Wheels Up is seeing ‘massive inbound volume’ amid commercial flight crisis, says CEO

Wheels Up (UP), a private jet charter company, hasn’t been shielded from this week’s air travel chaos, Chairman and CEO Kenny Dichter told Yahoo Finance Live this week. But nor has it experienced the disastrous fate of commercial airlines over the holidays.

“We’re not immune to the weather,” he said. But, Dichter added, “our folks, our members, for the most part, have gotten exactly where they need to get on time or within an hour or two of departure. We’re subject to some of the commercial action, and we move our crews and some of our maintenance folks around on the system…I would say we’re taking a tremendous amount of inbound volume [customers expressing interest in and booking flights].”

This week has been a spectacularly difficult one in commercial air travel, as thousands of passengers have found themselves stranded as severe winter weather triggered waves of flight cancellations. Southwest Airlines (LUV) has been at the center of the debacle, cancelling more than 2,000 flights on Wednesday alone, according to FlightAware. Southwest has said it plans to return to normal service on Friday. 

For Wheels Up, all the scheduling woes means they’ve had to double down on taking care of existing members.

“We always welcome demand,” said Dichter. “Over these peak-period times, we take care of our members and folks who have made commitments to us first. If there’s any slack in the system, we’re obviously open to new customers and prospects, but 98% of our focus is on our members and getting them to where they need to get to.”

Wheels Up was founded in 2013, and offers memberships that provide access to private jets. The cheapest Wheels Up membership starts with a $2,995 one-time initiation fee, and annual dues starting the second year come out to $2,495. Though the company’s been growing its top-line revenue, it has struggled to manage high costs this year contending with inflation and supply chain constraints. In its Q3 2022 earnings, the company’s net loss climbed to $86.8 million, up from $27.4 million in the same quarter the year prior.

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Wheels Up, as a result, has had a tough year on the public markets. The company’s shares are down about 76% year-to-date as of market open on Thursday. In the same period, the S&P 500 has declined roughly 20%.

‘Shifting directions’

Wheels Up is in the midst of pushing for profitability, said Dichter.

“Our top-line has been incredible,” he said. “We put up 39% year-over-year growth in our last quarterly earnings, our third quarter. Again, during the crisis, top-line was what Wall Street was looking for. We’re shifting directions here and are going to tamp down a little bit on that growth, and we’re going after profitability. We need to have a plan in place… [and] we need to execute.”

That plan includes tamping down costs, which will be especially key as the macroeconomic environment and interest rates stabilize. In Q3, the company’s revenue were $420.4 million.

It’ll be a difficult maneuver. The air travel business, crushed by COVID-19, has struggled across the board to find profitability in recent years. However, there’s hope yet – the International Air Transport Association (IATA) has said it expects the industry generally to turn a small profit in 2023, estimating more than 4 billion passengers will fly next year.

“At the end of the day, we want to deliver a premium service to great members and great customers,” added Dichter. “We want to digitize, organize, automate our space, and make it easier for customers to access private aviation, while at the same time [building] a profitable growth story.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.

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