• Date of publication: 02 February 2021
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  • Private jet company Wheels Up to go public with $ 2 billion SPAC deal that could help it open up new markets


    Merger with Aspirational Wheels Up acquires a luxury marketing and expansion partner overseas. The deal is worth more than $ 2 billion, more than double its 2019 estimate.

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Private jet company Wheels Up is merging with a special acquisition company to go public for over $ 2 billion, more than double the 2019 value.

The deal, expected to close in the second quarter, will make Wheels Up the first publicly owned private jet company and allow the seven-year-old startup to overtake many long-standing industry leaders in the race to the Uber or AirBnb title. private aviation.

He also highlights the rapid recovery of private jet companies during the pandemic, as the wealthy flocked to safe private jets for travel as the commercial airline industry continues to struggle. Commercial air travel is down about 65–70% from pre-pandemic levels, while private jet bookings are at or near pre-pandemic highs.

Under Aspirational Consumer Lifestyle Corp.'s deal, SPAC, founded by the former LVMH executive, will merge with Wheels Up with a corporate value of approximately $ 2.1 billion. The deal is expected to generate approximately $ 790 million in cash, of which $ 240 million will come from Aspirational and $ 550 million from PIPE, or "private equity investment." PIPE's investors include T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Vora Capital Management and Third Point, a hedge fund managed by Dan Loeb.

Delta Air Lines, which has a stake in Wheels Up as a result of Delta Private Jets' merger with Wheels Up last year, will also remain a shareholder following the completion of the deal.

“2020 was the beginning of a great democratization for us,” Kenny Dichter, founder and CEO of Wheels Up, told CNBC. "We saw so many new people who have never flown in private jets before, but in reality they either join Wheels Up or get on the platform and fly."

The deal marks the recognition of Dichter, a high-octane entrepreneur who started selling T-shirts to fellow students at the University of Wisconsin and then created the Marquis Jet, which was later sold to NetJets. Since 2013, with the King Air membership model and turboprop fleet, Dichter has sought to topple the aviation industry from its elite and inaccessible position in order to serve the wider mass market.

Last year, the company carried over 150,000 passengers on more than 1,500 of its own, operated and third-party partner aircraft.

Through the merger with Aspirational, Wheels Up gains a partner in luxury goods marketing and overseas expansion, especially in the fast-growing Asian markets.

Chief Executive Officer and Chairman of the Board Ravi Takran is the former Chairman of the LVMH Group in South and Southeast Asia, Australia and the Middle East and the former Chairman Emeritus of the Asian Business of L Catterton, a private equity firm that includes LVMH and Groupe Arnault as partners.

Takran, who will serve on Wheels Up's board of directors, will help the company advise on overseas expansion and form partnerships for VIP events and events to help it become a more global travel and lifestyle brand. Wheels Up has been successful in marketing exclusive access to major sporting events and boasts a roster of celebrity athletes as brand ambassadors.

The question for Wheels Up is whether it can deliver profitable growth for Wall Street shareholders while increasing market share in an industry with a history of low profit margins and overcapacity. The main problem for the private jet business is the large aircraft fleet and sporadic demand, with the result that most private jets fly empty or with one or two passengers. The proliferation of on-demand booking apps has made it easier for potential passengers to book a charter or a seat on a private jet just as it would with Uber or AirBnb.

“Ninety percent of the people who can afford to fly have not traveled in private jets,” Takran said, “and 95 percent of the planes are idle. Just using next generation technologies to connect them is a great game. "

Dichter added: "It's about connecting millions of customers with tens of thousands of aircraft in real time."

Wheels Up will be listed on the New York Stock Exchange under the ticker “UP”.