Story ID: 659WheelsUpNBAA2018
Wheels Up Flies Toward Stock Offering
By: Mark Huber
Caption: Readies to "push button" On Europe. 
Word Count: 467
Wheels Up (Booth 1416) expects to generate revenues of more than $400 million this year, up from $300 million last year, and is positioning itself for a public stock offering in 12 to 18 months. The company has already consulted on a potential offering with financial firms, including Fidelity and T. Rowe Price, CEO Kenny Dichter said on Monday at NBAA 2018.

The company’s current fleet has grown to 93 aircraft—72 Beechcraft King Air 350is, 15 Cessna Citation XLSs and six Citation Xs. The latter type is a recent addition to the fleet, Dichter said. Wheels Up has commitments to take up to 35 more King Airs, which are going to remain the “backbone” of the company’s fleet.

While Dichter said the jets are “nice to have,” the cost structure of the King Airs is half that of jets and a main customer draw. He said the eight-seat layout in the 350i is particularly attractive to customers and ruled out employing smaller aircraft including single-engine turboprops, which he said some corporate clients would likely find uncomfortable from a risk-management perspective. 

Dichter said Wheels Up’s growth has enabled the company’s operator, Gama Aviation, to have grown into the nation’s largest Part 135 operator, flying 75,000 hours last year. While Dichter conceded that the company—which began five years ago— has yet to achieve profitability, he did say he expects it to be EBITDA (earnings before interest, taxes, depreciation, and amortization) cash flow positive next year. Late last year Wheels Up raised an additional $117.5 million in investor financing and Dichter continues to stress the “up” side of the business.  

“We’re in the membership business, and people don’t want to own assets if they don’t have to,” he said, pointing out that the company’s King Air fleet is ideally suited to fly the most demanded routes in both North America and Europe, where 80 percent and 85 percent of the routes in each market are flights under two hours, respectively.

“The [business jet charter] industry is going big and we’re going the other way,” he said. “We’re the UberX of our space. We want to go where the people are.” Dichter said the 20,000 to 30,000 family businesses in the U.S. with annual revenues of $50 million to $1 billion are natural customers for Wheels Up, even if initially buying as little as 10 to 15 hours per year.

He also said that Wheels Up is well positioned to take advantage of consolidation in the charter market. “We’re going to play in the consolidation game,” according to Dichter.

Wheels Up is ready to “push the button” to begin European operations in earnest; the company has already established a flight desk there and had identified 85 possible aircraft for use, Dichter said.