Wheels Up to transition its current jet fleets
to Phenom 300 Series and Challenger 300 Series
aircraft
Entered into agreement to acquire GrandView
Aviation's entire fleet of 17 Phenom 300 and Phenom
300E aircraft
Entered into agreement to sell entire owned
fleet of super mid Citation X aircraft and lease for a limited
period in preparation for transition to Challenger fleet
New fleet to be outfitted with best-in-class
Gogo Galileo HDX satellite-based WiFi
Committed financing to be provided by Bank of
America, with credit support from Delta Air Lines
ATLANTA,
Oct. 22,
2024 /PRNewswire/ -- Wheels Up Experience Inc. (NYSE:
UP) today announced a series of major aircraft, commercial and
financing transactions that lay the foundation for the company's
fleet modernization strategy. Upon closing, the transactions will
initiate the transition of Wheels Up's four existing jet aircraft
types to two of the most preferred and successful aircraft types in
the industry – Embraer's Phenom 300 and Phenom 300E aircraft
and Bombardier's Challenger 300 and Challenger 350 aircraft.
Once complete, the transition of Wheels Up's jet
aircraft to the highly reliable Phenom 300 series and Challenger
300 series models is expected to lower the average aircraft age of
its fleet by approximately 10 years – a fleet transition with
wide-reaching operational implications, including expected
improvement in operational performance, operational efficiency and,
in turn, an enhanced customer experience.
The company intends to continue to operate in
support of its customers a fleet of King Air aircraft within its
existing service areas.
"Fleet modernization is the next critical step in
the journey of Wheels Up. We believe our flexible, accessible
offerings across programmatic membership and global charter,
enhanced through our one-of-a-kind strategic partnership with Delta
Air Lines, already deliver the most customer-centric global
aviation solutions available in the market today" said
George Mattson, CEO of Wheels Up. "We believe our fleet
modernization strategy and the enabling transactions we are
announcing today will allow us to deliver those solutions with a
best-in-class aircraft fleet, with an elevated customer experience
to match."
Wheels Up to Acquire GrandView Aviation's
Phenom Fleet
Wheels Up has entered into a binding agreement
to acquire the entire Phenom fleet of GrandView Aviation, a
subsidiary of Global Medical Response. The agreement provides for
the acquisition of their entire fleet of 17 Embraer Phenom 300 and
Phenom 300E aircraft and certain related maintenance assets to
support the fleet, at a purchase price of $105 million, subject to certain adjustments.
Under the terms of the agreement, Wheels Up expects to
assume GrandView's existing customer programs and retain most
of the existing pilot group, integrating them into the existing
Wheels Up pilot workforce.
Wheels Up and GrandView also expect to enter into
a short-term Transition Services Agreement at closing, under which
GrandView will operate the Embraer Phenom aircraft on Wheels Up's
behalf while the aircraft are transitioned to the company's Wheels
Up Private Jets FAA operating certificate.
The company anticipates that the GrandView
acquisition will close as promptly as practicable this quarter and
expects thereafter to immediately introduce the Phenom fleet into
its programmatic membership and charter offerings.
Wheels Up intends to grow its fleet of Phenom
series aircraft by opportunistically acquiring or leasing
additional aircraft in the secondary market and expects to complete
the fleet transition and retire its existing fleet of light and
mid-sized jet aircraft within approximately three years, subject to
business and market conditions.
Wheels Up to Introduce Bombardier Challenger
Aircraft
In the super mid category, Wheels Up intends to
opportunistically acquire a fleet of pre-owned Challenger 300 and
Challenger 350 aircraft via the secondary market through a
combination of outright purchases and long-term leasing.
In preparation for this transition, Wheels Up has
agreed to sell all 13 of its currently owned Citation X aircraft to
an unrelated third party. The company expects to lease a portion of
those sold aircraft and amend the lease terms for other Citation X
aircraft that are currently leased from that same buyer. This
agreement also provides the ability to replace leased aircraft with
Challenger aircraft in the future.
The Bombardier Challenger 300 Series aircraft are
expected to be introduced into Wheels Up's fleet beginning next
year, with availability on both an as-requested charter basis and
on specified routes for members. A full introduction into Wheels
Up's programmatic offering across guaranteed service areas is
expected by the end of 2025.
Consistent with the timing of the Phenom
transition plan, and subject to business and market conditions,
Wheels Up expects to complete the transition to the Challenger
platform within approximately three years.
An Enhanced Customer Experience with
Gogo
As a key strategic step in enhancing the customer
experience, Wheels Up has entered into a letter of intent with Gogo
Business Aviation to equip the Phenom and Challenger aircraft
Wheels Up expects to acquire with the enhanced capabilities and
superior performance of Gogo Galileo HDX satellite-based WiFi.
Gogo's low earth orbit (LEO) satellite system is expected to
deliver high bandwidth, low latency, global coverage and be capable
of live streaming and voice telephony.
"We believe that providing best-in-class
connectivity while in the air is a core element of the customer
promise and the customer experience", said George Mattson, Wheels Up CEO. "We anticipate
that we will be one of the first and only domestic fleets of
private aviation aircraft equipped with this level of capability
and, like our partner Delta in the commercial aviation space, want
to provide the highest level of connectivity and performance that
available technology delivers."
As part of the agreement, Gogo has committed to
complete certification for the Gogo Galileo HDX system and plans to
have HDX certification on the Challenger and Phenom platforms by
the middle of 2025, with transition for Wheels Up's updated fleet
planned to begin immediately thereafter.
Committed Financing to be Provided by Bank of
America with Credit Support from Delta Air Lines
Wheels Up
has entered into a commitment letter with Bank of America for a
new, five-year, up to $332 million
senior secured revolving credit facility. The company anticipates
that the revolving facility will close concurrently with the
closing of the GrandView acquisition in the fourth quarter.
Wheels Up expects to utilize the revolving
facility to fund several actions, including the GrandView
acquisition; the redemption of all outstanding equipment notes on
the company's owned aircraft; and general corporate purposes. The
financing is also expected to deliver up to $115 million of additional cash to the balance
sheet of Wheels Up and provides future revolving borrowing
availability under certain conditions, with which Wheels Up expects
to opportunistically acquire additional Phenom and Challenger
aircraft in the future as it completes its fleet modernization
plan.
Delta Air Lines is expected to provide credit
support for the new financing, enhancing Wheels Up's access to
capital and on more attractive terms than would otherwise be
available.
"In the year since we've invested in Wheels Up,
their operational performance, financial progress and the
successful revamp of their customer offering have validated our
decision to embark on this one-of-a-kind strategic partnership,"
said Ed Bastian, CEO of Delta Air
Lines. "Underpinned by those key improvements and further fueled by
the forthcoming execution of this modernized fleet strategy, we
feel more confident than ever that Wheels Up is on the right track
to be a global leader in private aviation, as we work together to
build an unrivaled partnership spanning across commercial and
private travel."
Future Fleet Enhancements
Wheels Up is
also in discussions with Bombardier, Embraer and other third-party
providers on additional elements of its product offering and
customer experience, including standardized livery and interiors.
Updates are expected in the coming months.
Concurrently with this announcement, the company
is filing a current report on Form 8-K with the SEC related to the
GrandView acquisition and commitment for the revolving
facility.
About Wheels Up
Wheels Up is a leading
provider of on-demand private aviation in the U.S. and one of the
largest companies in the industry. Wheels Up offers a complete
global aviation solution with a large and diverse fleet and a
global network of safety vetted charter operators, all backed by an
uncompromising commitment to safety and service. Customers can
access charter and membership programs, as well as unique
commercial travel benefits through a one-of-a-kind, strategic
partnership with Delta Air Lines. Wheels Up also offers freight,
safety and security solutions and managed services to individuals,
industry, government and civil organizations.
Wheels Up is guided by the mission to deliver a
premium solution for every customer journey. With the Wheels Up
mobile app and website, members and customers have the digital
convenience to search, book and fly.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains certain
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are predictions,
projections and other statements about future events that are based
on current expectations and assumptions and, as a result, are
subject to known and unknown risks, uncertainties, assumptions, and
other important factors, many of which are outside of the control
of Wheels Up Experience Inc. (the "Company", "Wheels Up", "our",
"us" or "we"). These forward-looking statements include, but are
not limited to, statements regarding: (i) the acquisition of 17
Embraer Phenom 300 and Phenom 300E aircraft and certain related
maintenance assets to support the fleet, and existing customer
program from GrandView Aviation LLC (the "GrandView
Acquisition"), and any expected benefits or impacts to the Company
as a result of the GrandView Acquisition or operation of the assets
acquired as part of the GrandView Acquisition after closing,
including the Company's ability to consummate the closing of such
acquisition on the schedule that it currently anticipates; (ii) the
commitment letter entered into between Wheels Up and Bank of
America, N.A. and the up to $332
million senior secured revolving credit facility (the
"Revolving Facility") contemplated thereby, including the expected
terms of the Revolving Facility, the ability to use net proceeds
from the Revolving Facility to fund the GrandView Acquisition, the
refinancing of the Company's existing equipment notes, the
potential receipt and expected use of any remaining net proceeds
from the initial closing under the Revolving Facility (including
the potential future acquisition of aircraft using such net
proceeds, assumptions regarding the consummation of aircraft sales
currently under contract and other factors that may impact the
amount of remaining net cash proceeds expected to be delivered to
Wheels Up from such initial closing), the ability of the Company to
reborrow under the Revolving Facility in the future, and the
ability of the Company to consummate such financing on the terms
and timeline that it currently anticipates; and (iii) the Company's
fleet modernization strategy described herein and the ability of
the Company to execute such strategy, as well as the expected
operational and financial impacts to the Company from implementing
such strategy on the timeline that it currently anticipates. The
words "anticipate," "continue," "could," "expect," "plan,"
"potential," "should," "would," "pursue" and similar expressions,
may identify forward-looking statements, but the absence of these
words does not mean that statement is not forward-looking. Factors
that could cause actual results to differ materially from those
expressed or implied in forward-looking statements can be found in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2023 filed with the U.S.
Securities and Exchange Commission ("SEC") on March 7, 2024 and the Company's other filings
with the SEC from time to time. You are cautioned not to place
undue reliance upon any forward-looking statements, which speak
only as of the date made. Except as required by law, the Company
does not intend to update any of these forward-looking statements
after the date of this press release.
For more information, please
visit: wheelsup.com
Media Contact
press@wheelsup.com
Investor Contact
ir@wheelsup.com
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SOURCE Wheels Up