Key Takeaways
On-demand private aviation provider Wheels Up Experience Inc. (NYSE: UP) secured a $68 million committed mezzanine debt facility from Sankaty Jet Capital to finance the expansion of its private jet fleet. The deal provides a crucial capital infusion as the company pushes forward with its multi-year turnaround and fleet modernization strategy.
"This strategic financing with Sankaty and AIP not only provides the investment capital needed to execute our growth plan but reflects confidence in the progress we're making towards building a strong and sustainable business," George Mattson, Chief Executive Officer at Wheels Up, said in a statement.
The financing was provided by Sankaty Jet Capital, the business aviation lending platform of global alternative investment manager AIP Capital. The facility is secured by 51 of Wheels Up's existing aircraft, which have a total appraised value of approximately $277.8 million. The structure allows for the acquisition of additional Phenom 300 and Challenger 300 Series aircraft over the next 18 months, according to the May 14 press release.
This non-dilutive financing arrives at a critical juncture for Wheels Up, which carries a significant debt burden of over $473 million and has seen its stock fall 85 percent over the past year, according to InvestingPro data. The capital injection supports the company's operational goals without further impacting its equity structure, which recently underwent a 1-for-20 reverse stock split in April to maintain its NYSE listing.
The deal directly supports the company's plan to modernize and upgrade its fleet, a core pillar of its strategy. Wheels Up recently announced it had completed a major fleet transition to exclusively operate Phenom 300 and Challenger 300 series aircraft 18 months ahead of schedule. This new capital allows the company to continue that momentum.
"We are proud to commence our partnership with Wheels Up by providing a bespoke financing solution to support their fleet modernization program," said Ford von Weise, Chief Executive Officer at Sankaty.
The transaction also highlights the deep relationships within the aviation industry. Scott Debano, Head of Capital Markets at AIP Capital, noted the firm's long-standing, two-decade relationship with Delta Air Lines, a key strategic partner for Wheels Up, as a factor in the deal.
Wheels Up provides on-demand private jet services through membership and charter programs. It also offers cargo services and benefits through its partnership with Delta.
This article is for informational purposes only and does not constitute investment advice.
