Wheels Up shows margin gains despite 10%YoY revenue dip
In its first quarter 2025 results announcement, Wheels Up reported a decline of 10% year-over-year in revenue citing seasonal slow start of the year despite 8% growth in total gross bookings during the quarter.
“Our results this quarter show the progress we are making in our business transformation, and we are pleased to see continued commercial momentum in light of more uncertain economic conditions,” said Wheels Up Chief Executive Officer George Mattson.
While revenues narrowed, the company was able to post a significant improvement in its gross loss. During the quarter, it improved the gross loss from -$16.5m in first quarter of 2024 to just -$1m in 2025. This was underpinned by sizable contraction in the cost of revenue which declined to $158m from $198.3m.
Meanwhile, the company also continued on its path of expanding margins by implementing turn around plans. Adjusted contribution margin – which is the difference between total revenue and total variable costs – saw a 12-percentage points improvement to 12.6% during the first quarter. In absolute terms, the company’s contribution margin clocked in at $22.4m – a $20m jump from just $2m in the first quarter of 2024.
The company contained its loss from operations at $80.7m (against $84.5m in1Q 2024). Overall, net loss amounted to $99.3m – highest in last six quarters.
We spoke with George Mattson, chief executive officer to discuss first quarter results. Below is the transcript:
CJI: Can you discuss the headline about this being your lowest quarterly revenue and the reasons behind it?
GM: The first quarter for us and the industry at large, private, and commercial aviation, is a seasonally low quarter. We are on plan vis-à-vis how the first quarter played out. I would point out that we did see growth in the first quarter versus the first quarter of last year. And the number that we point to when we talk about that is the gross bookings number.
If you think about our business today, just to remind you all the context, half of our business is programmatic membership revenue, half of our business is charter. When you look at gross bookings, we are up 8%. And that was on strong charter performance that exceeded kind of expectations for us and membership did well also.
CJI: Could you explain the improvement in your gross loss figures?
GM: We went from minus $15m to minus $1m. At the contribution margin line, we went from 1% contribution margins in the first quarter of last year to 12.6% this year. And in the process of doing that, we cut our EBITDA loss by more than 50%. Our goal is to be EBITDAR positive for the full year of 2025, including the fact that we knew we were going to lose some money in the first quarter.
CJI: What is driving your improved contribution margins?
GM: Last year we grew contribution margin by 19 percentage points on flat revenue, which is remarkable. We did that by flying the same number of flights on 25% less aircraft, which resulted in us driving utilisation up 32% last year. The journey from kind of 1% to 19% contribution margin was really driven by just operating with a sharper focus on performance.
This is a very high operating leverage business. And so, the more utilisation we can drive onto the fleet, the better we are going to perform, the lower our costs are going to be, and in the process, the more value we can deliver to customers.
CJI: How is the Air Partner business contributing to your overall performance?
GM: Air Partner is growing very quickly and so it is a bigger part of our business today than it ever has been. It is a great business, it gives us that, it is asset-light, it is profitable, it is growing, it is scalable. And it is global and connects us into the idea of providing global aviation solutions spanning across private and commercial.
Our charter business has seen significant, I would say, outsized growth driven by the cross-sell of Wheels Up members into charter, global charter, and the Delta customers, corporate customers in particular, accessing Air Partner global charter. We have a lot of corporate customers who might have their own fleet here in the US and feel like they have most or all their domestic U.S. needs covered, but they fly heavily with us on charter.
CJI: How is your fleet modernisation program progressing?
GM: We have got over 25% of our jets now that are the newer, the future jets, the Phenoms and the Challengers. We announced this program in October, and here we sit only six months later, and we are 25% of the way through it. We want to be about 40% done by the end of the year. As we go forward, by the end of next year, we are done. I mean, we will be 80%, 90%—we will be done.
If you earn a little bit higher yield, you have a little lower operating costs, you have much higher maintenance availability that can drive much higher utilisation. You see a result financially at the gross profit per aircraft line that is not percentage points better, it is multiples better, it is a step change.
CJI: What is your timeline for achieving profitability?
GM: Our goal is to be EBITDAR positive for the full year of 2025, including the fact that we knew we were going to lose some money in the first quarter.
