One of the largest private aviation providers, Wheels Up, had revenue of $1.6bn in 2022, up 32% from 2021. The number of “Active Members” grew 5% to 12,661 but the net loss also increased significantly. The company says it is now focused on profitability after many years of rapid growth.
"Wheels Up has a strong foundation of revenue backed by loyal customers who continue to spend at significant levels with us. Over the past decade, our team has proven that we can deliver robust growth with record revenue of $1.6 billion in 2022," said Chairman and CEO Kenny Dichter. "With that strong base of business, our focus is now on delivering world-class service profitably."
Fourth Quarter Results
In the last quarter of 2022, the company saw revenue increase 18% year-over-year to $408 million. “Live Flight Legs” decreased 5% year-over-year to 19,308 in total but the flight revenue per “Live Flight Leg” increased to $14,178 from $12,428. Note the company defines a “Live Flight Leg” as a complete one-way revenue generating flight leg.
Background & Prior Acquisitions
Wheels Up was founded in 2013 and has grown rapidly to become the third largest private aircraft operator in 2022 and the largest charter operator. It became a public company in 2021 and is traded on the NYSE under the symbol "UP". Large parts of that growth came through a series of acquisitions including Delta Private Jets, Air Partner and Gama Aviation Signature amongst several others. But in the recent accounts it took a non-cash charge of $132 million for goodwill impairment, which indicates it probably overpaid for some of these acquisitions.
In it’s end of year presentation to investors the company talked about it’s plans to achieve profitability.
For instance, it has recently announced $30 million of expected annualized cost savings from headcount reductions in sales and marketing and general and administrative areas. Specifically in an 8k filing the company said “The Plan is intended to streamline the Company’s organization and reduce headcount in areas of the business that do not directly impact the Company’s operations or its customers’ experience. Excluded from these actions were key operationally focused employee groups such as pilots, maintenance and operations-support personnel.”
In a note to employees Kenny Dichter said “we are in the process of taking out more than $30 million in costs through headcount reductions in several areas of the business, excluding pilots, frontline maintenance and other customer-facing roles.”
The new 34,000-ft Member Operations Center in Atlanta should open in the middle of this year. This will be the home for member services, scheduling, dispatch, directors of maintenance and other logistical functions. The company says this will “drive improved customer communications and service.” Atlanta is also the home for Delta Air Lines the largest shareholder in Wheels Up. The two have already collaborated on pilot development initiatives.
With the multiple acquisitions came multiple FAA Operating Certificates which added complexity to the operations. The company continues to consolidate the certificates to improve the efficiency. As an example, the company recently consolidated the Alante Air Charter operation (a 2022 acquisition) and sold the associated certificate.
On the leadership side, Mark Briffa, the former CEO of Air Partner, has been appointed as EVP and Chief Commercial Officer, effective as of March 1, 2023. In this role will lead the combined Wheels Up and Air Partner global sales force across the Company's portfolio of products, and will be responsible for developing and implementing strategies and managing the overall commercial and sales operation.
Looking at all these initiatives Wheels Up says it will improve fleet management, improve operating complexity and the company will also use dynamic pricing to balance demand across its network.
"Our strong top line and our iconic brand are huge advantages for us," said CFO Todd Smith. "Our focus remains on executing to deliver substantial progress in 2023 to achieve positive Adjusted EBITDA in 2024."