One week ahead of releasing its 2022 financial results, Wheels Up announced that it is implementing a restructuring plan it expects to produce $30 million in annual savings. The company revealed the plan via an 8-K filing with the U.S. Securities and Exchange Commission (SEC) on Wednesday.
In the filing, Wheels Up said the plan “is intended to streamline the company’s organization and reduce headcount in areas of the business that do not directly impact the company’s operations or its customers’ experience…Excluded from these actions were key operationally focused employee groups such as pilots, maintenance, and operations-support personnel.”
According to Wheels Up, the plan is designed to deliver “EBITA profitability” in 2024. The company said the savings would come primarily from cutting sales, marketing, and general administrative expenses relative to their levels in third-quarter 2022.
It said results from “substantial” implementation of the plan would be reflected in financial results in the second quarter and includes “certain discrete actions taken by the company in the fourth quarter of 2022.” Implementing the plans will cost an estimated $14 million spread between October and this month and are primarily related to “severance payments, employee benefits, and share-based compensation.”
In 2022, Wheels Up hired a new CFO and eliminated the position of president. The company lost $86 million on $420 million in revenues in third-quarter 2022. For the first nine months of 2022, Wheels Up lost $276.5 million versus $121 million in the same period in 2021. In October, Wheels Up borrowed against its owned fleet of 134 aircraft, netting proceeds of $259 million. At the time, CEO Kenny Dichter told AIN the move “created some runway.” Categorized as an enhanced equipment trust certificates loan structure, the financing has a maturity of seven years and a coupon rate of 12 percent.