The private aviation provider Wheels Up announced that in the fourth quarter of 2021 it saw continued growth in members & flight legs and had record sales of its prepaid block programs. Total revenue in Q4 increased 64% year-over-year to $345 million and reached $1.2bn for the whole of 2021.
Members & Flights Up
For the fourth quarter Wheels Up reported that “Active Members” grew 31% year-over-year to 12,040 in total and “Live Flight Legs” increased 63% year-over-year to 20,296 in total. The company notes that the growth in “Active Members” (membership accounts that generated membership revenue and are active at the end of the period) was due to strong new member additions and existing membership retention, as well as continued success converting legacy jet card holders (from acquisitions) into Wheels Up members.
The flight revenue per “Live Flight Leg”, in the fourth quarter, increased 2% year-over-year to $12,428 as a result of a higher mix of larger cabin flying and partially offset by a seasonal decrease in average flight stage length.
For the full year “Live Flight Legs” were 73,522 a growth of 65% from 44,579 in 2020. The company defines a “Live Flight Leg” as a complete one-way revenue generating flight leg in a given period, excluding empty repositioning legs and owner legs related to aircraft under management. Based on these number, on average the company flew over 1,400 “Live Flight legs” each week in 2021.
“I am pleased to report another quarter of record revenue, strong membership growth and retention, along with the best quarter in our history for prepaid block sales, which grew more than 80% to $540 million in the fourth quarter. We have more members that are increasingly making long-term commitments to Wheels Up, giving us clear revenue visibility for the year ahead and the confidence to invest in our growth while absorbing short-term margin pressures.” said Kenny Dichter, Wheels Up Chairman & Chief Executive Officer. “Additionally, we have several key initiatives underway to improve our profitability as we aggressively expand our global supply. As always, I am grateful to our employees for their dedication and to our members and customers for their loyalty and trust.”
“We are now working to increase our capacity to serve the strong demand we are seeing through pilot hiring, enhancing our maintenance capabilities, and adding to our fleet composition.” said Eric Jacobs, Wheels Up Chief Financial Officer. “The rollout of our technology initiatives will streamline our operations and add capacity through increased utilization. That, combined with rate increases and cost saving measures, should drive strong margin improvements starting in the second half of the year.”
Continuing Acquisitions
Wheels Up has grown rapidly, including through a series of acquisitions. The acquisitive nature has continued in 2022 with the announced intent to acquire Air Partner PLC (LSE: AIR) and the closed acquisition of Alante Air Charter which controls 12 light jets, where demand is particularly strong.
With all the acquisitions over the last few years it has a lot of aircraft on a variety of (FAA) operating certificates. These include over 180 aircraft in the company owned and leased fleet and approximately 150 aircraft that the company manages. Wheels Up notes that it has launched the first version of its global scheduling system, which will enable it to manage schedules across all of its operating certificates. Furthermore, the company says this system is an important building block that provides a fleet-wide view of available aircraft, and expects significant benefits to come following the conversion of its entire controlled fleet to UP FMS by the end of April and its ongoing efforts to consolidate its "First Party" fleet onto a single operating certificate.
Other Financials
Wheels Up went public last year and as a public company (NYSE:UP) it discloses quite a lot of information. While the company has been growing rapidly, it has also faced cost pressures and had a net loss of $197m for 2021. It partly attributes this to supply constraints and increased operating costs, as well as an increase in equity-based compensation expense, including a broad-based equity grant to the Wheels Up employee pilots. At the end of the year the company had $785m in cash on its balance sheet, helped by the block program sales.
For 2022 Wheels Up is forecasting revenue of $1.35 to $1.42 billion and expects to spend about $125 million on capital expenditure.