Wheels Up announces series of transactions

Wheels Up (UP) Experience announced a series of major aircraft, commercial and financing transactions. Upon closing, the transactions will initiate the transition of Wheels Up’s four existing jet aircraft types Embraer’s (ERJ) Phenom 300 and Phenom 300E aircraft and Bombardier’s Challenger 300 and Challenger 350 aircraft. Once complete, the transition of Wheels Up’s jet aircraft to Phenom 300 series and Challenger 300 series models is expected to lower the average aircraft age of its fleet by approximately 10 years. The company intends to continue to operate in support of its customers a fleet of King Air aircraft within its existing service areas. Wheels Up has entered into a binding agreement to acquire the entire Phenom fleet of GrandView Aviation, a subsidiary of Global Medical Response. The agreement provides for the acquisition of their entire fleet of 17 Embraer Phenom 300 and Phenom 300E aircraft and certain related maintenance assets to support the fleet, at a purchase price of $105M. Wheels Up and GrandView also expect to enter into a short-term Transition Services Agreement at closing, under which GrandView will operate the Embraer Phenom aircraft on Wheels Up’s behalf while the aircraft are transitioned to the company’s Wheels Up Private Jets FAA operating certificate. The company anticipates that the GrandView acquisition will close as promptly as practicable this quarter. In the super mid category, Wheels Up intends to acquire a fleet of pre-owned Challenger 300 and Challenger 350 aircraft via the secondary market through a combination of outright purchases and long-term leasing. In preparation for this transition, Wheels Up has agreed to sell all 13 of its currently owned Citation X aircraft to an unrelated third party. The company expects to lease a portion of those sold aircraft and amend the lease terms for other Citation X aircraft that are currently leased from that same buyer. This agreement also provides the ability to replace leased aircraft with Challenger aircraft in the future. The Bombardier Challenger 300 Series aircraft are expected to be introduced into Wheels Up’s fleet beginning next year. A full introduction into Wheels Up’s programmatic offering across guaranteed service areas is expected by the end of 2025. Consistent with the timing of the Phenom transition plan, and subject to business and market conditions, Wheels Up expects to complete the transition to the Challenger platform within approximately three years.