Wheels Up Experience Inc. announced on October 22, 2024, a series of major aircraft, commercial, and financing transactions to initiate its fleet modernization strategy. The company plans to transition its four existing jet aircraft types to two preferred models: Embraer's Phenom 300 series and Bombardier's Challenger 300 series, while retaining its King Air 350i fleet.
This transition is expected to lower the average aircraft age of its fleet by approximately 10 years, aiming for improved operational performance, efficiency, and an enhanced customer experience. The company intends to complete this fleet transition and retire its existing light and mid-sized jet aircraft within approximately three years, subject to market conditions.
As part of this strategy, Wheels Up entered a binding agreement to acquire GrandView Aviation's entire fleet of 17 Embraer Phenom 300 and Phenom 300E aircraft for $105 million, along with related maintenance assets and customer programs. The acquisition is expected to close this quarter, with Wheels Up assuming GrandView's customer programs and integrating its pilot group.
To prepare for the Challenger fleet, Wheels Up agreed to sell all 13 of its owned Citation X aircraft to an unrelated third party, with plans to lease back a portion and amend lease terms for other Citation X aircraft. The Bombardier Challenger 300 Series aircraft are expected to be introduced into Wheels Up's fleet starting next year.
Enhancing the customer experience, Wheels Up also entered a letter of intent with Gogo Business Aviation to equip the acquired Phenom and Challenger aircraft with Gogo Galileo HDX satellite-based WiFi. This system is expected to deliver high bandwidth, low latency, and global coverage, with certification planned by mid-2025.
Crucially, Wheels Up secured a commitment letter with Bank of America for a new, five-year, up to $332 million senior secured revolving credit facility, backed by Delta Air Lines' credit support. This financing is anticipated to close concurrently with the GrandView acquisition in the fourth quarter, funding the acquisition, redeeming existing equipment notes, and providing up to $115 million in additional cash for general corporate purposes and future aircraft acquisitions.
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