Franco Ercolino
Update 12pm: Adds company statement, confirmation.
Wheels Up (NYSE:UP) will cede control to investors including Knighthead Capital Management and Certares Management as part of a new financing that will avoid a bankruptcy filing for the private jet firm. Wheels Up has been halted for news pending.
Affiliates of Knighthead and Certares, along with Delta Air Lines (DAL) and other investors, agreed to provide $500 million in new funding and will receive 95% of Wheels UP’s equity, according to a statement.
Delta, which recently provided short-term financing, is providing $150 million of a new $400 million term loan and $100 million credit line. Wheels Up also announced that Delta (DAL) Chief Financial Officer Dan Janki will join the Wheels Up (UP) board as Chairman. Ravi Thakran will transition back to director from his role as Executive Chairman.
“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 in the statement. “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.”
The news comes after a report late Friday from WSJ that Wheels Up (UP) was in talks with lenders about a debt restructuring while exploring other options to try to avoid a bankruptcy filing. The on-demand private jet company has recently started talks with Bain Capital and MSD Capital, large holders of more than $260 million in equipment financing notes,
The latest report comes after Wheels Up (UP) on Wednesday that there is “substantial doubt” about its ability to continue as a “going concern” and announced it was unable to file its Q2 results, sending its shares tumbling 35%.
The private jet operator also said on Wednesday that it is actively involved in discussions around strategic business partnerships for the company. Wheels Up (UP) announced that Delta (DAL) has provided a short-term capital infusion to the company.
Shares of Wheels Up (UP) have dropped 86% this year, at least partly because the founder and former CEO stepped down in May. Wheels Up stock has dropped more than 95% since it went public through a de-SPAC in July 2021.
CNBC earlier reported on Tuesday that Wheels Up (UP) would receive funding to avoid a bankruptcy. Bloomberg earlier reported details of the financing.
Wheels Up (UP) reported Q2 results earlier on Tuesday. Wheels Up short interest is 9.3%.
