Aggressive revenue growth, record losses, and C-Suite instability continue at Wheels Up while its membership growth slowed. The company announced yesterday that third-quarter revenues increased by 38 percent to $420 million, producing a net loss of $86 million. Membership increased from 12,667 the previous quarter to 12,688. In the first nine months, the company lost $276.5 million versus a $121 million loss in the same period a year ago.
The increased revenues were driven by 7 percent year-over-year growth in live flight legs, to 21,025, and a 20 percent growth in flight revenue per flight leg to an average $13,266. Wheels Up attributed that growth in part to higher pricing, including the implementation of a fuel surcharge.
However, these moves were not enough to stem the losses and in October Wheels Up borrowed against its owned aircraft fleet, netting proceeds of $259 million. CEO Kenny Dichter told AIN the move “created some runway.”
Categorized as an enhanced equipment trust certificates loan structure, the financing will have a maturity of seven years and a coupon rate of 12 percent and covers the Wheels Up fleet of 134 owned aircraft, including 72 Beechcraft King Airs, 31 Cessna Citations, and 31 Hawker 400As. Loan covenants require Wheels Up to maintain a minimum liquidity of $125 million. The loans helped to boost the company’s cash on hand to $545 million, up from $427 million in the second quarter.
Yesterday, the company also announced the departure of its president, Vinayak Hegde, who joined the company in May 2021 as chief marketplace officer and was elevated to his current position five months later. Wheels Up said Hegde’s position was being eliminated. According to Dichter, the move is part of the company’s drive to create a “streamlined organizational structure, with senior leadership focused on driving key initiatives at an accelerated pace, which is a significant step in delivering profitable growth and an enhanced experience for our members and customers.”
Year-to-date, Wheels Up has already replaced its CFO and COO. New CFO Todd Smith told analysts yesterday that the company is implementing aggressive cost-cutting as “our cost base is higher than it needs to be.” The company stressed that the move does not include cutting pilots, technicians, or other operational personnel.