Wheels Up receives delisting notice


Update – April 14th, 2023: Wheels Up has now received a delisting notice from the New York Stock Exchange (NYSE) due to its share price falling below $1 for more than a month.

The company now has six months to regain compliance and get its share price above $1. At market close on Friday April 14th, it sat at $0.51.

If delisted, a company can no longer trade on the NYSE and instead has to trade on the Over-the-Counter (OTC) market. Investors don’t automatically lose money, but being delisted usually carries a negative association.

A delisted stock can be relisted, although this is difficult to do, as the company has to resolve the issue that has forced the delisting and become compliant again.

Wheels Up is recommending its shareholders vote to carry out a reverse stock split to increase its per-share price.

The action, if voted for in its shareholders meeting on May 31st, would mean outstanding shares of common stock are split at a ratio between 1-5 and 1-10.

A 1-5 reverse stock split would mean a shareholder who previously owned 100 shares would now own 20, but each share would be worth five times more than before. A 1-10 ratio would mean a shareholder who held 100 shares previously would now own 10, with each share worth 10 times as much as previously.

At market opening today, the Wheels Up share price was $0.57.

Corporate Jet Investor (CJI) understands that while this could be a move to prevent a delisting of the company, Wheels Up has not received any notice of potential delisting from the New York Stock Exchange.

Earlier in the week, Wheels Up adjusted its unaudited full-year results for 2022, stating that its audited net loss during the year totaled $555m, rather than the $507m previously stated.

The adjusted net loss was more than double the loss of $197m reported in 2021.

In a separate SEC filing on April 3rd, the company said it amended its accounts to reflect a non-cash goodwill impairment charge.

Wheels Up previously reported a charge of $132m for the last quarter and full year 2022. Now, Wheels Up has said the charge was actually for $180m. The company said it should have recognised a $62m charge in its third quarter (Q3) results for 2022 and a $118m charge in its Q4 2022 results.

CJI understands the losses do not reflect the acquisition of Air Partner but were related to acquisitions that took place before the company went public. The company said the changes do not affect its commitment to be EBITDA profitable in 2024.

A Wheels Up spokesperson told CJI: “These impairments were one-time, non-cash charges, meaning that they do not impact our cash position or adjusted EBITDA, our preferred measure of our profitability, and we do not expect to see similar adjustments going forward. None of these matters represent a significant financial issue for Wheels Up, and they did not impact our operations.”

The spokesperson added: “We are confident in our business and excited for its future. We opened the year with a strong cash position of $586 million on hand, which gives us the runway to invest in operations and improve our member experience while we continue to improve our profitability profile.

“We have the benefits of significant scale, a great brand and high-impact partnerships with companies like Delta Air Lines. We look forward to continuing to deliver exceptional member experiences while we pursue profitability in 2024.”

In March, Wheels Up announced it is cutting staff to save $30m annually to meet this goal of profitability next year.