Wheels Up Finalizes New Investment in Turnaround Effort

Wheels Up Experience has received a new round of financing from an investor group that includes Delta Air Lines, Certares Management LLC, Knighthead Capital Management LLC, and Cox Enterprises. The announcement came quickly after the selection of George Mattson as the company’s new CEO.

Wheels Up provides on-demand private aviation in the U.S.   Services include membership programs, charter services, aircraft management services, and whole aircraft sales. It also offers airline travel benefits through a strategic partnership with Delta Air Lines.

The new deal includes a $500 million credit facility to Wheels Up, with funds contributed by Delta and CK Wheels LLC, which is co-managed by affiliates of Certares, Knighthead, and Cox. The new investment structure combines the airline experience of Delta with the travel and tourism focus of Certares and turnaround and restructuring experience of Knighthead.

“Wheels Up is an integral part of Delta’s portfolio of premium partners, and this deep relationship offers a significant opportunity to deliver compelling benefits to our customers that are unique in the travel space,” said Dan Janki, Wheels Up chairman and Delta’s chief financial officer.

The credit facility includes a $350 million term loan funded at closing from Delta, CK Wheels, and Cox, plus a $100 million revolving credit facility from Delta. The terms of the credit agreement permit a new lender to provide a $50 million term loan after the closing date, as approved by Delta, Certares, Knighthead, and Cox, and it is anticipated this additional funding will close in the near term.

The lenders will initially receive newly issued Wheels Up common stock representing 80 percent of the company’s outstanding equity as of the closing of the credit facility, on a fully diluted basis. After approval by Wheels Up’s stockholders of an amendment to its certificate of incorporation, the company will issue to the lenders more new shares such that the lenders will own 95 percent of the company’s outstanding equity as of the closing of the credit facility, on a fully diluted basis.

Wheels Up also announced a new structure for its board of directors. Under the new structure, Delta Air Lines will appoint four directors, Certares and Knighthead each will appoint two directors, and Cox will appoint one director. In addition, one company executive will join the board, and two independent directors are expected to remain from the previous board.

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