Delta Air Lines is leading a $500 million round of funding in its struggling private jet partner company Wheels Up.
Delta became a partner of New York-based Wheels Up by spinning off and combining its Delta Private Jets subsidiary with Wheels Up in a deal announced in 2019. That agreement also gave Delta an equity stake of 24% in Wheels Up as of December 2020.
Last year, Wheels Up announced it would open an operations center in Chamblee and was hiring pilots, partnering with Delta for the airline’s pilot career path program.
But Wheels Up ran into severe financial struggles this year, leading to the May resignation of its CEO and founder Kenny Dichter.
Wheels Up said last week that if it could not get additional funding soon, there was “substantial doubt about its ability to continue as a going concern for any meaningful period of time.”
This week, the private jet firm posted a $261.5 million loss for the first half of the year on $686.9 million of revenue. Wheels Up’s count of active members declined to 11,639 as of June 30, down 8% from 12,667 a year earlier.
Delta said Tuesday that it would co-lead the funding round with travel investment firm Certares and turnaround investment firm Knighthead.
The funding includes $150 million in loans from Delta and $100 million in liquidity from Delta, a $150 million loan from a fund managed by affiliates of Certares and Knighthead, $50 million in loans agreed to by other investors and $50 million to be allocated to other investors.
As part of the deal, the lenders will receive stock giving them approximately 95% ownership of the company.
The expertise and reach of Delta, Certares and Knighthead “are expected to speed Wheels Up on its path to profitability,” said Delta CEO Ed Bastian in a written statement.
Delta Chief Financial Officer Dan Janki will join the Wheels Up board of directors as chairman.
Wheels Up interim CEO Todd Smith said in a statement: “We are extremely grateful for Delta’s support and look forward to welcoming our new partners,” including Certares and Knighthead.
About the Author
