It is hard to keep up with Wheels Up. The company was only launched in August and already has already taken delivery of four King Airs. This week, it closed a $100 million debt deal which will finance 22 aircraft. Jefferies, which arranged the loan, also participated along with two hedge funds. While the pricing (which has not been disclosed) was not particularly cheap, this is by far the largest ever financing of King Airs and is a genuine landmark deal.
The company now has more than 100 members and 40 full time employees. It has also signed up around 150 equity investors – many of whom are expected to sign up as members as well. This week, it had over 20 revenue flights. By the end of the year, Wheels Up will have nine King Air 350i aircraft and plans to take delivery of 19 more next year. By 2020, it is forecasting that it will have more than 10,000 members.
Although it has ordered aircraft, it is important to remember that Wheels Up is not a fractional operator. It is buying aircraft, but they will be operated by Gama Aviation (which, after the problems with Avantair, should reassure customers and investors) and although it is selling memberships, it is not selling shares. In fact, the company only expects about 30 per cent of its revenues to come from its King Air fleet, so it can have a much higher ratio of members to aircraft. The rest of its sales will be from partnerships with companies like VistaJet (where it is exclusive North American sales agent) and JetSuite.
This actually makes it quite hard to characterise the company as it is really a cross between a leasing company, a card provider and an aircraft broker. Even though it was only launched four months ago, with 40 employees and several hundred million in funding, it doesn't feel right to call it a start-up either. Kenny Dichter has said that he wants "to truly democratise business aviation." So perhaps we should see it as more as a movement.
Originally published by Alasdair Whyte from www.corporatejetinvestor.com although DQ takes the credit for the bad headline!
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