Wheels Up Experience’s second quarter earnings call on Aug. 8 highlighted restructuring moves, including operational and maintenance changes, it has made the past year since investors led by Delta Air Lines took over.
Wheels Up was close to bankruptcy last year when the investors provided a $500 million credit facility to provide stability and restructure.
Since then, Wheels Up has worked to change its flying service mix and reduce costs by streamlining its operations.
“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 the earnings call.
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 Q2 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 the second quarter. This compares to $335 million the same period last year, which is a 41% decrease.
One notable operational change in Q2 was 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,” says Smith. That allows Wheels Up to optimize its crews and cut costs.
In mid-April, 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 later this year, resources stationed at its Fort Lauderdale facility will relocate to PBI.
As part of its maintenance operations restructuring, the company is closing facilities in Cincinnati, Ohio and Broomfield, Colorado that were underutilized. Wheels Up worked with FEAM Aero and AVEX Aviation in those two cities to help staff find new opportunities.
It also relocated some mobile service units throughout its network during the quarter.
“By concentrating our remaining maintenance capabilities where we have network density, we have greatly improved our maintenance cycle times and aircraft availability,” says Smith.
“After a year of hard work, our operations are now in a much better position and scalable looking forward,” says Smith. Because of this, “we expect adjusted contribution margin will improve significantly in the third quarter driven by higher asset utilization, reduced fixed costs and continued charter growth, with further improvement also in the fourth quarter.”
