Delta Air Lines is the leading investor in a $500 million nonbinding rescue package for private jet charter company Wheels Up.
Under the arrangement, the investment team will take control of 95% of Wheels Up. Private equity firm Certares (a company with several travel investments) and Knighthead Capital Management are now also Wheels Up investors.
The rescue is a major step up in Delta's commitment to Wheels Up, which purchased Delta Private Jets in 2020 and partners with the SkyMiles loyalty program.
Wheels Up reported a net loss of $161 million in the second quarter, a year-over-year revenue decline of 21%, and a 4% decrease in active users. Earlier this year, Wheels Up developed a restructuring plan designed to cut costs and refocus on its profitable operations. The company offers on-demand flights and subscription charter flying.
"The partnership will create new opportunities for Wheels Up to drive strategic, operational and financial improvements for its customers in the months and years ahead," Delta CEO Ed Bastian said Tuesday. "Delta's unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability and aircraft maintenance, combined with Certares' and Knighthead's experience and global reach, are expected to speed Wheels Up on its path to profitability."
Under the financing arrangement, Delta will provide Wheels Up with $150 million in term loans and a $100 million liquidity facility. An additional $150 million term loan will be provided by the CK Opportunities Fund, which is co-managed by Certares and Knighthead. Other unnamed investors have committed to providing a $50 million term loan and the final $50 million has yet to be allocated.
"Over the past few months, we have been intensely focused on taking clear steps to improve our product offering and our operational delivery," Wheels Up interim CEO Todd Smith said on Tuesday. "Those actions are already showing results and we look forward to continuing and accelerating that progress with the support of our new partners. Our continued close work with the Delta team will enable us to further integrate our digital experiences, member benefits and our operations."
Delta CFO Dan Janki will become chairman of the Wheels Up board.
Wheels Up founder Kenny Dichter stepped down as CEO in May.