Private jet company Wheels Up is merging with a special purpose acquisition company to go public with a valuation of more than $ 2 billion – more than double the value of 2019.
The deal, due to close in the second quarter, will make Wheels Up the first publicly traded autonomous private jet company and will outpace many of the industry’s longtime leaders in the race to become the Uber or AirBnb of private aviation.
He also highlights the rapid recovery of private jet companies during the pandemic, as the wealthy migrated to private jet safety to travel while the commercial aviation industry continues to struggle. Commercial airline traffic fell by 65% to 70% from pre-pandemic levels, while private jet reservations are at or near pre-pandemic levels.
Under the terms of the agreement, Aspirational Consumer Lifestyle Corp., a SPAC founded by a former executive of LVMH, will merge with Wheels Up for a business value of about $ 2.1 billion. The deal is expected to provide about $ 790 million in cash, with $ 240 million in cash from Aspirational and $ 550 million in PIPE, or “private investment in public stock”. PIPE’s 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 has a stake in Wheels Up following the merger of Delta Private Jets and Wheels Up last year, will also remain a shareholder when the deal is completed.
“2020 was the start 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 in private before actually picking up and joining Wheels Up or going up on the platform and flying.”
The deal marks a validation for Dichter, a high-octane businessman who started selling T-shirts to fellow students at the University of Wisconsin and went on to create the Marquis Jets, which was later sold to NetJets. Starting in 2013 with a King Air turboprop association and fleet model, Dichter aimed to bring the aviation industry out of its elitist and inaccessible position to serve a richer, mass market.
Last year, the company flew more than 150,000 passengers with more than 1,500 of its own, managed and third-party aircraft.
By merging with Aspirational, Wheels Up gains a partner in luxury marketing and overseas expansion, especially in fast-growing Asian markets.
The CEO and aspirational president, Ravi Thakran, is the former group president of LVMH South and Southeast Asia, Australia and the Middle East and the former emeritus president of Asian business for L Catterton, the privately held company that includes LVMH and Groupe Arnault as partners.
WheelsUp private jet
Source: WheelsUp
Thakran, who will serve on the board of Wheels Up, will help advise the company on expansion abroad and form partnerships for events and VIP experiences to help it become another global travel and lifestyle brand. Wheels Up was successful in marketing exclusive access to major sporting events and has a list of famous athletes as brand ambassadors.
The question for Wheels Up is whether it can generate profit growth for Wall Street shareholders and, at the same time, increase market share in an industry with a history of narrow profit margins and overcapacity. The main challenge for the private jet business is the large fleets and the sporadic demand that results in most private jets flying empty or with just one or two passengers. The proliferation of on-demand booking apps has made it easier for potential passengers to book a chartered plane or seat, just as they would with an Uber or AirBnb.
“Ninety percent of people who can fly have not flown in private jets,” said Thakran, “and 95% of the planes are stationary. Using state-of-the-art technology to connect them is already a big move.”
Dichter added: “It’s about connecting millions of customers with tens of thousands of planes in real time.”
Wheels Up will be traded on the New York Stock Exchange under the symbol “UP”.