Wheels Up continues to transform its operation to reduce costs and get it to a state from which it can scale and grow as a sustainable business in 2025.
“This quarter’s financial results provide validation that the investments we have made in our business and the difficult decisions we have made over the past year to improve the efficiency of our business are working,” said Todd Smith, Wheels Up chief financial officer, during an earnings call Aug. 8.
The company’s financial numbers and operational metrics are mostly improving. Its net loss improved by $63.6 million year-over-year to $97 million. Its adjusted contribution margin increased year-over-year to 7.8% and its adjusted EBITDA improved to a loss of $37.4 million compared to the second quarter (Q2) of 2023, which was a loss of $40.3 million.
Wheels Up’s revenue decreased to $196 million due to divestiture of non-core assets, including exiting aircraft management and aircraft sales businesses, as well as reduced flight revenue in Q2.
This compares to $335 million the same period last year, which is a 41% decrease.
“We are pleased with our progress in refining operations and establishing a scalable platform that supports revenue growth. This solid foundation paves the way for our next initiative: fleet modernization. Our plan includes investing in larger, newer and more capable aircraft, all designed to elevate the flight experience for our customers,” George Mattson, Wheels Up CEO, tells Aviation Week.
Mattson says Wheels Up plans to share more about its fleet modernization plans later in 2024.
In the meantime, he says the company has been investing in its operations to improve reliability and performance.
“We consider completion percentage, on-time percentage, and Brand Days as key metrics for our customer service,” Mattson says. The Q2 figures “exceeded our internal goals for both completion rate and on-time performance, achieving 99% and 87%, respectively.”
It introduced Brand Days, a new benchmark that measures days with zero cancellations across its controlled fleet. Zero cancellation days is a metric airlines such as Delta, its majority owner, also use. Mattson tells Aviation Week that in Q2, “We set a new record with 31 Brand Days, marking a nearly 15% increase from Q1, which was previously our highest.”
A few notable achievements in the recent quarter include transitioning its King Air 350i and Citation Excel/XLS fleets onto a single FAA operating certificate that already includes its Hawker 400XP aircraft. This results in operational efficiencies including maintenance, scheduling and training. Its Citation X fleet is in the process of transition to that same certificate, with six of those aircraft already moved to the single certificate.
“Now all of our pilots and technicians are trained on the same flight manuals and all of those aircraft operate under the same flight ops and maintenance rule sets,” Smith says. “The pilot of those aircraft are now fully interchangeable, which has allowed us to optimize our crew and aircraft scheduling, saving unnecessary travel and providing improved service for our customers with a lower delivery cost.”
During the quarter, Wheels Up also upgraded its app and website to enable travelers to more easily see dynamic pricing to 200 destinations on various days, similar to what airlines do. Expect Wheels Up to add more destinations to this throughout the year.
One thing unique about Wheels Up is that travelers can choose between ad hoc charter flights, annual memberships that provide price protection, and the capability to fly commercially on Delta Air Lines, as well as a hybrid of those on the same trip. Travelers can earn Delta Air Lines Medallion status through Wheels Up flights, which deepens its integration with the airline.
Mattson says travelers can track their savings and loyalty progress.
“We are the first to offer this type of savings and rewards progression transparency and expect to continue building upon it as we invest further in our digital platform,” Mattson says.
“In the first quarter, total private jet flight transaction value, which captures the value of all of our private jet flying, was up 13% sequentially, reflecting stabilized demand with a normal seasonal pick up, and down 19% year-over-year, reflecting our transition to focus on more profitable flying that started just over a year ago,” Smith says.
Another quarter highlight occurred in mid-April when Wheels Up announced it is building a new maintenance facility at Palm Beach International Airport (PBI), an area where it has high flight frequency. When that facility opens this year, resources stationed at its Fort Lauderdale facility will relocate to PBI.
As part of its maintenance operations restructuring, it is closing facilities in Cincinnati, Ohio, and Broomfield, Colorado.
The company also relocated some mobile service units throughout its network during the quarter.
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