Private jet company Wheels Up merges with a special acquisition company to go public with a valuation of more than $ 2 billion – more than twice its value in 2019.
The deal, expected to close in the second quarter, will make Wheels Up the first publicly traded standalone private jet company and will put the seven-year start-up past many of the industry’s longtime leaders in the race to become the Uber or AirBnb . of private aviation.
It also highlights the rapid recovery of private jet carriers during the pandemic as the wealthy flocked to private jet safety to travel while the commercial aviation industry continues to struggle. Commercial air traffic is down about 65% to 70% from pre-pandemic levels, while private jet bookings are at or near the pre-pandemic high.
Under the terms of the deal, Aspirational Consumer Lifestyle Corp., an 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 bring in approximately $ 790 million in cash proceeds, with $ 240 million in cash from Aspirational and $ 550 million from a 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 an equity stake in Wheels Up following the merger of Delta Private Jets with Wheels Up last year, will also remain a shareholder once the deal is completed.
“2020 was the start of a major democratization for us,” Kenny Dichter, Wheels Up’s founder and CEO, told CNBC. “We saw so many new people who had never flown in private before actually picking up and joining Wheels Up or coming to the apron and flying.”
The deal marks confirmation for Dichter, a high-octane entrepreneur who began selling T-shirts to fellow students at the University of Wisconsin and then founded Marquis Jets, which was later sold to NetJets. Starting in 2013 with a membership model and fleet of King Air turboprops, Dichter sought to overthrow the aviation industry from its elite and inaccessible place to serve a wider affluent market.
Last year, the company flew more than 150,000 passengers with more than 1,500 aircraft owned, operated and third-party.
By merging with Aspirational Wheels Up gets a partner in luxury marketing and expansion abroad, 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 chairman emeritus of the Asian operations for L Catterton, the private equity firm that includes LVMH and Groupe Arnault as partners .
WheelsUp private jet
Source: WheelsUp
Thakran, who will sit on Wheels Up’s board, will assist the company in advising on overseas expansion and partnering for VIP events and experiences to help it become more of a global travel and lifestyle brand. Wheels Up has successfully had exclusive access to major sporting events and boasts a selection of famous athletes as brand ambassadors.
The question for Wheels Up is whether it can generate profit growth for Wall Street shareholders while increasing market share in an industry with a history of small profit margins and overcapacity. The main challenge for the private jet business is large fleets and sporadic demand, leaving most private jets empty or flying with only one or two passengers. The proliferation of on-demand booking apps has made it easier for potential fliers to book a private jet charter or seat, just like an Uber or AirBnb.
“Ninety percent of people who can afford to fly have not flown private jets,” said Thakran, “and 95% of planes are stationary. Using next-gen technology to connect them alone. , is a great game. “
Added Poet: “It’s about connecting millions of customers to tens of thousands of aircraft in real time.”
Wheels Up will be traded on the New York Stock Exchange under the ticker symbol “UP”.