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LAS VEGAS, Nev. — In 2023, Delta Air Lines effectively saved membership-based charter operator Wheels Up from the brink of bankruptcy. A $500 million debt financing lifeline from the airline was a major first piece of an effort to rework its corporate structure and move towards a profitable future. So far, results have been less than stellar — its most recent earnings reports show its membership base has shrunk by 30% and revenue of $393 million is down 41% since the second quarter of 2023.
Continuing its bid to right the ship, Wheels Up on Oct. 22 announced a flurry of new financial and fleet related transactions at a standing room only press conference at the National Business Aviation Association’s annual conference. Wheels Up is officially selling its Cessna Citation X fleet, and will phase out its Citation Excel and CJ3 aircraft as well as its Hawker 400XP business jets over the course of three years in favor of Embraer Phenom 300s and Bombardier Challenger 300s and 350s. Its Phenom fleet will be kick started by the immediate purchase of charter company GrandView Aviation (a transaction that includes “most” of its existing pilot group), and the Challengers will be added through a combination of purchasing and leasing.
Related: Wheels Up lays off pilots as airline hiring slows and revenues slump
Beyond the sale of its current jet fleet, financing for that aircraft shuffle will be accomplished through a revolving credit facility of up to $332 million from Bank of America, an arrangement that allows Wheels Up to repeatedly access favorable loans, according to filings with the U.S. Securities and Exchange Commission. The funds will be used to re-capitalize its existing owned aircraft debt facility as well as to fund the Grandview transaction and future aircraft acquisitions.
This marks Wheels Up’s second round of high value credit-based financing coming off the heels of its 2023 agreement with Delta, which is providing “credit support” in this latest transaction. However, filings indicate that the arrangement is conditional and complex, tying the ultimate amount borrowed to dynamic aircraft valuations and raising questions about how far Delta is willing to go to protect its investment.
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