Delta Air Lines (DL, Atlanta Hartsfield Jackson) remains optimistic about its partnership with Wheels Up (WUP, Teterboro), despite the charter carrier posting a net loss of USD106.5 million for the first three quarters of 2024.
During Delta’s investor day, CEO Ed Bastian acknowledged a drop in demand for Wheels Up in the wake of the COVID-19 pandemic but expressed confidence in their partnership and said he expects strong growth in the charter business.
“Once things started to stabilise [after the pandemic], those customers came back to Delta or to other commercial providers,” he said in an earnings call. “We got some work to do, but eventually it is going to be our next step on our premium ladder.” He added that no airline has successfully integrated commercial operations with private charters before but Delta is learning how to schedule, price, and operationalise the business. “In the next couple of years, I think you’ll see meaningful growth in this asset,” he concluded.
In October, Wheels Up secured a senior secured revolving credit facility backed by Delta to facilitate an Asset Purchase Agreement with GrandView Aviation. The strategy includes acquiring seventeen Embraer Executive Jets (Phenom 300 and 300E) while selling thirteen owned Citation X aircraft. Some of these jets will be leased back to provide operational flexibility during the transition to Challenger 300 series aircraft, the company said in its third-quarter financial results.
The charter operator has faced seven consecutive quarters of revenue contraction. However, the management believes it has stabilised the top line, expanding margins to record levels, and positioned the company for growth. George Mattson, chief executive, said: “We expect our next phase of financial and operational improvement to be driven by the positive impact of our fleet transition, both immediately and over the next several years.”
According to the latest US Federal Aviation Administration (FAA) data, Wheels Up operates 107 aircraft under its Part 135 certificate.
The Delta-Wheels Up partnership dates back to 2019 when the scheduled passenger carrier announced it was acquiring a stake in the "on demand" private aviation provider and combining it with its Delta Private Jets charter business arm.
