Private reaction company Wheels Up is merging with a special-purpose acquisition company to go public at a valuation of more than $ 2 billion, more than double its 2019 value.
The deal, which is expected to close in the second quarter, will make Wheels Up the first autonomous private jet company to go public and avoid launching seven years after many of the industry’s top leaders in the race to become Uber or AirBnb of private aviation.
It also highlights the rapid recovery of private airlines during the pandemic, as the rich flocked to the safety of private jets to travel while the commercial airline industry continued to struggle. Commercial airline traffic has dropped by about 65% to 70% from pre-pandemic levels, while private jet bookings are close to or nearing their highs.
Under the terms of the deal, Aspirational Consumer Lifestyle Corp., a SPAC founded by a former LVMH executive, will merge with Wheels Up for a business value of about $ 2.1 billion. The deal is expected to provide approximately $ 790 million in cash, with $ 240 million in cash from Aspirational and $ 550 million in PIPE, or “private investment in public capital.” PIPE investors include T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Voro Capital Management and Third Point, a hedge fund led by Dan Loeb.
Delta Airlines, which has a stake in Wheels Up from the merger of Delta Private Jets with Wheels Up last year, will also remain a shareholder when the deal is completed.
“2020 was the beginning of a great democratization for us,” said Kenny Dichter, founder and CEO of Wheels Up at CNBC. “We saw so many new people who had never flown in private before picking up and joining Wheels Up or coming to the platform and flying.”
The deal marks the validation of Dichter, a high-octane businessman who began selling T-shirts to colleagues at the University of Wisconsin and created Marquis Jets, which was later sold to NetJets. Starting in 2013, with a membership model and a fleet of King Air turboprops, Dichter aimed to end the aeronautical industry from its elitist and inaccessible hanger to serve a wider and more affluent market.
Last year, the company flew more than 150,000 passengers with more than 1,500 proprietary, managed and third-party aircraft.
By merging with Aspirational, Wheels Up gains a luxury overseas marketing and expansion partner, especially in the fast-growing Asian markets.
Ravi Thakran, CEO and Chairman of Aspiration, is the former chairman of the LVMH group in South and Southeast Asia, Australia and the Middle East and former president emeritus of the Asian business of L Catterton, the private equity firm that includes LVMH and Groupe Arnault as partners.
Private Jet WheelsUp
Source: WheelsUp
Thakran, who will serve on the board of Wheels Up, will help the company expand overseas and form partnerships for VIP events and experiences to help it become a global travel and lifestyle brand. . Wheels Up has been 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 produce profit growth for Wall Street shareholders, while growing market share in an industry with a history of low profit margins and overcapacity. The main challenge for the private jet business is large fleets and the sporadic demand that causes most private jets to fly empty or with only one or two passengers. The proliferation of on-demand booking apps has made it easier for potential travelers to book a charter or private seat, just as they would with Uber or AirBnb.
“Ninety percent of the people who can afford to fly have not flown private jets,” Thakran said, “and 95 percent of the jets are idle. Just using next-generation technology to connect them is a great game “.
Dichter added: “It’s about connecting millions of customers with tens of thousands of planes in real time.”
Wheels Up will be listed on the New York Stock Exchange under the symbol “UP”.