Delta shows it is backing Wheels Up, Airshare in talks to buy management, Air Partner next?
Rather than getting second-quarter results, today we were told that Delta is putting cash into Wheels Up and that it is in talks to sell its management business to Airshare. There was however no comment about Air Partner, the charter broker it bought in 2019.
Delta Air Lines, which owns 20% of the company, has agreed to provide a short-term capital infusion to Wheels Up. This will prevent Wheels Up from breaching bank covenants. It also demonstrates how the airline is keen to support Wheels Up. One other investor has also been in talks with the company about providing debt.
Ed Bastian, Delta’s CEO – and one of the highest regarded airline executives – is personally committed to Wheels Up. In April, Delta and Wheels Up said they had agreed to work more closely selling to corporate companies. “For us to be able to add that to our stack as the premium opportunity within the Delta experience, well no one has ever been able to do that before, and we have been attempting to pull that off,” said Bastian at a Wings Club lunch in May.
Airshare, the fractional operator, has agreed to buy Wheels Up’s aircraft management. The two companies have signed a non-binding letter of intent. Wheels Up acquired five significant management companies – TMC Jets (2019), Delta Private Jets (2019), Gama Signature Aviation (2020), Mountain Aviation (2020) and Atlante Air (2022) – before going public. It paid around $70m for Gama Signature Aviation alone. Merging operators is always difficult and the company has found integrating the five different operators much harder than it expected – partly due to staff shortages at the FAA. It has also seen owners who are less focused on charter move aircraft to other operators.
Wheels Up acquired Air Partner for about $110m in April 2022. Although it has been integrated with Wheels Up, it could be relatively easy to split. Mark Briffa, the CEO of Air Partner has become executive vice president and chief commercial officer at Wheels Up. Wheels Up has had interest from trade buyers and financial investors in Air Partner.
Today’s announcement gives more guidance into the future of Wheels Up. This is just the start of its restructuring and you can expect it to become a more focused company – strongly supported by Delta Air Lines – as it focuses on becoming profitable. The biggest brand in business aviation is keen to stay around.