Executive Summary / Key Takeaways

• Strategic Transformation Underway: Wheels Up is executing a comprehensive turnaround, shifting from a period of significant losses to a focused strategy emphasizing operational excellence, a streamlined product portfolio, and a modernized fleet.
• Delta Partnership as a Core Differentiator: The unique, "one-of-a-kind" strategic partnership with Delta Air Lines (DAL) is central to Wheels Up's vision, offering seamless integration between private and premium commercial travel and driving strong corporate customer engagement.
• Fleet Modernization Driving Efficiency: A multi-year fleet transition to Embraer (ERJ) Phenom 300 and Bombardier (BDRBF) Challenger 300 series aircraft is expected to significantly enhance operational efficiency, reduce costs, and improve customer experience, with initial benefits already materializing.
• Path to Profitability and Growth: Management projects positive adjusted EBITDA for the full year 2025, supported by substantial cost savings initiatives, stabilizing revenue trends, and increasing demand for its profitable charter services.
• Technological Edge Enhancing Customer Value: Investments in digital platforms, dynamic pricing, and advanced in-flight connectivity like Gogo (GOGO) Galileo HDX WiFi are crucial for improving accessibility, flexibility, and the overall customer journey, strengthening the company's competitive moat.

The Ascent of Wheels Up: A New Era of Private Aviation

Wheels Up Experience Inc. ($UP) stands at a pivotal juncture, transforming its business model to redefine private aviation. Founded in 2013, the company has evolved from a membership-focused operator to a comprehensive global aviation solutions provider, uniquely positioned through its strategic partnership with Delta Air Lines. This alliance is not merely a commercial agreement; it is a foundational pillar enabling a seamless, flexible, and accessible offering that bridges private and premium commercial travel, a capability unmatched in the industry.

The company's vision extends beyond traditional private jet services, aiming to become the "best-run private aviation company in the world" by integrating its programmatic member offerings with Air Partner's global charter capabilities. This strategy addresses a broad spectrum of customer needs, from domestic leisure to international corporate travel, allowing clients to choose their optimal mode of travel trip by trip. This integrated approach, coupled with a renewed focus on operational excellence and technological innovation, forms the bedrock of Wheels Up's investment thesis.

Technological Edge and Operational Precision

Wheels Up is not just an aviation company; it is increasingly a technology-driven platform. Its mobile app and website, coupled with an advanced pricing platform, empower travelers to explore dynamic pricing rates across various routes and destinations. This digital convenience allows members to enjoy increased savings across popular city fares, providing a level of flexibility and visibility often associated with commercial air travel. This technological backbone is critical for efficient scheduling and demand shaping, directly contributing to operational efficiency and improved financial performance.

A significant technological leap is the planned integration of Gogo Galileo HDX satellite-based WiFi into its new Phenom and Challenger aircraft. This system promises high bandwidth, low latency global coverage, capable of live streaming and voice telephony. Wheels Up aims to be one of the first and only domestic fleets in private aviation with standardized satellite WiFi, offering a best-in-class connectivity experience. This enhancement is a direct response to discerning customer demands and a clear differentiator in a competitive market, elevating the overall customer journey and fostering loyalty.

These technological advancements are intertwined with Wheels Up's relentless pursuit of operational excellence. The company has consolidated its flight operations under a state-of-the-art Atlanta Member Operations Center, which serves as the heartbeat of its network. This centralization, along with the consolidation of FAA operating certificates for its King Air 350i and Citation Excel/XLS fleets, has harmonized flight and maintenance processes, improving economies of scale and reducing costs. Wheels Up has publicly committed to transparency, disclosing operational metrics such as a 99% completion rate and 87% on-time performance in Q2 2024, alongside achieving a record 31 "brand days" (days with zero cancellations) in the same quarter. This commitment to operational rigor and transparency sets a new industry standard.

Strategic Pivot and Fleet Modernization

Wheels Up's journey has not been without turbulence. Following seven quarters of sequential revenue decline leading into 2024 and significant adjusted EBITDA losses in 2022, the company initiated a profound strategic recalibration in 2023. This involved overhauling its programmatic offerings to focus on primary service areas where it held a network density advantage, thereby shedding unprofitable flying. Concurrently, Wheels Up divested non-core assets, including its aircraft management and aircraft sales businesses, to streamline operations and concentrate on its core aviation services.

A cornerstone of the current strategy is a multi-year fleet modernization plan. Wheels Up is transitioning from four legacy private jet models (Cessna Citation CJ3, X, Excel/XLS, and Hawker 400XP) to two highly popular and reliable aircraft types: Embraer Phenom 300 series and Bombardier Challenger 300 series, while retaining its King Air 350i fleet. This transition is expected to be completed within approximately three years. The company has already begun operating Phenom 300 series and its first three Challenger 300 series aircraft by April 2025, and retired its legacy Cessna Citation CJ3 fleet from revenue service in Q2 2025.

This modernization is not merely an upgrade; it is a strategic imperative designed to deliver substantial operational and financial benefits. Management anticipates 25% to 50% higher maintenance availability from the new aircraft, leading to increased asset utilization and lower hourly costs. Improved reliability is expected to enhance schedule integrity, reduce recovery costs, and make crew scheduling more efficient. Furthermore, consolidating from five to three aircraft models will significantly simplify operations, reducing complexity and expenses. This transformation of the unit cost economics is projected to drive improved profitability margins per aircraft over the next several years.

Financial Trajectory and Liquidity

The strategic shifts are beginning to manifest in Wheels Up's financial performance. After a challenging period, revenue stabilized in 2024. For the three months ended June 30, 2025, revenue was $189.6 million, a 3% decrease year-over-year, while year-to-date revenue stood at $367.2 million, down 7% from the prior year. This decline was primarily driven by a 7% reduction in Live Flight Legs, partially offset by a 4% increase in Flight revenue per Live Flight Leg due to a favorable mix of larger and premium cabin flights. Membership revenue saw a 53% decrease in Q2 2025, a deliberate outcome of streamlining offerings and shifting less frequent fliers to charter. Conversely, Other revenue increased by 44% in Q2 2025, driven by higher cargo flights and safety and security services.

Cost reduction initiatives are significantly impacting profitability. Cost of revenue decreased by $17.7 million in Q2 2025, primarily due to a $17.7 million reduction in employee compensation, a $4.7 million decrease in aircraft lease costs, and a $2.8 million decrease in non-cash charges for obsolete parts inventory. Adjusted Contribution Margin, a key indicator of operational efficiency, surged to 14.8% in Q3 2024, nearly double the prior quarter and the highest since the company went public. This improvement underscores the effectiveness of restructuring actions and cost optimization measures. Adjusted EBITDA loss also improved significantly, decreasing by 50% sequentially to $20 million in Q3 2024.

Liquidity management remains a critical focus. As of June 30, 2025, Wheels Up held $107 million in cash and cash equivalents and $34.2 million in restricted cash. Operating cash outflow improved dramatically, down 94% year-over-year from $250 million to $15 million in Q3 2024, largely due to strong prepaid block sales and improved cash management. Prepaid block sales, a forward indicator of demand, were up 86% year-over-year to $147 million in Q3 2024, with corporate block sales increasing over 50%. The company secured a new $332 million senior secured revolving credit facility from Bank of America (BAC), expected to close by November 2024, with Delta's credit support. This facility will fund the $105 million GrandView Aviation acquisition, refinance existing aircraft debt, and add up to $115 million in cash and liquidity, while also saving over 500 basis points in cash interest.

Competitive Landscape and Strategic Positioning

Wheels Up operates in a highly competitive private aviation market, facing established players like NetJets (a Berkshire Hathaway (BRK.B) subsidiary), Flexjet, and VistaJet, as well as niche innovators like Blade Air Mobility (BLDE). Against this backdrop, Wheels Up differentiates itself through several key advantages. Its unique partnership with Delta Air Lines provides an unparalleled integrated offering across private and commercial travel, a strategic moat that no other competitor can replicate. This partnership is already yielding results, with joint Delta accounts representing the highest mix of overall block sales in September 2024, a four-year best.

While direct quantitative comparisons with all private competitors are challenging to ascertain, Wheels Up's operational transparency, being the first and only major private aviation operator to publicly share performance metrics, fosters trust and accountability. The fleet modernization strategy further strengthens its competitive standing. By transitioning to Embraer Phenom 300 and Bombardier Challenger 300 series aircraft, Wheels Up is adopting models known as the "best-selling aircraft over the last decade in their respective categories." The acquisition of GrandView Aviation's Phenom fleet is expected to make Wheels Up the "largest provider of Phenom aircraft on an on-demand basis in the world," a significant market leadership position.

The company's global charter capabilities, powered by the Air Partner platform, position it as "one of the largest Part 135 charter providers in the world." This asset-light model provides significant scale and a profitable revenue stream, complementing its programmatic offerings. Wheels Up's focus on a streamlined product portfolio, offering both membership and ad-hoc charter options, aims to capture a broader addressable market, including less frequent fliers. This flexibility, combined with its technological investments in dynamic pricing and in-flight connectivity, enhances its customer-centric approach, allowing it to outperform the industry, as evidenced by its live leg demand remaining flat in Q3 2024 against an industry decline of over 15%.

Outlook and Path to Profitability

Wheels Up is firmly focused on achieving sustainable, profitable growth. Management has set a clear target of generating positive adjusted EBITDA for the full year 2025. While acknowledging that the significant investments and associated costs of the fleet modernization strategy may create a "headwind" for reaching breakeven in Q4 2024, the confidence in the 2025 target remains strong. This outlook is underpinned by several key initiatives:

• Cost Savings: The company expects to realize approximately $50 million in annual cash cost savings from efficiency, productivity, and overhead reductions, with the full impact anticipated in Q3 and Q4 2026.
• Growth Resumption: Current commercial offerings and the fleet modernization are expected to drive a resumption of growth in 2025, with both private jet and total gross bookings projected to increase sequentially in Q4 2024.
• Operational Leverage: The benefits from increased maintenance availability, higher asset utilization, and simplified operations from fleet modernization are expected to dramatically improve profitability margins per aircraft.
• Liquidity Improvement: The year-end cash and liquidity position is projected to improve from Q3 2024 levels, bolstered by the new Bank of America facility, proceeds from aircraft sales, and seasonally strong prepaid block sales.

The company's leadership team, strengthened by key hires including John Verkamp as CFO and operational talent from Delta, is executing this strategy with discipline. The focus on profitable charter growth, increasing corporate customer mix, and optimizing fleet deployment are all designed to maximize asset utilization and drive higher incremental margins.

Risks and Challenges

Despite the positive momentum, Wheels Up faces several pertinent risks. The ongoing GRP litigation against flyExclusive for wrongful termination of a revenue program agreement presents a financial recovery risk, particularly given flyExclusive's disclosed net losses, negative operating cash flows, and working capital deficit. This raises concerns about the counterparty's ability to fulfill potential obligations.

Internally, the company acknowledged that its disclosure controls and procedures were not effective as of June 30, 2025, due to ongoing material weaknesses in internal control over financial reporting. While remediation plans are in place, including enhancing IT general controls and hiring additional compliance personnel, the successful and timely resolution of these weaknesses is crucial for investor confidence. Operational performance, while generally strong, saw on-time performance in Q3 2024 fall below target, "partially driven by summer weather, air traffic control delays and certificate conformity activity," highlighting persistent challenges in a complex operating environment. Furthermore, the capital-intensive nature of the fleet modernization strategy, while strategically beneficial, introduces execution risk and the potential for near-term cost absorption that could impact financial targets.

Conclusion

Wheels Up is in the midst of a profound transformation, shedding unprofitable legacy operations and strategically investing in a future defined by operational excellence, technological leadership, and a unique partnership with Delta Air Lines. The company's disciplined approach to fleet modernization, coupled with a streamlined product portfolio and a relentless focus on customer experience, is creating a more resilient and efficient business model. The projected achievement of positive adjusted EBITDA in 2025, alongside significant cost savings and a return to growth, signals a compelling turnaround story.

While challenges such as litigation, internal control remediation, and operational complexities persist, Wheels Up's strategic responses, particularly its technological advancements and the unparalleled synergy with Delta, position it to capture a larger share of the evolving private aviation market. Investors should closely monitor the execution of the fleet modernization, the continued growth in profitable segments, and the realization of anticipated cost efficiencies as Wheels Up endeavors to solidify its standing as a leader in integrated private and premium commercial travel.