Wheels Up Lands $500 Million Rescue That Puts Delta, Investors in Control

Private jet membership company Wheels Up Experience has reached a deal to receive a $500 million rescue financing package from Delta Air Lines and investors with turnaround experience in the travel and tourism industries, the airline said Tuesday.

With the new capital infusion Wheels Up, a startup that was founded on the idea of expanding access to private-jet ownership, has a path to averting bankruptcy, which the company has been exploring as one of its strategic options.

A consortium of investors including Delta, Certares Management and Knighthead Capital Management agreed to provide a $400 million loan, while Delta will also provide an additional $100 million revolving credit facility.

Lenders under the nonbinding agreement announced Tuesday will receive newly issued common shares in Wheels Up to give them a 95% stake in the company. Wheels Up hasn’t turned a profit since it was founded in 2013 and has recently run low on cash, putting its survival as a going concern in doubt.

Certares and Knighthead teamed up in the travel industry before, taking over Hertz Global Holdings in its bankruptcy in 2021.

Wheels Up benefited from a surge in demand after the onset of the Covid-19 pandemic as travelers sought to avoid crowded airports and flights.

Wheels Up shares, which soared to over $100 in 2021 after the company went public in a merger with a special-purpose acquisition company, dwindled to just over $1 this year as losses widened and founder Kenneth Dichter stepped down as chief executive in May.

Wheels Up’s shares closed up 6.3% at $1.51 Tuesday.

The investment will avert a crash landing for Wheels Up, which on Monday disclosed that holders of its equipment financing bonds had extended a grace period on missed principal and interest payments to Tuesday.

Earlier this year the company announced changes to its service models, including ending guaranteed availability of flights in unprofitable regions.

“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 Delta CEO Ed Bastian.

Delta finance chief Dan Janki

Write to Soma Biswas at [email protected]