Wheels Up Experience has unveiled a series of significant aircraft, commercial and financing transactions to lay the foundation for its fleet modernisation strategy. Upon completion, these transactions will transition Wheels Up's current four jet aircraft types to two of the most popular and successful models in the industry – Embraer's Phenom 300 and Phenom 300E and Bombardier's Challenger 300 and Challenger 350 aircraft.
This transition is expected to reduce the average age of Wheels Up's jet fleet by approximately ten years, leading to operational improvements in performance and efficiency and ultimately providing an enhanced customer experience. Wheels Up will continue to operate its King Air fleet to serve customers within its existing service areas.
“Fleet modernisation 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 modernisation 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 acquisition includes 17 Embraer Phenom 300 and Phenom 300E aircraft, as well as related maintenance assets, for a purchase price of US$105 million, subject to adjustments. Wheels Up will assume GrandView's customer programmes and integrate most of its pilots into the existing Wheels Up workforce.
The two companies expect to sign a short-term transition services agreement upon closing, allowing GrandView to continue operating the Phenom aircraft on behalf of Wheels Up until the aircraft are fully transitioned to the Wheels Up Private Jets FAA operating certificate. The acquisition is expected to close by the end of this quarter, with the Phenom fleet being integrated into Wheels Up's programmatic membership and charter offerings shortly thereafter.
New US$332 million revolving credit facility commitment
In addition to the fleet modernisation initiatives, Wheels Up has entered into a commitment letter with Bank of America for a new five-year senior secured revolving credit facility of up to US$332 million. This facility is anticipated to close concurrently with the GrandView acquisition in the fourth quarter of the year.
Wheels Up plans to utilise this revolving facility for several key actions, including financing the GrandView acquisition, redeeming all outstanding equipment notes on its owned aircraft, and general corporate purposes. Additionally, the financing is expected to provide up to US$115 million in additional cash to Wheels Up's balance sheet, along with future revolving borrowing capacity under certain conditions. This financial flexibility will support the company's continued opportunistic acquisition of additional Phenom and Challenger aircraft as it progresses with its fleet modernisation plan.
Delta Air Lines is expected to provide credit support for the new financing, which will enhance Wheels Up's access to capital on more favourable terms than would otherwise be available.
