Quote:
Originally Posted by AirBear
https://www.ainonline.com/aviation-n...2&utm_campaign
They are mortgaging their primary owned aircraft to raise $259M. Big rises in revenue but also big increases in losses, $180M for the 1st half of the year. Stock has dropped 90% since going public in July 2021.
WU is having to pay 12% interest for 7 years on the mortgaged jets.
I'd be careful about going to work there unless you're an age 65 retired airline type. I think I already posted about seeing WU ads on Facebook targeting retired pilots.
From a Linked In post
Up Raise $259 Million In Asset-Backed Debt
I heard that this debt facility was inbound, a few days ago. Of the 134 WUP-owned aircraft that have been used as collateral, 72 are King Air 350i's that are no longer as popular among WUP members, at least according to Wheels Up. Is using them as loan collateral the best way to use these aircraft? Wouldn't a controlled sale raise more cash?
On top of at least $100 million in asset value loss, since the King Air 350i's were purchased, this $259 million credit line carries an interest rate of 12%, or $230,000 per annum for each wholly-owned aircraft in the WUP fleet. Putting this into perspective, WUP have lost $180 million, year-to-date and will now need to generate a further $30 million, each year, just to cover their interest expenses.
During NBAA WUP have announced that they will continue to make acquisitions in addition to achieving breakeven by 2024. Two recent acquisitions, Alante Air and Air Partner, consumed $124.5 million. At the risk of appearing skeptical (I am, by the way) I simply cannot see how this combination of high-cost acquisitions and heavy losses can be converted into profitability in just two years.
More widely, I am seeing a steady flow of announcements about new aircraft purchases and SPAC's, all of which suggest that the charter market is robust enough to absorb dozens of brand new aircraft and that these companies are, therefore, worthy of being handed billions in additional capital. Having been directly involved with aircraft charter and fractional operations, for close to forty years, I have never seen evidence that these markets can sustain brand new, wholly-owned, aircraft or the astonishing levels of debt these providers are accumulating...
I look forward to seeing earnings updates for Wheels Up, every quarter. Sadly, I expect to see one or more of these branded charter providers go spectacularly bust, when the charter market, or the wider economy, bites back.