Wheels Up Goes Public in a $2.1 Billion Deal

Wheels Up, the second largest provider of for-hire private aircraft has announced a final agreement to become publicly traded. Under the terms of the deal, Wheels Up will merge with Aspirational Consumer Lifestyle Corp, a special purpose acquisition company.

The deal values Wheels Up at over $2 billion, which is more than twice the company’s valuation in 2019. Under the deal, the New York-based company will receive $790 million in cash proceeds from the transaction, including $550 million from private investors such as T. Rowe Price, Fidelity, and Franklin Advisors.

Delta Air Lines, which also has a stake in Wheels Up from the merger of Delta Private Jets with Wheels Up last year, will also remain a shareholder once the agreement is finalized.

Expected to close in the second quarter, the deal marks Wheels Up as the first publicly traded standalone private jet company.

What are SPACS?

The announcement highlights a growing trend relevant to the aviation industry: SPACs (Special Purpose and Acquisition Company). SPACS are legal entities that have no commercial operations established. They are solely aimed at raising capital through acquiring existing companies.

In simpler terms, these “blank-check companies,” are shell companies that utilize funds from an initial public offering to make a private firm public.

Wheels Up’s merger with Aspirational Consumer Lifestyle is the latest SPAC deal in the aviation sector. Earlier this year, air taxi start-up Joby Aero Inc similarly considered a deal to go public through a merger with a blank-check firm.

Growing demand in private aviation

The announcement further brings to light the growth and recovery of private jet companies during the pandemic. 2021 saw a change in priorities, as more travelers turned to private jets for their safety and convenience. Commercial airlines are feeling the effects of decreased demand while private jet bookings are at or near their pre-pandemic highs.

Kenny Dichter, Wheels Up’s CEO, reiterates this trend when he said: “2020 was the beginning of big democratization for us. We saw so many new people who had never flown private before actually pick up and either join Wheels Up or come on to the platform and fly.”

What’s next for Wheels Up?

Through merging with Aspirational, Wheels Up benefits from their partnership in luxury marketing and international expansion, with a particular emphasis on the rapidly growing Asian markets. After the deal closes, the parent company will be renamed Wheels Up Experience Inc.

As the former group chairman of LVMH South and Southeast Asia, Ravi Thakran is a prospective member of the Wheels Up board. His responsibilities are to advise the company on its growth in overseas markets as well as secure partnerships for VIP events and elitist experiences. By doing so, Wheels Up will solidify and expand its brand for global and luxury travel.

The main challenge for Wheels Up going forward is to balance generating enough earnings to attract shareholders while growing their market share. We could potentially see a more digital presence from the company, an effort that coincides with the massive expansion of on-demand booking apps. Such apps would allow flyers to book a private jet charter with the same ease that they would an Uber or Airbnb.

For informational purposes only.