Private jet company Wheels Up goes public in $ 2 billion PSPC deal

Private jet company Wheels Up is merging with a special purpose acquisition company to go public at 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 publicly traded stand-alone private jet company and defeat the seven-year-old start-up ahead of many of the industry’s longtime leaders in the race. to become Uber or AirBnb. of private aviation.

It also highlights the rapid recovery of private jet companies during the pandemic, as the wealthy flock to the safety of private jets for travel as the commercial airline industry continues to struggle. Commercial airline traffic is down about 65% to 70% from pre-pandemic levels, while private jet bookings are at or near their pre-pandemic 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 an enterprise value of approximately $ 2.1 billion. The deal is expected to provide cash proceeds of approximately $ 790 million, including $ 240 million in cash from Aspirational and $ 550 million from a PIPE, or “private investment in public stocks.” PIPE investors include T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Voro Capital Management and Third Point, a hedge fund managed by Dan Loeb.

Delta Airlines, which owns a stake in Wheels Up following Delta Private Jets’ merger with Wheels Up last year, will also remain a shareholder once the deal is closed.

“2020 was the start of a great democratization for us,” Kenny Dichter, founder and CEO of Wheels Up told CNBC. “We saw so many new people who had never flown privately before, get behind the wheel and join Wheels Up or get on the platform and fly.

The deal marks a validation for Dichter, a high-octane entrepreneur who began selling T-shirts to fellow students at the University of Wisconsin and then created Marquis Jets, which was later sold to NetJets. Beginning in 2013 with a membership model and a fleet of King Air turboprop engines, Dichter aimed to push the aviation industry out of its elite and inaccessible perch to serve a larger mass market.

Last year, the company carried more than 150,000 passengers with more than 1,500 aircraft owned, managed and third party partners.

By merging with Aspirational, Wheels Up gains a partner in luxury marketing and expansion overseas, especially in fast growing Asian markets.

Aspirational CEO and Chairman Ravi Thakran is the former chairman of the LVMH South & Southeast Asia, Australia & Middle East group and former chairman emeritus of the Asia business of L Catterton, the private equity firm that includes LVMH and Groupe Arnault as partners.

Thakran, who will be part of the Wheels Up Board of Directors, will help the company expand overseas and form partnerships for VIP events and experiences to help it grow into a global travel brand and lifestyle. Wheels Up has successfully marketed exclusive access to major sporting events and has a roster of famous athletes as brand ambassadors.

The question for Wheels Up is whether it can produce profit growth for Wall Street shareholders while increasing market share in an industry with a history of low profit margins and excess capacity. The main challenge for the private jet industry is the large fleets and sporadic demand that results in most private jets flying 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 private jet charter or seat, just as they would an Uber or AirBnb.

“Ninety percent of people who can afford to fly have not flown private jets,” Thakran said, “and 95% of planes are inactive. Just using next-generation technology to connect them is a great game. “

Dichter added: “It’s about connecting millions of customers to tens of thousands of planes in real time.”

Wheels Up will trade on the New York Stock Exchange under the symbol “UP”.