Private aviation company attributes earnings downturn to end of government funding, higher operational costs >>
Wheels Up, the private aviation company, reported in a third quarter earnings press release a revenue increase of 55% year-over-year to $302 million. However, the company, which went public earlier this year, said its income was down $80 million from the same quarter previous year. Wheels Up attributed the decrease to the 2020 use of $51.6 million CARES Act grant funding, supply constraints, increased operating costs and higher compensation for employees, including pilots. The company reported that active members rose 45% year-over-year to 11,375; and live flight legs increased 52% year-over-year to 19,714. Kenny Dichter, CEO, said the supply constraints are no different from what many companies are facing, “and reinforce the need for the technology-enabled marketplace platform that we are building.” Eric Jacobs, CFO, said the company is managing through its challenges and the impact they are having on profitability and “believes we can significantly increase margins in the long term." Wheels Up cited several recent initiatives:
- Commenced strategic relationship with American Express, offering its members exclusive benefits. The partnership has driven strong new flight activity, membership purchases, and fund block purchases, as well as a significant increase in mobile downloads during the quarter.
- Accelerated success in selling “Up for Business,” which has benefited from the commercial relationship with Delta Air Lines that gives businesses the flexibility to fly both commercial and private as well as access a diverse range of aircraft to fit their varying needs.
- Announced new capped rate pricing and program changes for its membership programs, which will take effect on Dec. 1.
- Enhanced the senior leadership team with the appointment of Vinayak Hegde to president on Oct. 5, as well as the hiring of Gene McKenna as chief product officer; Srikanth Satya as chief technology officer; and Julia Zhang as senior vice president of pricing and revenue management.