- Delta Air Lines’ investment in Wheels Up provides the private aviation company with much-needed capital for financial stability and profitable growth.
- The investment brings together the expertise of Delta, Certares Management, Knighthead Capital, and Cox Enterprises, which will contribute to the company’s success.
- The new structure includes credit facilities and a term loan to improve operating performance and offer a seamless connection between private and premium commercial travel.
The $500 million investment, confirmed on September 20, will be an essential source of capital for Wheels Up and is expected to give the company a much-needed financial boost and provide a stable platform for sustainable and profitable growth. Additionally, Wheels Up has announced the structure of the new Board of Directors just a week after the appointment of the new CEO.
Structure of the credit facility
The new investment structure brings together a wide range of exceptional qualities, including the experience of Delta as one of the world’s leading carriers, Certares’ travel and tourism expertise, and Knighthead’s knowledge in turnaround and restructuring processes.
Photo: Wheels Up
Wheels Up will receive a $500 million credit facility, with funds provided by Delta and CK Wheels, an investment firm co-managed by Certares, Knighthead, and Cox affiliates. Wheels Up CEO George Mattson said;
“This investment represents both an important source of capital for Wheels Up to support our strategy for financial stability, future profitability, and long-term growth on behalf of our members and customers, as well as a vote of confidence in our path forward from a group of investors with deep experience in the premium travel space.”
In addition to a $100 million revolving credit facility from the Atlanta-based carrier, the investment includes a $350 million term loan funded at closing from Delta, CK Wheels, and Cox. Under the credit agreement, a new lender can provide a $50 million term loan after the closing date. All parties have approved this, and the additional funding is expected to close soon. Mattson added;
“We look forward to working closely with Delta and our other investors to deliver best-in-class operating performance and an exceptional customer experience, which, as we deepen our commercial partnership, will also enable us to provide a one-of-a-kind seamless connection between private and premium commercial travel.”
Closing of the credit facility
Regarding the closing of the credit facility, lenders will receive newly issued Wheels Up common stock, giving them about 80% ownership of the company’s outstanding equity. They will also receive additional new shares, granting ownership of 95% of the company’s outstanding equity. However, the latter is pending approval of an amendment to its certificate of incorporation by Wheels Up stockholders.
Photo: Wheels Up
Last month, Delta and the other investors announced the expanded partnership with Wheels Up, which welcomed the $500 million facility. All parties expressed their delight in joining the Wheels Up team and expect to achieve strategic, operational, and financial improvements for the company and its customers.
New leadership structure
The New York-based company has also announced the new structure of its Board of Directors. Altogether, the investing parties will appoint nine directors to the board, with four from Delta, two from Certares, two from Knighthead, and one from Cox. A Wheels Up executive will also join, while two directors will retain their positions from the previous board.
Photo: Joe Kunzler | Simple Flying
Speaking about the investment and new structure, Wheels Up Chairman and Delta’s Chief Financial Officer Dan Janki said in a statement,
“Wheels Up is an integral part of Delta’s portfolio of premium partners, and this deep relationship offers a significant opportunity to deliver compelling benefits to our customers that are unique in the travel space. This investment and new leadership puts Wheels Up on a strong path to future success.”
This is not the first time the Wheels Up leadership has been shaken up recently. Just last week, the company announced the appointment of George Mattson as its new Chief Executive Officer. He is a long-standing member of Delta’s Board of Directors, bringing 25 years of experience in the aviation industry.
“I look forward to leading the Wheels Up team with the operational, commercial, strategic, and financial support of Delta and our other new investors,” Mattson said upon his appointment.
What do you think about Delta’s investment in Wheels Up? Please share your thoughts in the comments!