Wednesday, September 27, 2023

Inability to Continue Operations Shakes Wheels Up, Shares Plummet

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  • Wheels Up Experience (UP.N) faces operational challenges and receives short-term funding from Delta Air Lines (DAL.N).
  • The company undertakes restructuring amid the private jet traffic slowdown due to the pandemic impact.
  • Delta offers secured promissory notes to Wheels Up for strategic partnerships.
  • Private jet travel surge during pandemic wanes as commercial travel recovers, affecting Wheels Up.
  • Wheels Up cancels earnings call, enters agreement with Airshare to divest non-core aircraft management business.

Wheels Up Experience (UP.N), a company specializing in hourly plane charters, has sounded the alarm over its ability to sustain operations. The announcement was accompanied by news of short-term financial support from Delta Air Lines (DAL.N), resulting in a sharp 42% drop in its stock value.

The company, grappling with the aftermath of pandemic-driven private jet demand, has initiated a series of measures to restructure its operations, including staff reductions and shifts in management. As private jet travel, once buoyed by pandemic preferences of affluent travelers, slows down, Wheels Up Experience has faced increasing challenges.

Business flights in North America have seen a 3.6% decline compared to the same period in July of the previous year, as revealed by data from Argus International.

Delta Air Lines has stepped in with a short-term capital injection, taking the form of a secured promissory note. Although the exact amount of funding remains undisclosed, this infusion comes at a critical juncture for Wheels Up as it seeks strategic partnerships to navigate its uncertain path.

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During the pandemic, private jet travel experienced a significant surge due to the avoidance of commercial airlines. However, with the resurgence of commercial travel, private operators like Wheels Up have found themselves navigating a challenging landscape, as highlighted by Delta CEO Ed Bastian in a recent interview.

In the wake of these challenges, Wheels Up Experience has made the decision to cancel an upcoming earnings call. Additionally, the company has entered a non-binding agreement with U.S. private jet operator Airshare to offload its non-core aircraft management business.

Airshare, as a potential acquirer, envisions expanding its aircraft management services across the United States.

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Ethan Rivers
Ethan Rivers
Hi there! I'm Ethan Rivers, a financial enthusiast and the proud author behind the popular financial blog, "Roms Deals." With a passion for helping others achieve financial freedom, I've spent years diving deep into the intricacies of personal finance, investment strategies, and wealth management. Through my blog, I aim to demystify the world of finance and provide practical tips that anyone can apply to their financial journey. Having worked in the financial industry for over a decade, I've gained valuable insights and experience that I love sharing with my readers. From navigating the stock market to maximizing savings, I strive to equip individuals with the knowledge and tools they need to make informed financial decisions. Join me on this exciting journey towards financial empowerment and let's unlock the doors to a brighter financial future together. Welcome to "Roms Deals"!

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