Our feature Wheels on Fire, published in CJIQ Q3 2023, probed the long, and at times winding, path taken by the company as it restructured. We talked to the key people in the room, including Kenny Dichter, who played a leading role in planning  the business’s profit-focused future.

The second short-listed feature, ‘We are a company of engineers’, was also published in CJIQ Q3 2023. This article, based on an interview with top Dassault Aviation executive Carlos Brana and colleagues, explores how  engineering skills and disciplines are said to be helping the company thrive in the highly competitive world of business jet manufacturing.

“Most of us are engineers here – we are a company of engineers,” Brana told CJI last year, as the company celebrated 60 years of making Falcon jets.

According to the Aerospace Media Awards organisers: “The Aerospace Media Awards have been created to honour journalists and publishers who have made a significant contribution to aerospace journalism and publishing.”

Launched 11 years ago, this year’s awards  will be presented in London on Sunday, July 21st, 2024.

Meanwhile, you can sign up for your free copy of Corporate Jet Investor Quarterly here. Also, previous editions of CJIQ digital publication, first launched in 2019, are available to read here.

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This week, when George Mattson (who has now been CEO for five months) announced the company’s first-quarter results, there was none of this excitement.

Sales were down 44% and it posted another loss, but this is not a surprise. The company is still restructuring. Mattson stressed that everything was in line with the plan.

“Wheels Up was great at the offensive, but its defence was weak,” says one member of its founding team looking back. “It was becoming the Amazon of business aviation but the warehouses and delivery team could not keep up.”

Much of the past year has been about building this defence. In an analyst call, Mattson and Todd Smith, Wheels Up’s chief financial officer, stressed how they are focusing on operations and turning around the company. They said that they have added more than 250 years of operational experience to its Atlanta Member Operation Center (we don’t know how many people this is). It had on-time performance of 87% and a flight completion rate of 98%. It is also cutting its fleet and cutting costs.

At $197m, sales for the first quarter were down 44% compared with last year. But half of this came from the sale of its aircraft management business to Airshare and lower aircraft sales (the company’s aircraft sales team have also since left). Charter – mainly run through Air Partner – was up 20%.

The number of active members fell by 25% to 9,155. Some of these were members in the centre of the US that Wheels Up no longer wants to serve with its King Air fleet (but it is very happy to arrange charter for them). Active users fell to 10,218, a 23% YoY drop from 13,336 users in the same quarter last year.

The results also show how long it can take to change a membership company. Wheels Up stopped selling its guaranteed nationwide programme in June 2023. So it still has customers on this programme – although it is now less than 20% of its peak.

Wheels Up is saying that it is on track to produce positive adjusted EBITDA by the end of the year. It had an adjusted EBITDA loss of $49m in the quarter; similar to the same quarter last year. 

The biggest change in the past 12 months is that it has added $490m in new investment – particularly the cash and support that has come from Delta Air Lines. At a members’ event at the Masters golf tournament, Ed Bastian, Delta’s CEO, stressed that the airline is committed to Wheels Up.

Mattson and Smith still have a way to go to get Wheels Up to profit. The company had a net loss of $487m for 2023 financial year, down from $555m in 2022. It got through $6,765m of cash last year. But they have a plan and will quietly keep working on it.

The post Wheels Up’s profit plan appeared first on Corporate Jet Investor.

Our feature Wheels on Fire probes the business restructuring of Wheels Up. No aviation business has attracted as much attention as Wheels Up this year. This cover story feature probes how and why the restructuring happened. Plus how the company is preparing for a profit-focused future.

Star players in the feature include: (of course) Kenny Dichter, founder, former CEO and chair. George Mattson, new CEO of Wheels Up and, the man who appointed him to the role, Ed Bastian, CEO, Delta Air Lines among many others.

Here’s a selection of quotes from our cover story feature. This from Dichter after his departure from the company: “I am very enthusiastic about the future of Wheels Up. The entire Wheels Up community has my unwavering support on the journey ahead.”

And here’s Bastion on Dichter’s contribution to the business. “I would like to extend my sincere gratitude to Kenny Dichter for building the Wheels Up brand into a powerhouse in private aviation,” he said after closing the big financing deal. “We have grate appreciation for his steadfast devotion to the members, customers and employees and his role in elevating the private aviation experience, which will undoubtedly guide the industry’s path forward.”  Read the full story here.

When Dassault Aviation’s executive vice president Civil Aviation, Carlos Brana spoke to CJIQ, he stressed the technical qualifications of the manufacturer’s staff. “Most of us are engineers – we are a company of engineers,” he told us. It’s a discipline and an approach to business planning that infuses all of Dassault Aviation, he said.

Brana is responsible for defining and implementing global strategy for Falcon Aircraft sales and customer service. His to-do list includes defining the guidelines for the modernisation of Dassault’s product line. So Brana and the team had something to celebrate last month when the manufacturer confirmed its long-awaited Falcon 6X had finally entered service after the jet won type certification from both EASA and FAA on August 22nd.

During our interview, Brana looked ahead to the commercial launch of the 6X and its next development project – the Falcon 10X, due to enter service at the end of 2025.

Another leading business jet to feature in the current edition of CJIQ was the ACJ TwoTwenty in our popular First Look feature. Launch customer luxury resort company FIVE Hotels is so pleased with its new jet it’s reluctant to release the aircraft to exhibit at events. Chadi Saade, acting president, Airbus Corporate Jets told us: “FIVE Hotels seems delighted with its ACJ TwoTwenty and aircraft schedule is so busy – to the point we can’t get hold of the aircraft  as much as we would like or shows.” But he added: “It’s a nice problem to have.”

Aloki Batra, CEO FIVE Hospitality told us: “A dare-to-be-different jet, the ACJ TwoTwenty cabin is one of the most innovative and technologically-advanced aircraft cabins ever designed. One that boasts all the conveniences of luxury living, but in the sky.”  

No stranger to fast jets was the late Hamish Harding, the late chairman of Action Aviation, who tragically died on June 18th, 2023, when his submersible imploded during a dive to view the wreck of RMS Titanic in the North Atlantic. Our feature recalls happier times, as we documented his many adventures in the air, in space and below the sea.

The first adventure we featured was his world-record breaking circumnavigation of the Earth via the North and South Poles at the controls of a Qatar Executive Gulfstream G650ER together with a specialist team. Last year Harding blasted into space aboard the Blue Origin New Shepard 4 space rocket.

The feature, Jules Verne planted the idea, recalled another record-breaking achievement, his dive aboard the Triton submersible DSV Limiting Factor to the deepest part of the world’s oceans. Accompanied by submarine explorer Victor Vescovo, Harding crossed the Challenger Deep in March 2021. Read the full feature – including his many other accomplishments – via the link.

Meanwhile, you can read the digital version of CJIQ here. And, if you like what you read, why not sign up for the free print version of the magazine?  Also, we are always searching for new stories from the fast-moving world of private jet aviation. So, if you have an idea, please let us know.

The post CJIQ323 features Wheels Up, Dassault, Airbus and the late Hamish Harding appeared first on Corporate Jet Investor.

But is there a link between big events at Wheels Up and NetJets announcing aircraft options?

NetJets announced a deal with Embraer for 250 Praetor 500 options in May, two days after Kenny Dichter stepped down as CEO of Wheels Up. This week it signed options for 1,500 Textron Aviation aircraft, releasing this news hours before Wheels Up announced it had closed a $500m financing.

The 15-year agreement covers Cessna Citation Ascend, Citation Latitude and Citation Longitude aircraft. NetJets will also be fleet launch customer for the Citation Ascend, when it enters service after 2025.

It is worth stressing that these are options not orders. Warren Buffett, chair of NetJets parent Berkshire Hathaway, once said: “It is impossible to un-sign a contract, so do all your thinking before you sign,” and NetJets takes this to heart. 

But even though they are not firm orders, these options should be taken seriously. Analysts at Jefferies say that Textron has taken between 19% and 30% of all Textron jet deliveries over the past five years. The investment bank says that the options may be worth $30bn to Textron.

In June 2012 NetJets placed options for up to 150 Citation Latitudes. Four years later it added another 50 options. Since then, it has taken delivery of almost 200, more than half of all Latitudes that have been built. 

As well as giving Textron production certainty and introducing the aircraft to new customers, these large orders should not worry other Textron customers. NetJets does not have a habit of dumping large numbers of aircraft on the market – in fact its whole business model makes this unlikely. You can expect the fractional operator to keep its Latitudes for 15-20 years. 

As well as QS Partners, its in-house sales broker, NetJets also has options for disposing of older aircraft. Amber Aviation spoke about its innovative Chinese AmberNet fractional lease product at Corporate Jet Investor Asia this week. NetJets has a small stake in AmberNet and has moved older Gulfstreams to the company. Hopefully we may eventually see it take some Textron aircraft from NetJets into China.

The closing of the Wheels Up credit facility is not a surprise but is good news for the company. Delta Air Lines, Certares Management and Knighthead Capital Management have successfully closed the $500m investment in Wheels Up that was announced in August. Cox Enterprises, the family-owned media and communications company has also joined as an investor. Perhaps, coincidently, Wheels Up’s former chief financial officer and its first chief technology officer were both former Cox employees. 

Delta, CK Wheels (a new Certares and Knighthead fund) and Cox have agreed a $350m term loan. The airline has also agreed to a $100m revolving credit facility.

It is unclear what secures the debt. Two market sources believe that collateral includes broker Air Partner, the few aircraft not included in Wheels Up’s aircraft EETC or aircraft-backed bond, all the company’s intellectual property including the brand, and all other assets. In return for closing the loans, the lenders have received 80% of Wheels Up’s stock. This is expected to get to 95% if investors agree to new shares being issued. Wheels Up’s advisers – Jefferies and PJT Partners – are also in talks to add another $50m lender.

This cash is designed to get Wheels Up to profit by late 2024. “This investment represents both an important source of capital for Wheels Up to support our strategy for financial stability, future profitability and long-term growth on behalf of our members and customers, as well as a vote of confidence in our path forward from a group of investors with deep experience in the premium travel space,” said George Mattson, Wheel Up’s new CEO.

The new lenders will also dominate Wheels Up’s new board. Delta will have four directors, Certares and Knighthead two each, and Cox one. There will be a seat for one company executive and two places for independent directors from the old board.

Obviously negotiating aircraft deals takes many months and NetJets will no doubt say its announcements are coincidental. The fractional operator is not going to announce any more options in the next few months so we can not prove it.

This is a shame. As Ian Fleming, the creator of 007, wrote, “Mr Bond, they have a saying in Chicago: ‘Once is happenstance. Twice is coincidence. The third time it’s enemy action’.” 

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George Mattson, the new Wheels Up head, plans to be based at the company’s Atlanta Operations Center, rather than the New York City offices. Todd Smith, who has been interim CEO since founder Kenny Dichter stepped down in May, will return to his role of chief financial officer (CFO).  

With Delta investing more in Wheels Up (it has already lent $60m before the restructuring programme is agreed upon) it is no surprise that Mattson, a former Goldman Sachs banker, has a strong connection with the airline. He has been on the board of Delta Air Lines since 2012 and knows Delta CEO Ed Bastian well.  

“George is an exceptional business leader whose background will be instrumental to the continued success of Wheels Up,” said Bastian. “With new leadership in place, Wheels Up is well-positioned to drive strategic, operational and financial improvements for its customers and stakeholders in the months and years ahead.” 

Mattson should understand Wheels Up well. He was on Delta’s board when it agreed to merge with Delta Private Jets in 2019 (in return for a 27% stake). He is also the chair and largest investor in Tropic Ocean Airways, a seaplane operator. Wheels Up invested in Tropic Ocean Airways in March 2022 as part of a partnership agreement.   

“George is an exceptional choice to lead the company through this important time.  He will serve customers, employees, and stakeholders consistent with the elevated experiences that have always defined Wheels Up,” said Dichter. “I am very enthusiastic about the future of Wheels Up.” 

Wheels Up says that Mattson has 25 years of aviation experience – it says that he oversaw transportation and airlines when he was co-head of the Global Industrials Group. Mattson also led two SPACS. One merged with Virgin Orbit, a small satellite launch company, which filed for Chapter 11 this year. The other acquired electric trucking company Xos. 

He is due to start working for Wheels Up in early October. His decision to be based in Atlanta is significant. Wheels Up opened the 34,000sqft Member Operations Center earlier this year. It has been led by Dave Holtz, chairman of Operations at Wheels Up, who spent 43 years at Delta.  

Flexjet last week opened its $50m stunning new headquarter global operations centre (pictured) in Cleveland. The 51,453sqft it adds brings Flexjet’s Cleveland campus to 243,000sqft.  

The star shaped building hosted more than 1,200 guests and even had a static display of all the operator’s aircraft. The senior manufacturers in attendance are also a sign that you can expect at least one order from Flexjet at NBAA BACE. 

Inside the star-shaped building, Flexjet has installed the largest seamless LED screen in the US. It is 176ft (53.6m) wide by 19ft high with 1,572 individual panels. Although it would be great for playing video games, the screen displays every Flexjet, Sentient Jet, and FXAir flight around the world in real time. 

“If anyone sets foot into the Global Headquarters, they instantly realise how serious we are about building a global company,” says Andrew Collins, co-CEO, Flexjet. 

“I was over in Europe when everyone started moving in and I was blown away when I came back. It is beyond expectation. It has injected so much energy into the company,” says Collins. “You can tell, as soon as you walk in, that it has also been designed from a workflow standpoint to absolutely service a customised product set.” 

Flexjet now employs more than 4,000 people around the world. Some 670 of them are based in Cleveland. Ricci, its founder, is also passionate about design and architecture. In the control room there is a table made from the fuselage of the first Gulfstream G4. Coincidently, Ricci has flown the aircraft.

The post New Wheels Up CEO, new Flexjet HQ appeared first on Corporate Jet Investor.

Jet.Ai listed by merging with Oxbridge Acquisition Corp, a Special Purpose Acquisition Company (SPAC) becoming the second business jet services company listed in New York. A few blocks across Manhattan, Wheels Up and its advisers – investment bank Jefferies and law firm Kirkland & Ellis – were busy trying to secure the future of the first. Last Wednesday they announced a deal that brings in $500m of debt for 95% of the company.

Wheels Up’s listing in 2021 gave its large institutional investors a chance to free up their investments. Jet.AI’s gave its crowd funders a chance to do the same thing. “The driving force behind the SPAC deal was to bring liquidity to our 32,000 investors and to allow the company enhanced access to capital for growth,” says Winston.

Jet.Ai is more of a software company than a business jet operator. It has a fleet of four HondaJets and also has five Challenger 3500s on order. Winston says it uses these to inform its software business. It tries not to own the aircraft by selling fractional shares and they are all operated by Las Vegas operator Cirrus Aviation.

It definitely has some innovative technology. A few weeks ago, it soft-launched CharterGPT, which allows customers to book charter using artificial intelligence. It also has a new product to help operators off-set carbon emissions and one that automatically prices yields for diverting empty legs.

With Flight Club it wants to allow operators to sell shared flights. “The software sends the booking and files to the DOT [Department of Transportation] automatically and then you have to set up an escrow which we help with. Once you have done that you can sell by the seat,” says Winston. Jet.AI has already used this working with Cirrus Aviation and the Vegas Golden Knights ice hockey team. It is also planning to offer technology allowing small operators to create their own jet cards.

Unlike Wheels Up, Winston does not want to buy operators and consolidate business aviation. He wants to help the 2,350 Part 135 charter operators in the US use technology to become more efficient. Especially the 80% who have fewer than 10 aircraft. The listing is about raising money to fund this technology. The merger between Jet.AI and the SPAC was originally valued at $45m, but Jet.AI’s first week has been tough. It listed at $10 a share. They were trading at $4 before the market opened today.

Wheels Up also listed at $10. Despite its ticker symbol of UP, on Friday it was $1.45. This is up $0.45 after Delta Air Lines and a fund run by Certares and Knighthead agreed to lend $500m to Wheels Up. Wheels Up will issue new stock to the three giving them 95% of the company. The CK Opportunities Fund 1 will lend $400m, with Delta providing a $100m loan.

The investors hope that this $500m – and the $151m in cash it had at the end of June – will be enough to get it to 2024 when it hopes to be cash flow positive – and have a positive adjusted EBITDA.

The three investors are happy with these projections. Certares focuses on investing in travel and hospitality and Knighthead has a strong restructuring focus. Together they took car hire firm Hertz Global Holdings out of bankruptcy in 2021.

Delta and Ed Bastian, its highly regarded CEO, are committed to Wheels Up. They already owned 20% after merging Delta Private Jets with the company in 2020. Bastian believes that in the long-term Delta will have a big advantage in being able to sell private aviation to its customers. This is not a new theory for the airline. It launched Delta AirElite in 1984 and expanded this in 2010 when it acquired Seagrave Aviation from Jim Seagrave. (He is working on taking flyExclusive, his next company, public). Bastian believes Wheels Up is the best way for his airline to access business aviation.

“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,” said Bastian this week. “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.”

Dan Janki, Delta’s CFO, has been appointed chair of Wheels Up.

Bastian is also a huge supporter of Kenny Dichter, Wheels Up’s founder, who stepped down as CEO in May but is still a strategic adviser to the company. “I would like to extend my sincere gratitude to Kenny Dichter, the visionary founder behind Wheels Up, for building the Wheels Up brand into a powerhouse in private aviation,” said Bastian this week. You could easily see Dichter coming back to Wheels Up with a more formal role – especially when growth becomes the focus again.

If Bastian’s bets are right: that Delta, Certares and Knighthead can get the company to profit by the end of next year and drive profits at his airline, you can expect to see other major carriers invest in business aviation. He will have secured his legacy as one of the greatest airline CEOs ever.

The bell for round two in Wheels Up’s stockmarket history has just rung.

The post Jet.Ai and Wheels Up: A tale of two stocks appeared first on Corporate Jet Investor.

Today (Wednesday August 9th), Wheels Up will report its second-quarter results. The first-quarter announcement was overshadowed by the departure of founder Kenny Dichter as CEO. This time the numbers will get much more scrutiny.

Many will focus on how much cash it has. At the end of March, it had $363m. It could be getting close to breaking debt covenants. We will find out more soon.

The company had record first quarter sales and its new strategy of focusing on two regions looks sensible, but 12 weeks is not a long time to implement it, especially for a membership business. Wheels Up does still have some supportive large investors – especially Delta Air Lines, which owns 20%.

Wheels Up launched in a market when investors were happy to support what were called pre-profit companies (and many pre-revenue ones). It was unlucky that this mood changed before it became profitable.

But it does make you ask: why would any business aviation firm want to go public today? Surprisingly, a lot of companies do.

Last week Volato, the fractional operator with a fleet of 25 aircraft, announced plans to merge with a SPAC. Jet AI (formally Jet Token) is likely to become listed this week. North Carolina charter operator flyExclusive is still in the process of listing. Set Jet, which has access to a fleet of five Bombardier Challenger 850s, is hoping to merge with a SPAC by the end of the year.

These are very different businesses. And have very different motivations in listing. (Pictured is the New York Stock Exchange building).

Matt Liotta, Volato’s founder, accepts the risks in becoming public, but says there are real benefits. “One of the benefits of being public is the increased transparency for customers and prospects,” he says. This is also a good thing for a market where it is difficult to get hard data.

They are going public at a time when demand for business aviation is cooling from its post-lockdown highs. Private Jet Card Comparisons says that hourly jet card rates fell 1.3% in the second quarter of this year, after a 5.2% drop in the first three months.

“The overall market is cooling,” says Liotta. “Charter traffic is down and private traffic is down but fractional is up compared to last year. We are not a typical fractional company and are seeing strong demand.”

Kenn Ricci’s FlexJet has stayed private. In October last year Flexjet announced a merger with a SPAC sponsored by long-term investor and partner Todd Boehly. This was cancelled in April citing market conditions.  Last week Flexjet acquired Flying Colours to bring more maintenance – especially completions – in-house.

Flying Colours received strong interest from a mixture of strategic and financial investors (it was advised by Jefferies). The fact that it was not listed is arguably an advantage when closing deals.

Spare a thought for Surf Air Mobility which became public through a direct listing on Thursday July 27th at $4.60. It is now at $1.50. Surf Air is a very different business – relying on small aircraft and certification of electric aircraft – but now is not a fun time to be running it.

SPACs get a lot of criticism but the fact they typically launch at $10 is useful.

The post Why would anyone want to list? appeared first on Corporate Jet Investor.

“We are seeing no signs of demand falling,” said Robert Bourrier, EVP global corporate sales, Wheels Up. “Demand from corporates is stronger than ever.”

Bourrier joined Wheels Up when it acquired Delta Private Jets in 2020. Before that he worked in corporate sales at Delta Air Lines. Delta Private Jets had a corporate scheme which Wheels Up adapted and formally launched two years ago.

In April, Wheels Up announced a closer partnership with 20% shareholder Delta Air Lines to add even more enterprise accounts. “We’re focusing on very strategically targeting those opportunities and bringing new opportunities to Wheels Up from the Delta relationship,” said Bourrier.

Wheels Up customers can use their funds to buy Delta flights. Delta customers can also buy Wheels Up flights.

“It makes perfect sense, there is an awful lot we can do together,” said Ed Bastian, CEO, Delta Air Lines speaking at The Wings Club Luncheon in New York on May 17th. “We have just launched a partnership with our corporate sales team where our corporates who may not be willing to put a big investment into private aviation or may have their own – can on a smaller, almost by the menu option – take Wheels Up opportunities and we can make that as frictionless and seamless in our corporate customer contracts.”

 Bastian said that most corporate travel managers buy a lot of airline seats but few regularly get involved in business aircraft charter – which may be handled by corporate flight departments. He said this is a big opportunity for Delta and Wheels Up.

“What we do is sit down with customers to truly understand their needs,” said Bourrier. “We then develop a programme that suits that flying need and really solves the problems that they’re looking to solve.”

Bourrier gave the example of a company flying from New York on a capital raising roadshow. “They might fly from New York to Boston in a light jet. From Boston they might want to pick up another four people and then take a mid-sized jet down to Miami before choosing a bigger aircraft or Delta to fly to the Bay Area,” he said. “We can give them the flexibility to gain access to multiple aircraft on the same day and with unlimited lead passengers so they can put anyone they need on that jet at any time.”

Large users typically sign a two-year agreement depositing one year’s funds with Wheels Up. “Once they realise the advantages, the majority end up under contributing and fly in excess of the initial deposit,” said Bourrier.

He said they are always keen to introduce customers to business aviation. “So if a target organisation has a board meeting that’s upcoming, we are very happy to help them sample Wheels Up,” he said. “Once we get to know them and they know us we can transition them to a broader programme. And then somewhere we get to know them, they get to know us and then transitioning through a broader programme to meet all of it.”

It is not unusual for enterprise accounts to have their own aircraft. “We don’t want to compete with corporate flight departments. What we’re looking to do is be as complementary as possible,” said Bourrier. “When you already have your own fleet, we can be an extension of our fleet when you have challenges around maintenance or demand issues.”

The best part of the job for him is that every client – and agreement – is different. “We may have a customer that owns grocery stores across America with a very active CEO who wants to be in those locations probably once every year. We can get him to three stores a day.” said Bourrier. “It is exciting to be able to do this.”

Wheels Up also uses Air Partner – the brokerage it bought in 2022 – to arrange international trips.  Bourrier gave s the example of a company using Delta to fly long-haul to Europe and then using a business jet when they are here. “No one in the industry can do that and execute on it.”

Delta’s Bastian agreed. At the Wings Club lunch Bastian was asked by Phil LeBeau, CNBC’s auto and airline industry reporter, if he regretted investing in Wheels Up? Bastian answered: “Not at all. I won’t talk about the stock, and they are not unlike many SPACs. People talk about trouble with it tends to be more stock related. The relationship is strong. Kenny [Dichter] has done a masterful job over the last decade building a high-quality brand, great experience, a lot of new members.”

Bastian added: “For us to be able to add that to our stack as the premium opportunity within the Delta experience, well no one has ever been able to do that before, and we have been attempting to pull that off.”

The post Wheels Up and Delta focused on growing corporate customers appeared first on Corporate Jet Investor.

On Sunday (May 7th), at the annual Berkshire Hathaway investor day Warren Buffett, chair and CEO, praised the performance of NetJets. “It’s in a class by itself. It’s done what Ferrari has done in a different sort of way in cars.” Charlie Munger, vice president of Berkshire, said that NetJets is now worth the same amount as a major airline (credit to Private Jet Card Comparisons for listening to the six hour meeting to get these quotes).

Buffett was also asked about Wheels Up. He did not hold back saying: “It has 12,600 people who have given them over a billion dollars on prepaid cards and I think there’s a good chance some people are going to be disappointed later on.”

Buffett’s comments focused interest on Wheels Up’s first quarter results which came out on Tuesday. The big news was that Kenny Dichter, its founder and CEO, was stepping down. Over green juice in the Wyn Hotel at NBAA back in 2013, he pledged that he would build the biggest brand in business aviation. He did and it will be fascinating to see what he does next.

Todd Smith, Wheels Up’s CFO, has been named interim-CEO. Ravi Thakran, who led the SPAC that acquired Wheels Up, is now executive chairman.

The financial results were overshadowed by Dichter’s departure. Wheels Up lost $100m in the first quarter, with adjusted EBITDA of  –  $49m but this is not a big change. It lost $89m in the same quarter in 2022 (with a $49.5m EBITDA loss). No one expected it to make a profit in the first three months of the year.

Aside from Dichter, there were three key things announced. First, there are signs that demand is starting to fall. Active members fell 1% to 12,285 for the first quarter of 2023 compared with 2023.

Second, the company is radically restructuring its programme. Rather than try to fly countrywide, it is refocusing on two core markets: east of the Mississippi River (with part of Texas) and west. It will keep its King Air fleet in the east. Offering light, mid-size and super-midsize aircraft in both regions, it is cutting the cost of flying and daily minimums. Using a King Air will be 7.6% per hour cheaper. Customers outside these areas will be encouraged to book charter with Air Partner.

This is a big shift. The company says that 80% of its customers are in these two markets. It also makes it much easier to support the fleet – particularly King Airs – reducing delays. With the programme changes it has now announced its clearest plan to get to profit.

Third Wheels Up also announced more cooperation with 21% shareholder Delta Air Lines more closely. Large Delta corporate clients will now be sold Wheels Up flights. Wheels Up customers will continue to get Delta frequent flier points and perks.

Launched on Wednesday, at the excellent International Aircraft Dealers Association (IADA) conference in Florida, Vista Global Trading is an exciting venture. It will be led by Bill Papariella, chief business officer at Vista.

Papariella was CEO of Jet Edge International which Vista acquired in 2022.

As well as helping existing owners trade their aircraft for programmes, Vista Global Trading is looking for large multiple aircraft deals.  At Jet Edge, Papariella bought and sold hundreds of aircraft – particularly Gulfstream G4SPs and G450s and Bombardier Challenger aircraft.

He loves trading and Vista Global Trading could become a significant business. Jet Edge Partners will continue to operate as a separate US aircraft broker led by Kevin White, but will work closely with Vista Global Trading.

The timing of the announcement is a bit of a surprise. Normally you would expect this to come at a large industry event like EBACE (which is next). Surely this has nothing to do with any other news last week?

This is from Corporate Jet Investor’s One Minute Week email – you can sign up for free here

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Both active members and live flight legs fell during the quarter, according to the company’s results. . Active members dropped 1% to 12,285 in total, while live flight legs decreased 13% year-on-year (yoy) to 15,389.

The company’s adjusted EBITDA remained flat at a loss of $49m, while revenue was up $26m yoy to $352m. Wheels Up attributed the rise in revenue to an increase in aircraft sales and the acquisition of Air Partner.

The public firm said it has $363m cash in hand and a total of $1.7bn in assets, while owing $1.5bn in liabilities.

Wheels Up is evaluating the disposal of “certain non-strategic assets” to focus on its core charter business, said the company. The firm also announced programme changes, including a new programme with Delta Air Lines that will give volume-based preferential rates on Wheels Up flights to its corporate customers.

Earlier today, Wheels Up revealed  Kenny Dichter, who founded the business, is stepping down as CEO. Todd Smith, chief financial officer, has been appointed interim CEO.

Smith said: “Our revised product offering will improve Wheels Up’s competitiveness and service delivery, as well as the flight experience for members and customers. These changes are positive steps for Wheels Up and we are committed to making the decisions necessary to improve this business for our customers, employees and shareholders.”

Meanwhile, read more about Dichter’s decision to step down here.

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