuring measures this year to shore up its finances, including job cuts to its workforce and changes to its management team.
Under the latest non-binding agreement, Wheels Up would receive a $400 million term loan from its partners Delta Air Lines and investment firms Certares Management and Knighthead Capital Management. Delta would also provide a $100 million liquidity facility, bringing the total funding available to Wheels Up to $500 million.
The expanded partnership between Wheels Up and its investors "would include deep travel expertise and resources to drive strategic, operational and customer service improvements," the company said in a press release.
"The partnership will create new opportunities for Wheels Up to drive strategic, operational and financial improvements for its customers in the months and years ahead," Delta CEO Ed Bastian said in a statement. "Delta’s unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability and aircraft maintenance, combined with Certares’ and Knighthead’s experience and global reach, are expected to speed Wheels Up on its path to profitability."
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Todd Smith, interim chief executive officer and chief financial officer of Wheels Up, added that the private jet firm "sincerely appreciates the unwavering support of so many of our members and customers."
"Over the past few months, we have been intensely focused on taking clear steps to improve our product offering and our operational delivery," Smith said. "Those actions are already showing results and we look forward to continuing and accelerating that progress with the support of our new partners. Our continued close work with the Delta team will enable use to further integrate our digital experiences, member benefits and our operations."
The news comes after the company on Monday said it was evaluating its options, including potentially filing for bankruptcy, as it reported a net loss in the second quarter was larger than its loss in the same period last year.
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Wheels Up launched in 2013 with the aim of making private air travel possible for people by making it more affordable through hourly leases. It became the first private aviation company to trade on the New York Stock Exchange in 2021.
FOX Business’ Breck Dumas and Reuters contributed to this report.
