Private jet company Wheels Up is merging with a special-purpose procurement company to go public at a valuation of more than $ 2 billion – more than double its 2019 value.
The deal, which is expected to end in the second quarter, will make Wheels Up the first publicly traded independent private jet and give up its seven-year-old start-up by many of the industry’s long-term leaders. in the race to become Uber or AirBnb of private aviation.
It also highlights the rapid recovery of private jet airlines during the pandemic, as the rich have amassed the safety of private jets for travel, while the commercial airline industry continues to struggle. Airline traffic has dropped by about 65% to 70% from its pre-pandemic levels, while private jet bookings are at or near their pre-pandemic highs.
Under the agreement, Aspirational Consumer Lifestyle Corp., a SPAC founded by a former LVMH executive, will merge with Wheels Up to a value of about $ 2.1 billion. The transaction is expected to provide approximately $ 790 million in cash receipts, with $ 240 million in cash from Aspirational and $ 550 million in a PIPE, or “private investment in public capital.” PIPE investors include T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Voro Capital Management and Third Point, a hedge fund managed by Dan Loeb.
Delta Airlines, which owns a stake in Wheels Up from the merger of Delta Private Jets with Wheels Up last year, will also remain a shareholder at the conclusion of the transaction.
“2020 was the beginning of a great democratization for us,” Kenny Dichter, founder and CEO of Wheels Up, told CNBC. “I saw so many new people who had never flown in private before picking up and joining Wheels Up or coming on the platform and flying.”
The deal marks a validation for Dichter, a high-octane entrepreneur who began selling T-shirts to colleagues at the University of Wisconsin and created the Marquis Jets, which was later sold to NetJets. Starting in 2013 with a membership model and a fleet of King Air turboprops, Dichter set out to overthrow the aviation industry from its elitist and inaccessible perch to serve a wider, mass-rich market.
Last year, the company flew over 150,000 passengers with more than 1,500 aircraft owned, operated and third-party partners.
By merging with Aspirational, Wheels Up is gaining a partner in luxury marketing and expansion abroad, especially in the fast-growing Asian markets.
Ravi Thakran, CEO and President of Aspirational, is the former President of LVMH Group South and Southeast Asia, Australia and the Middle East and former President Emeritus of the Asian Business for L Catterton, a private equity firm that includes LVMH and Groupe Arnault as partners.
Private jet wheelsUp
Source: WheelsUp
Thakran, who will be on the board of directors of Wheels Up, will help advise the company on expanding abroad and forming partnerships for VIP events and experiences to help it become more of a global travel and lifestyle brand. . Wheels Up has managed to market exclusive access to major sporting events and boasts a list of famous athletes as brand ambassadors.
The question for Wheels Up is whether it can increase earnings for Wall Street shareholders, while also increasing market share in an industry with a history of thin profit margins and overcapacity. The main challenge for the private jet business is the large fleets and the sporadic demand that leads to most private jets flying empty or with only one or two passengers. The proliferation of on-demand booking apps has made it easier for potential flyers to book a charter or private flight, as an Uber or AirBnb would.
“Ninety percent of the people who can afford to fly have not flown in private jets,” Thakran said, “and 95 percent of the jets are idle. Just using state-of-the-art technology to connect them is a great piece.”
Dichter added: “It’s about connecting millions of customers with tens of thousands of planes in real time.”
Wheels Up will trade on the New York Stock Exchange under the symbol “UP”.