Non-public jet firm Wheels Up goes public with a $ 2 billion SPAC deal
Private jet company Wheels Up is merging with a special purpose vehicle company to go public with a value of more than $ 2 billion – more than double what it was in 2019.
The deal, slated to close in the second quarter, will make Wheels Up the first publicly traded standalone private jet company and let the seven-year-old start-up overtake many of the longtime industry leaders in the race for Uber or AirBnb in private aviation.
It also shows the rapid recovery of private jet companies during the pandemic, as the rich flocked to the safety of private jets while the commercial aviation industry continued to struggle. Commercial air travel has fallen by 65% to 70% compared to the prepandemic, while bookings for private jets 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 for an enterprise value of approximately $ 2.1 billion. The deal is expected to generate approximately $ 790 million in cash proceeds, of which $ 240 million from Aspirational and $ 550 million from a PIPE or “private public equity investment”. PIPE investors include T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Vora Capital Management and Third Point, a hedge fund operated by Dan Loeb.
Delta Air Lines, which has a stake in Wheels Up due to the merger of Delta Private Jets with Wheels Up last year, will remain a shareholder after the transaction is closed.
“2020 was the beginning of a great democratization for us,” Kenny Dichter, founder and CEO of Wheels Up, told CNBC. “We saw so many new people who had never flown privately when they actually picked them up and either joined Wheels Up or got on the platform and flown.”
The deal is an endorsement for Dichter, a high octane entrepreneur who started selling t-shirts to fellow students at the University of Wisconsin and then developed Marquis Jet, which was later sold to NetJets. Beginning in 2013, with a membership model and fleet of King Air turboprops, Dichter wanted to overturn the aviation industry from its elitist and inaccessible place to serve a broader market for the wealthy masses.
Last year, the company flew more than 150,000 passengers with more than 1,500 owned, managed and third-party partner aircraft.
By merging with Aspirational, Wheels Up gains a partner for luxury marketing and expansion overseas, especially in the fast growing Asian markets.
Aspirational CEO and Chairman Ravi Thakran is the former group chairman of LVMH South and Southeast Asia, Australia and the Middle East and former Asia business chairman emeritus for L Catterton, the private equity firm that partners LVMH and Groupe Arnault.
WheelsUp private jet
Thakran, who will serve on Wheels Up’s board of directors, will advise the company on expanding overseas and partnering for VIP events and experiences to make it a global travel and lifestyle brand. Wheels Up has successfully marketed exclusive access to major sporting events and has a list of prominent athletes as brand ambassadors.
The question for Wheels Up is whether it can deliver earnings growth for Wall Street shareholders while increasing market share in an industry with low profit margins and overcapacity. The central challenge for the private jet business is large fleets and sporadic demand, which means that most private jets fly 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 private jet charter or seat, just as they would with an Uber or AirBnb.
“Ninety percent of the people who can afford to fly haven’t flown private jets,” Thakran said, “and 95 percent of the planes are idling. Just using next-generation technology to connect them is a great thing Game.”
Dichter added, “It’s about connecting millions of customers to tens of thousands of aircraft in real time.”
Wheels Up is traded on the New York Stock Exchange under the ticker symbol “UP”.