- No. 1 premium airline joins travel and tourism investment
firm Certares and deep value and turnaround investment firm
Knighthead in a non-binding agreement in principle to co-lead a
$500 million facility
- The lenders will receive newly issued Wheels Up Class A
common stock resulting in the lenders owning approximately 95% of
the pro forma equity of the company on a fully diluted
basis
- Expanded partnership with Wheels Up would include deep
travel expertise and resources to drive strategic, operational and
customer service improvements
ATLANTA, Aug. 15,
2023 /PRNewswire/ -- Delta Air Lines, Certares
Management LLC, a leading investment specialist dedicated to the
travel, tourism and hospitality sectors, and Knighthead Capital
Management LLC, a deep value and turnaround investment firm,
announced an expanded partnership with Wheels Up Experience Inc., a
leading provider of on-demand private aviation, to accelerate the
company's business transformation.
Earlier this year, Wheels Up announced plans to scale and evolve
its product offerings to deliver world-class private aviation
service profitably. Funding provided by Delta, certain affiliates
of Certares and Knighthead, and other partners is expected to
provide the company the stability to execute on its strategic
vision over the long term.
The partnership would combine the experience of Delta, the No. 1
premium airline and a longstanding Wheels Up partner, with the
travel and tourism focus of Certares and turnaround and
restructuring experience of Knighthead to boost Wheels Up as it
evolves and elevates its customer experience, reliability and
financial performance. It includes a non-binding agreement in
principle for a $500 million facility
to Wheels Up, which includes funds contributed by Delta and CK
Opportunities Fund I, LP, ("CK Opportunities") which is co-managed
by affiliates of Certares and Knighthead. The facility would be
comprised of a $400 million term loan
and a $100 million liquidity facility
from Delta, totaling $500 million to
Wheels Up.
"The partnership will create new opportunities for Wheels Up to
drive strategic, operational and financial improvements for its
customers in the months and years ahead," said Delta CEO
Ed Bastian. "Delta's unmatched
expertise in premium travel, customer loyalty, corporate sales,
operational reliability and aircraft maintenance, combined with
Certares' and Knighthead's experience and global reach, are
expected to speed Wheels Up on its path to profitability.
"I would like to extend my sincere gratitude to Kenny Dichter, the visionary founder behind
Wheels Up, for building the Wheels Up brand into a powerhouse in
private aviation. We have great appreciation for his steadfast
devotion to the members, customers and employees and his role in
elevating the private aviation experience which will undoubtedly
guide the industry's path forward. We're grateful he will continue
as Wheels Up's strategic advisor," Bastian said.
Greg O'Hara, founder and Senior
Managing Director at Certares, said: "This strategic partnership
with Wheels Up is a natural extension of our focus and experience
in travel, tourism and hospitality. This transaction extends upon
our longtime partnership with Delta across many of our portfolio
companies. We're looking forward to joining Delta, Knighthead
and others in driving the company's ongoing transformation as it
elevates private aviation as an industry leader."
Tom Wagner, Knighthead's
co-founder, said: "We are delighted to be joining the Wheels Up
team alongside Delta, Certares and other strategic partners. The
agreement in principle announced today brings not just capital, but
Knighthead's extensive expertise, experience and resources to drive
the next phase of Wheels Up's business transformation as a leading
provider of on-demand private aviation. We look forward to the
journey ahead with our partners."
"Wheels Up sincerely appreciates the unwavering support of so
many of our members and customers," said Todd Smith, Interim Chief Executive Officer and
Chief Financial Officer of Wheels Up. "Over the past few months, we
have been intensely focused on taking clear steps to improve our
product offering and our operational delivery. Those actions are
already showing results and we look forward to continuing and
accelerating that progress with the support of our new partners.
Our continued close work with the Delta team will enable us to
further integrate our digital experiences, member benefits and our
operations. We are extremely grateful for Delta's support and look
forward to welcoming our new partners, including Certares and
Knighthead, to the Wheels Up family and leveraging their expertise
to further enhance our services and member experiences."
Wheels Up also today announced that Delta Chief Financial
Officer Dan Janki will join the
Board of Directors as Chairman. Ravi
Thakran will transition back to Director from his role as
Executive Chairman.
"I am pleased to officially welcome Dan as the Chairman of the
Wheels Up Board of Directors," Thakran said. "I've been honored to
lead the company through this transition and generate global
interest in Wheels Up as the premier experience in private
aviation. With today's announcements, Wheels Up should be in
a far stronger position to leverage its considerable assets in
service of our members and continue to be an innovative leader in
aviation."
Under the non-binding agreement in principle announced today,
Delta will provide Wheels Up with $150
million in new money term loans and a $100 million liquidity facility. An additional
$150 million term loan will be
provided under the facility by CK Opportunities. Furthermore, to
date other investors have agreed in principle to join Delta and CK
Opportunities to provide $50 million
in term loans under the facility. The additional $50 million will be allocated to certain other
investors as approved by Delta, Certares and Knighthead.
In connection with the transaction, Wheels Up will issue Class A
common stock to the participating new money lenders such that they
are expected to own approximately 95% of the Company following the
transaction. The company's audit committee determined that
the delay that would be caused in obtaining stockholder approval
would jeopardize the company's financial viability. Shares
representing approximately 80% of the Company's outstanding equity
are expected to be issued without prior shareholder approval based
on the Financial Distress Exception provided for in the Shareholder
Approval Policy of the New York Stock Exchange. In reliance
on the exception, the company is mailing to all stockholders a
letter notifying them of its intention to issue the shares without
seeking their approval. Ten days after such notice is mailed,
Wheels Up expects to proceed to issue the shares. The remainder of
the shares to be issued to the new money lenders will be subject to
stockholder approval of an amendment to Wheels Up's certificate of
incorporation (including in that vote the 80% voted by the new
money lenders) and will be issued after receipt of stockholder
approval.
The transaction is subject to completing definitive
documentation, as well as customary closing conditions and other
approvals.
Wheels Up, which offers membership-based and on-demand private
jet services, is a meaningful part of Delta's broad portfolio of
premium partners. The relationship dates to 2020, when Delta
Private Jets combined with Wheels Up. Delta provides Wheels Up
members with an array of benefits, including access to Delta
flights, the opportunity to earn Delta SkyMiles and the ability to
earn toward Medallion Status through spend on Wheels Up
flights.
About Delta Air Lines
Through the warmth and service
of the Delta Air Lines (NYSE: DAL) people and the power of
innovation, Delta never stops looking for ways to make every trip
feel tailored to every customer. More than 90,000 Delta people lead
the way in delivering a world-class customer experience on over
4,000 daily flights to more than 280 destinations on six
continents, connecting people to places and to each other.
Delta expects to serve nearly 200 million customers this year
safely, reliably and with industry-leading customer service
innovation – recognized as North
America's most on-time airline. We're dedicated to ensuring
that the future of travel is connected, personalized and enjoyable.
Our people's genuine and enduring motivation is to make every
customer feel welcomed and respected across every point of their
journey with us.
Headquartered in Atlanta, Delta
operates significant hubs and key markets in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los
Angeles, Mexico City,
Minneapolis-St. Paul, New York-JFK
and LaGuardia, Paris-Charles de
Gaulle, Salt Lake City,
Seattle, Seoul-Incheon and
Tokyo.
As the leading global airline, Delta's mission to connect the
world creates opportunities, fosters understanding and expands
horizons by connecting people and communities to each other and to
their own potential. Powered by innovative and strategic
partnerships with Aeromexico, Air France-KLM, China Eastern, Korean Air, LATAM, Virgin
Atlantic and WestJet, Delta brings more choice and competition to
customers worldwide.
Delta is America's most-awarded airline thanks to the
dedication, passion and professionalism of its people. It has been
recognized by Cirium for operational excellence, as the top U.S.
airline by the Wall Street Journal, among Fast Company's most
innovative companies, the World's Most Admired Airline according to
Fortune, as one of Glassdoor's Best Places to Work, and a top
employer for diversity, veterans and best workplaces for women by
Forbes.
About Certares
Established in 2012, Certares is
a global investment firm focused exclusively on the travel and
hospitality industries, leveraging deep sector experience,
proprietary transactions and hands-on partnership with management
teams to drive growth. With approximately $9.9 billion of assets under management,
including co-investments, as of March 31,
2023, Certares brings together a team with decades of both
operational and investment experience in private equity, travel,
tourism, hospitality and travel-related business and consumer
services. For more information, please visit
www.certares.com.
About Knighthead
Knighthead Capital Management, LLC
was co-founded in 2008 by Ara Cohen
and Tom Wagner and currently has
approximately $10.3 billion of assets
under management. Knighthead is a deep value and turnaround focused
SEC-registered investment advisor that specializes in investing in
companies that need financial and operational restructuring.
Knighthead has worked to create a diversified platform with an
experienced team of investment professionals, specializing in
credit analysis, sourcing, trading and restructuring. Knighthead's
long-term objective is to generate attractive risk-adjusted returns
for its clients while emphasizing the preservation of capital.
Knighthead manages assets across a variety of investment vehicles
including a long/short evergreen hedge fund, a number of closed-end
credit vehicles, a dedicated real estate lending business and a
sizable insurance asset management business.
About Wheels Up
Wheels Up is a leading provider of
on-demand private aviation in the U.S. and one of the largest
private aviation companies in the world. Wheels Up offers a
complete global aviation solution with a large, modern and diverse
fleet, backed by an uncompromising commitment to safety and
service. Customers can access membership programs, charter,
aircraft management services and whole aircraft sales, as well as
unique commercial travel benefits through a strategic partnership
with Delta Air Lines. Wheels Up also offers freight, safety and
security solutions and managed services to individuals, industry,
government and civil organizations.
Wheels Up is guided by the mission to connect private flyers to
aircraft, and one another, through an open platform that seamlessly
enables life's most important experiences. Powered by a global
private aviation marketplace connecting its base of approximately
12,000 members and customers to a network of approximately 1,500
safety-vetted and verified private aircraft, Wheels Up is widening
the aperture of private travel for millions of consumers globally.
With the Wheels Up mobile app and website, members and customers
have the digital convenience to search, book and fly.
Delta Air Lines Forward Looking Statements
Statements made in this press release that are not historical
facts, including statements regarding our estimates, expectations,
beliefs, intentions, projections, goals, aspirations, commitments
or strategies for the future in connection with our proposed
strategic investment in Wheels Up Experience described in this
press release, should be considered "forward-looking statements"
under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. Such statements are not guarantees
or promised outcomes and should not be construed as such. All
forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from the estimates, expectations, beliefs, intentions, projections,
goals, aspirations, commitments and strategies reflected in or
suggested by the forward-looking statements. Information concerning
risks and uncertainties that could cause differences between
Delta's actual results and forward-looking statements is contained
in Delta's Securities and Exchange Commission filings, including
Delta's Annual Report on Form 10-K for the fiscal year ended
Dec. 31, 2022. Caution should
be taken not to place undue reliance on our forward-looking
statements, which represent our views only as of the date of this
press release, and which we undertake no obligation to update
except to the extent required by law.
Wheels Up Experience Inc. Cautionary Note Regarding
Forward-Looking Statements
This press release contains certain "forward-looking statements"
within the meaning of the federal securities laws. Forward-looking
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions and, as a result, are subject to known and unknown
risks, uncertainties, assumptions and other important factors, many
of which are outside of the control of Wheels Up. These
forward-looking statements include, but are not limited to,
statements regarding: (i) Wheels Up's ability to continue as
a going concern absent receipt of the funding from the transactions
described in this press release; (ii) the terms of, the ability to
sign and close, and the impact of, any potential investments,
financings (including the financing discussed in this press
release), restructurings or other strategic transactions involving
Wheels Up or its subsidiaries or affiliates, including the ability
to realize anticipated benefits relating to any such transactions
and any potential impacts on the trading prices and trading market
for Wheels Up's Class A common stock, par value $0.0001 per share ("Wheels Up Common Stock");
(iii) Wheels Up's liquidity, future cash flows, deferred revenue
balances, measures intended to increase Wheels Up's operational
efficiency and certain restrictions related to its debt
obligations; (iv) the impact of Wheels Up's cost reduction efforts
on its business and results of operations, including the timing and
magnitude of such expected reductions and any associated expenses
in relation to liquidity levels and working capital needs; (v)
Wheels Up's ability to perform under its contractual obligations,
including to its members and customers, and maintain or establish
relationships with third-party vendors and suppliers; (vi) the
degree of market acceptance and adoption of Wheels Up's products
and services, including member program changes implemented in
June 2023; (vii) the competition in,
size, demands and growth potential of the markets for Wheels Up's
products and services and Wheels Up's ability to serve those
markets; and (viii) general economic and geopolitical conditions,
including due to fluctuations in interest rates, inflation, foreign
currencies, consumer and business spending decisions, and general
levels of economic activity. The words "anticipate," "believe,"
continue," "could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predict," "project," "should,"
"strive," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that statement is not forward-looking. Factors that could
cause actual results to differ materially from those expressed or
implied in forward-looking statements can be found in Wheels Up's
Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities
and Exchange Commission (the "SEC") on March
31, 2023, Wheels Up's Quarterly Report on Form 10-Q for the
three months ended June 30, 2023 filed with the SEC on
August 14, 2023, and Wheels Up's other filings with the
SEC. You are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made.
Except as required by law, Wheels Up does not intend to update any
of these forward-looking statements after the date of this press
release or to conform these statements to actual results or revised
expectations.
Securities Disclaimer
The issuance, offer and/or sale of any securities described
herein has not been registered under any federal or state
securities laws and may not be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
applicable federal and state laws. This press release shall not
constitute an offer to sell or a solicitation of an offer to
purchase any securities, and shall not constitute an offer,
solicitation or sale in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful.
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SOURCE Delta Air Lines