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What changed in Wheels Up Experience Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Wheels Up Experience Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+752 added−727 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-07)

Top changes in Wheels Up Experience Inc.'s 2024 10-K

752 paragraphs added · 727 removed · 487 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+74 added−54 removed27 unchanged
Biggest changeAccount managers serve as dedicated private aviation consultants for members with respect to evaluating options for specific flights and their overall Wheels Up relationship. In this capacity, our account management team plays a critical role in driving membership renewals and the purchase of Prepaid Blocks. This team also assists members in activating Delta and other partner benefits.
Biggest changeWe also have a Wheels Up account management team that is in regular contact with our members and educates them on the benefits of Wheels Up Membership. Account managers serve as dedicated private aviation 8 consultants for members with respect to evaluating options for specific flights and their overall Wheels Up relationship.
We have entered into agreements with multiple industry leading third-party suppliers to provide factory-authorized training for our pilots. These agreements provide training availability to Wheels Up throughout the year for both initial and recurrent pilot training in exchange for a fixed price per training slot.
We have entered into agreements with multiple industry leading third-party suppliers to provide factory-authorized training for our pilots. These agreements provide training availability to Wheels Up pilots throughout the year for both initial and recurrent pilot training in exchange for a fixed price per training slot.
We are subject to DOT jurisdiction as an “air charter broker” under Part 295 in offering and selling our membership program for single-entity charters and in acting as an agent for members in arranging flights. We are also subject to DOT’s jurisdiction as a “ticket agent” as defined by 49 U.S.C. Section 40102(a)(45).
We are subject to DOT jurisdiction as an “air charter broker” under Part 295 in offering and selling our membership program for single-entity charters and in acting as an agent for members and customers in arranging flights. We are also subject to DOT’s jurisdiction as a “ticket agent” as defined by 49 U.S.C. Section 40102(a)(45).
Our maintenance and repair process also includes procedures designed to maintain the FAA airworthiness certificate of each aircraft in good standing. Line maintenance consists of daily and weekly scheduled maintenance inspections, including pre-flight, daily, weekly and overnight checks. Line maintenance also includes any unscheduled items requiring repair on an as-needed basis.
Our maintenance and repair process also includes procedures designed to maintain the FAA airworthiness certificate of each controlled aircraft in good standing. Line maintenance consists of daily and weekly scheduled maintenance inspections, including pre-flight, daily, weekly and overnight checks. Line maintenance also includes any unscheduled items requiring repair on an as-needed basis.
Member Relationships Retention of our existing members is essential to the growth of our business. We drive retention by taking a holistic view of the member journey, from onboarding to the member’s booking and flight experience and extending to every moment of member engagement thereafter. We believe each of these touchpoints is an essential element of the overall member experience.
Retention of our existing members is essential to the growth of our business. We drive retention by taking a holistic view of the member journey, from onboarding to the member’s booking and flight experience and extending to every moment of member engagement thereafter. We believe each of these touchpoints is an essential element of the overall member experience.
CBP also oversees entry and clearance into the U.S., including with respect to exports and imports, and issues landing rights approvals for aircraft arriving in the U.S. from abroad. U.S. Environmental Protection Agency (“EPA”) The EPA is the principal federal environmental regulator.
CBP also oversees entry and clearance into the U.S., including with respect to exports and imports, and issues landing rights approvals for aircraft arriving in the U.S. from abroad. 16 U.S. Environmental Protection Agency (“EPA”) The EPA is the principal federal environmental regulator.
Intellectual Property The protection of our technology and other intellectual property is an important aspect of our business. We seek to protect our intellectual property (including our technology and confidential information) through a combination of trademarks and trade secret protections, as well as contractual commitments and security procedures.
Intellectual Property The protection of our technology and other intellectual property is an important aspect of our business. We seek to protect our intellectual property, including our technology and confidential information, through a combination of 17 trademarks and trade secret protections, as well as contractual commitments and security procedures.
The terms on which an airport authority might lease or allow use of 14 its property (or other property and services at an airport) can, at times, be on terms less favorable than would be customary for real estate or other transactions outside of an airport environment.
The terms on which an airport authority might lease or allow use of its property (or other property and services at an airport) can, at times, be on terms less favorable than would be customary for real estate or other transactions outside of an airport environment.
Pursuant to the Amended Credit Agreement, (i) the Lenders provided a term loan facility (the “Term Loan”) in the aggregate original principal amount of $390.0 million and (ii) Delta provided commitments for a revolving loan facility (the “Revolving Credit Facility”) in the aggregate original principal amount of $100.0 million.
Pursuant to the Credit Agreement, (i) the Lenders provided a term loan facility (the “Term Loan”) in the aggregate original principal amount of $390.0 million and (ii) Delta provided commitments for a revolving loan facility (the “Revolving Credit Facility”) in the aggregate original principal amount of $100.0 million.
The FAA’s regulations touch on many aspects of civil aviation, such as: • the design and manufacturing of aircraft, engines, propellers, avionics and other key components (collectively the “aircraft,” as used below), including engine noise and other environmental standards; • the inspection, maintenance, repair and registration of aircraft; • the training, licensing or authorizing, and performance of duties by pilots, flight attendants and maintenance technicians; • the testing of safety-sensitive personnel for prohibited drug use or alcohol consumption; • the design, construction, and maintenance of runways and other airport facilities; • the operation of air traffic control systems, including the management of complex air traffic at busy airport facilities; • the certification and oversight of air carriers; • the establishment and use of SMS by air carriers; • the promotion of voluntary systems to encourage the disclosure of data that may aid in enhancing safety; and 13 • the oversight and operational control of air carriers by key personnel, including directors of operations, directors of maintenance, chief pilots, chief inspectors and directors of safety.
The FAA’s regulations touch on many aspects of civil aviation, such as: • the design and manufacturing of aircraft, engines, propellers, avionics and other key components (collectively the “aircraft,” as used below), including engine noise and other environmental standards; • the inspection, maintenance, repair and registration of aircraft; • the training, licensing or authorizing and performance of duties by pilots, cabin attendants and maintenance technicians; • the testing of safety-sensitive personnel for prohibited drug use or alcohol consumption; • the design, construction and maintenance of runways and other airport facilities; 15 • the operation of air traffic control systems, including the management of complex air traffic at busy airport facilities; • the certification and oversight of air carriers; • the establishment and use of SMS by air carriers; • the promotion of voluntary systems to encourage the disclosure of data that may aid in enhancing safety; and • the oversight and operational control of air carriers by key personnel, including directors of operations, directors of maintenance, chief pilots, chief inspectors and directors of safety.
Our charter solutions customize the member and customer experience for short- or long-haul flights with bespoke private jet arrangements or group charters, including for commercial-size charters with large passenger groups of 15 or more, sports teams, global corporate events and tour operations.
Our charter offerings customize the member and customer experience for short- or long-haul flights with bespoke private jet arrangements or group charters, including for commercial-size charters with large passenger groups of 15 or more, sports teams, global corporate events and tour operations.
Voting Percentage (if any), of the Company’s issued and outstanding shares as a result of restrictions on voting imposed on holders who may be deemed not to be a “citizen of the United States” pursuant to 49 USC § 40102(a)(15)(C) (the “Citizenship Limitation”), and pursuant to Article X of the Company’s Amended and Restated Certificate of Incorporation, dated as of November 15, 2023 (the “Certificate of Incorporation”), and the Amended Investor Rights Agreement; • Each of Pandora Select Partners, L.P., Whitebox Multi-Strategy Partners, L.P. and Whitebox Relative Value Partners, L.P.
Voting Percentage (as defined below, if any), of the Company’s issued and outstanding shares of Common Stock as a result of restrictions on voting imposed on holders who may be deemed not to be a “citizen of the United States” pursuant to 49 USC § 40102(a)(15)(C) (the “Citizenship Limitation”), Article X of the Company’s Amended and Restated Certificate of Incorporation, dated as of November 15, 2023 (the “Certificate of Incorporation”), and the Investor Rights Agreement; • Each of Pandora Select Partners, L.P., Whitebox Multi-Strategy Partners, L.P. and Whitebox Relative Value Partners, L.P.
Available Information We make available free of charge on our website at wheelsup.com/investors, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after these reports are filed with or furnished to the Securities and Exchange Commission (“SEC”).
Available Information We make available free of charge on our website at www.wheelsup.com/investors , our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after these reports are filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”).
As the operator of our nation’s air traffic control system, the FAA has an especially important role to play in the management of air traffic, including congestion at the busiest airports and in the busiest air corridors.
As the operator of our nation’s air traffic control system, the FAA has an especially vital role to play in the management of air traffic, including congestion at the busiest airports and in the busiest air corridors.
On July 13, 2021 (the “Business Combination Closing Date”), Wheels Up Partners Holdings LLC, a Delaware limited liability company (“WUP Holdings”), consummated a business combination with Aspirational Consumer Lifestyle Corp. (“Aspirational”), a New York Stock Exchange (“NYSE”) listed blank check company.
On July 13, 2021 (the “Business Combination Closing Date”), Wheels Up Partners Holdings LLC, a Delaware limited liability company (“WUP”), consummated a business combination with Aspirational Consumer Lifestyle Corp. (“Aspirational”), a New York Stock Exchange (“NYSE”) listed blank check company.
Our marketplace platform comprises three main elements: intuitive digital front-end interfaces; a middle tier supported by data-driven optimization and pricing algorithms; and a back-end featuring a comprehensive flight operations platform, with connectivity to a network of third-party operators, supported by our cloud-based flight management system, UP FMS.
Our global aviation solutions platform comprises three main elements: intuitive digital front-end interfaces; a middle tier supported by data-driven optimization and pricing algorithms; and a back-end featuring a comprehensive flight operations platform, with connectivity to a network of third-party operators, supported by our cloud-based flight management system, UP FMS.
We are also actively working to enhance UP FMS and the Wheels Up mobile app and website to attract more members, customers and operators to our marketplace, which we anticipate will drive additional benefits through fleet optimization and “asset-right” aircraft availability.
We are also actively working to enhance UP FMS and the Wheels Up mobile app and website to attract more members, customers and operators, which we anticipate will drive additional benefits through fleet optimization and greater availability of “asset-right” aircraft availability.
We also bill flyers for a carbon offset fee for each hour of flight time, which are intended to offset the environmental impact from our flight operations. Safety Each and every day, our passengers trust us with their lives, and it is paramount that we consistently reinforce this trust with our actions and words.
We also bill fliers for a carbon offset fee for each hour of flight time, which is intended to offset the costs related to the environmental impact from our flight operations. Safety Each and every day, our passengers trust us with their lives, and it is paramount that we consistently reinforce this trust with our actions and words.
Data Protection Act 2018 (“U.K. DPA”). Laws and regulations relating to privacy and data protection are continually evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, or may conflict with other rules or our practices.
Laws and regulations relating to privacy and data protection are continually evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, or may conflict with other rules or our practices.
Voting Percentage”), respectively, of the Company’s issued and outstanding shares as a result of the Citizenship Limitation, and pursuant to Article X of the Certificate of Incorporation and the Amended Investor Rights Agreement; • by agreement with Delta, any shares in excess of 29.9% held by Delta will be neutral shares with respect to voting rights and voted in proportion to all other votes cast (“for”, “against” or “abstain”) other than by Delta.
Voting Percentage”), respectively, of the Company’s issued and outstanding shares of Common Stock as a result of the Citizenship Limitation and pursuant to Article X of the Certificate of Incorporation and the Investor Rights Agreement; • by agreement with Delta, any shares of Common Stock in excess of 29.9% held by Delta will be neutral shares with respect to voting rights and voted in proportion to all other votes cast (“for,” “against” or “abstain”) other than by Delta.
Over time, we expect to offset the carbon impact of our flight operations through the purchase and retirement of applicable carbon credits or via another established and vetted mechanism.
Over time, we expect to offset the carbon impact of our flight operations through the purchase and retirement of applicable carbon credits or through other established and vetted mechanism.
In addition to our internal safety management efforts, the Wheels Up operating entities are voluntary participants in audits from a number of third-party aviation safety organizations and independent audits by certain of our corporate clients. These audits are opportunities to have outside experts review and contribute to the continuous improvement of our SMS.
In addition to our internal safety management efforts, the Wheels Up operating entities are voluntary participants in audits from a number of third-party aviation safety organizations and independent audits by certain corporate clients, as well as the U.S. Department of Defense. These audits are opportunities to have outside experts review and contribute to the continuous improvement of our SMS.
Item 1. BUSINESS General Wheels Up is a leading provider of on-demand private aviation in the United States (“U.S.”) and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by an uncompromising commitment to safety and service.
ITEM 1. BUSINESS Wheels Up is a leading provider of on-demand private aviation in the U.S. and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by an uncompromising commitment to safety and service.
Aircraft Maintenance and Repairs We maintain and repair our owned, leased and managed aircraft to ensure the safety of our passengers, assets and the surrounding environment where we operate. Aircraft maintenance and repair consists of scheduled and unscheduled maintenance performed during line maintenance and scheduled maintenance events.
Aircraft Maintenance and Repairs We maintain and repair our controlled aircraft to ensure the safety of our passengers, assets and the surrounding environment where we operate. Aircraft maintenance and repair consists of scheduled and unscheduled maintenance performed during line maintenance and scheduled maintenance events.
We own certain trademarks important to our business, such as the “Wheels Up” and “Air Partner” words and design marks. In addition, we currently own certain domain names, including “wheelsup.com” and “airpartner.com”. We generally require our employees and consultants to enter into confidentiality agreements, and certain third parties to enter into non-disclosure agreements.
We own certain trademarks important to our business and brand, such as the “Wheels Up” and “Air Partner” words and design marks, and certain domain names, including “wheelsup.com” and “airpartner.com.” We generally require our employees and consultants to enter into confidentiality agreements and certain third parties to enter into non-disclosure agreements.
For trips that are charged based on a capped or fixed rate, the cost of the trip is calculated by multiplying the applicable capped or fixed rate (based on cabin class and rules associated with the applicable Prepaid Block) by the estimated flight and taxi time with minimum flight hours for each cabin class, and adding applicable fees and taxes.
For trips that are charged based on a capped or fixed rate, the cost of the trip is calculated by multiplying the applicable capped or fixed rate by the estimated flight and taxi time with minimum flight hours for each cabin class and adding applicable fuel costs, fees and taxes.
As applied to our business, under Title 14 of the Code of Federal Regulations (“14 C.F.R.”) Part 298, DOT oversees the operations of our subsidiaries that operate as air taxis (i.e., on-demand operators of small aircraft).
As applied to our business, under Title 14 of the Code of Federal Regulations (“14 C.F.R.”) Part 298, DOT oversees the operations of our subsidiaries that operate as air taxis (i.e., on-demand operators of small aircraft with less than 20 passenger seats).
Because our technology platform is an integral aspect of our business and due to our international operations, compliance with laws governing the use, collection and processing of personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site.
Because our technology platform is an integral aspect of our business, compliance with laws governing processing and protecting personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site.
This includes economic authority to conduct business as a type of air carrier, as well as consumer protection and insurance requirements that are applied to the conduct of such business. In 14 C.F.R.
This includes economic authority to conduct business as an on-demand air carrier, as well as consumer protection and insurance requirements that are applied to the conduct of such business. In 14 C.F.R.
Our operations team includes team members that facilitate booking, flight scheduling, destination transportation and other member services either located on-site at certain airport locations or at our state-of-the-art Member Operations Center located in the Atlanta, Georgia area (the “Atlanta Member Operations Center”).
Our operations team operates nationwide and includes team members that facilitate booking, flight scheduling, destination transportation and other member services. Our operations team members are either located on-site at certain airport locations or at our state-of-the-art Member Operations Center located in the Atlanta, Georgia area (the “Atlanta Member Operations Center”), which opened in May 2023.
We receive, collect, store, process, transmit, share and use personal information, and other customer data, including sensitive data for certain members, customers and employees, and we rely in part on third-parties that are not directly under our control to manage certain of these operations and to receive, collect, store, process, transmit, share and use such personal information, including payment information.
Privacy and Data Protection We process personal information and other customer data, including sensitive data for certain members, customers and employees, and we rely in part on third-parties that are not directly under our control to manage certain of these operations and to process such personal information, including payment information.
To the extent Wheels Up does not have the capability and/or capacity to perform maintenance or repairs in-house, we have entered into certain long-term agreements with certain qualified vendors to perform maintenance on our aircraft, aircraft components and engines, generally at agreed upon work-scopes and pricing.
To the extent Wheels Up does not have the capability and/or capacity to perform maintenance or repairs in-house, we have entered into certain long-term agreements with certain qualified vendors to perform maintenance on our aircraft, aircraft components and engines, generally at agreed upon work-scopes and pricing. 14 Government Regulation We are subject to government regulation at federal, state, local and international levels.
In connection with the transactions contemplated by the Amended Credit Agreement, the Company entered into an Investment and Investor Rights Agreement on September 20, 2023 (the “Original Investor Rights Agreement”), by and among the Company and the Initial Lenders, which was subsequently amended by Amendment No. 1 to Investment and Investor Rights Agreement, dated as of November 15, 2023 (the “Investor Rights Agreement Amendment” and together with the Original Investor Rights Agreement, the “Amended Investor Rights Agreement”), by and among the Company and Initial Lenders.
In connection with the transactions contemplated by the Credit Agreement, the Company entered into an Investment and Investor Rights Agreement on September 20, 2023 (the “Original Investor Rights Agreement”), by and among the Company and the Initial Lenders, which was subsequently amended by Amendment No. 1 to Investment and Investor Rights Agreement, dated as of November 15, 2023 (the “First Investor Rights Agreement Amendment” and collectively with the Original Investor Rights Agreement, Amendment No. 2 thereto, dated September 22, 2024, and the Investor Rights Agreement Joinders (as defined below), the “Investor Rights Agreement”), by and among the Company and Initial Lenders.
We create custom enterprise solutions to streamline corporate travel needs. The flexibility of our offering provides our UP for Business members with the ability to book, purchase and manage their private travel needs and book commercial travel through Delta, all from a single source.
The flexibility of our offering also provides our UP for Business members with the ability to book, purchase and manage their private travel needs and book commercial travel through Delta, all from a single source.
In addition, Wheels Up conducts substantially all of its operations outside of North America through its subsidiary, Air Partner, which is an international aviation services group with operations across four continents. 2023 Credit Agreement & Common Stock Issuances On September 20, 2023, the Company entered into a Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”), Cox Investment Holdings, Inc.
In addition, Wheels Up conducts substantially all of its operations outside of North America through Air Partner, which provides charter broking and other aviation-related services across four continents. 2023 Credit Agreement & Common Stock Issuances On September 20, 2023, the Company entered into a Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”), Cox Investment Holdings LLC (“CIH” and collectively with Delta and CK Wheels, the “Initial Lenders”), and U.S.
Upon consummation of such business combination, WUP Holdings became a wholly owned subsidiary of Wheels Up Experience Inc., and beginning July 14, 2021, our shares of Common Stock began trading on the NYSE under the ticker symbol “UP”. Wheels Up is a holding company with no direct operations.
Upon consummation of such business combination, WUP became a subsidiary of Wheels Up Experience Inc., and beginning July 14, 2021, our shares of Class A common stock, $0.0001 par value per share (“Common Stock”), began trading on the NYSE under the ticker symbol “UP”. Wheels Up is a holding company with no direct operations.
We are also examining other sustainability initiatives, including the potential use of sustainable aviation fuel and long-range investments in 15 other sustainability solutions, as well as operational improvements, fleet planning initiatives, sustainable practices at our facilities and a reduction in single-use plastics at our offices and aboard our aircraft.
We are also examining other sustainability initiatives, including the potential use of sustainable aviation fuel and long-range investments in other sustainability solutions, as well as operational improvements, fleet planning initiatives, sustainable practices at our facilities and waste reduction initiatives across our operations.
The decrease in the number of employees as of December 31, 2023, from the prior fiscal year was primarily a result of actions taken 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 members’ and customers’ experience, as well as the sale of our non-core aircraft management business on September 30, 2023.
The decrease in the number of employees as of December 31, 2024 from the prior fiscal year was primarily a result of actions 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 members’ and customers’ experience, as well as actions to optimize the number of aircraft in our controlled fleet.
Wheels Up has implemented Safety Management Systems (“SMS”), that go beyond FAA regulatory requirements, across our operating certificates. SMS is a means to identify hazards, mitigate the risk associated with those hazards, collect safety data and act on that data to improve the safety of our operations.
Wheels Up has implemented and maintains voluntary Safety Management Systems (“SMS”) across its FAA operating certificates, that conform to FAA regulatory requirements for SMS. SMS is a formal, top-down, organization-wide means to identify hazards, mitigate the risk associated with those hazards, collect safety data and act on that data to improve the safety of our operations.
We also generate other revenue from group charter, MRO and FBO activities, safety and security services, and special missions, including government, defense, emergency and medical transport. We believe that these primarily non- 7 member facing activities and services complement our core private aviation business and provide additional sources of revenue.
We also generate Other revenue from group charter flights, cargo flights, maintenance, repair and operations services (“MRO”), fixed-base operator (“FBO”) services, safety and security services, and special missions, including government, defense, emergency and medical transport. We believe that these primarily non-member facing activities and services complement our core private aviation business and provide additional sources of revenue.
Our pilot selection process screens all candidates for background and safety record. This screening process includes in-person technical interviews and written examinations, as well as a flight simulator assessment if appropriate. Successful candidates must also complete mandatory advanced aircraft ground and flight training in a full-motion simulator. This training is also completed annually.
This screening process includes in-person technical interviews and written examinations, as well as a flight simulator 13 assessment if appropriate. Successful candidates must also complete mandatory initial and recurrent advanced aircraft ground and flight training in a full-motion simulator. This training is also completed annually.
A variety of federal, state, local, municipal and foreign laws and regulations, as well as industry standards (such as the payment card industry standards) govern the collection, storage, processing, sharing, use, retention and security of this information including but not limited to U.S. state-level laws, such as the California Consumer Privacy Act (“CCPA”), the European Union’s General Data Protection Regulation (“GDPR”) and the U.K.
A variety of federal, state, local, municipal and foreign laws and regulations, as well as industry standards (such as the payment card industry standards) govern the processing and security of this information including but not limited to, the European Union’s General Data Protection Regulation (“GDPR”) and the U.K. Data Protection Act 2018 (“U.K. DPA”).
In addition, our unique partnership with Delta provides our members and customers with a seamless offering across both private and premium commercial travel. Our Products and Services While we offer numerous products and services to our customers and industry partners, we generate the majority of our revenue from flight activity through our member programs and charter solutions.
(“Delta”) provides our members and customers with a seamless offering across both private and premium commercial travel. Our Offerings and Services We offer numerous services to our members, customers and industry partners, and generate the majority of our revenue from flights through our member programs and charter solutions.
See “Part I, Item 1A “ Risk Factors—Significant increases in fuel costs could have a material adverse effect on our business, financial condition and results of operations ” for additional information about risks related to aircraft fuel.
See the caption titled “ Significant increases in fuel costs could have a material adverse effect on our business, financial condition and results of operations ” in Part I, Item 1A “Risk Factors” in this Annual Report for additional information about risks related to aircraft fuel.
Federal Aviation Administration (“FAA”) operating certificates as part of our integration and efficiency efforts. We are also continuing to expand the delivery of our charter solutions globally through Air Partner, whose deep experience with global charter brokerage gives us the opportunity to extend additional benefits to our members and customers.
We are continuing to expand the delivery of our charter solutions globally through Air Partner, whose deep experience with global charter brokerage gives us the opportunity to extend additional benefits to our members and customers.
These programs include elements relating to the training of flight crews, checking the identity and screening of passengers, application of security watch lists and cooperation in threat assessments and responses. U.S.
Among other things, the TSA regulates the standard security programs in use by U.S. airports and aircraft operators. These programs include elements relating to the training of flight crews, checking the identity and screening of passengers, application of security watch lists and cooperation in threat assessments and responses. U.S.
Our wholesale customers typically pay us an agreed fixed rate for a flight, which varies based on factors such as the aircraft type and date of the flight, and in turn sell the flight to their own retail customers. Other Activities & Services We provide our charter customers with global passenger, cargo, emergency and government services.
Our wholesale customers typically pay us an agreed fixed rate for a flight that we operate on their behalf, which varies based on factors such as the aircraft type and date of the flight, and in turn sell the flight to their own retail customers.
As we focus on delivering exceptional customer experiences and achieving more profitable operations, we intend to pursue the following priorities: • Our “Asset-Right” Aircraft Fleet — We have tailored, and continue to tailor, our fleet of owned and leased aircraft across all cabin class categories to meet the needs of our members and customers.
As we focus on delivering exceptional customer experiences worth repeating and achieving more profitable operations, our execution plan includes the following priorities: • Our Fleet Modernization Strategy — We have tailored, and continue to tailor, our fleet of controlled aircraft across all cabin class categories to meet the needs of our members and customers.
Pursuant to the Amended Investor Rights Agreement, the Company issued, in two separate private placements on September 20, 2023 and November 15, 2023, 671,239,941 shares of Common Stock in the aggregate to the Lenders, which represented approximately 95% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis as of September 15, 2023.
Pursuant to the Investor Rights Agreement, the Company issued, in two separate private placements on September 20, 2023 and November 15, 2023, 671,239,941 shares of Common Stock in the aggregate to the Lenders .
Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), which was subsequently amended by Amendment No. 1 to Credit Agreement, dated November 15, 2023 (the “Credit Agreement Amendment” and together with the Original Credit Agreement, the “Amended Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, each of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP, Whitebox GT Fund, LP and Kore Fund Ltd (collectively, the “Incremental Term Lenders” and together with the Initial Lenders, the “Lenders”), and the Agent.
Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), which was subsequently amended by Amendment No. 1 to Credit Agreement, dated November 15, 2023 (the “First Credit Agreement Amendment” and collectively with Amendment No. 2 to Credit Agreement, dated November 13, 2024 and the Original Credit Agreement, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, certain other lenders named therein (collectively, the “Incremental Term Lenders” and together with the Initial Lenders, the “Lenders”), and the Agent.
(“Pratt and Whitney”) and Rolls Royce aircraft engines for certain of our owned and leased aircraft. In support of the maintenance of our fleet, we operate eight maintenance facilities under FAA Part 135 or Part 145 in support of our planned and unplanned maintenance activities where Wheels Up has both the capability and the capacity.
In support of the maintenance of our fleet, we operate various maintenance facilities under FAA Part 135 or FAA Part 145 in support of our planned and unplanned maintenance activities where Wheels Up has both the capability and the capacity.
Our provision of the UP FMS system facilitates fleet optimization for our entire owned fleet of aircraft and allows third-party owners and operators to access Wheels Up demand.
Our provision of the UP FMS system facilitates fleet optimization for our controlled fleet of aircraft and provides a pathway for third-party operators to access Wheels Up flight demand.
Human Capital Employees As of December 31, 2023, Wheels Up and its consolidated subsidiaries had 2,206 employees, including 2,116 full-time employees, and 90 part-time employees. We employ approximately 600 pilots across our aircraft fleet. Approximately 80% of our employees are based in the U.S., with the remaining employees in Europe and other territories.
Employees As of December 31, 2024, Wheels Up and its consolidated subsidiaries had 1,866 employees, including 1,807 full-time employees and 59 part-time employees. We employ approximately 475 pilots across our aircraft fleet. Approximately 78% of our employees are based in the U.S., with the remaining employees in Europe and other territories.
Such shares of Common Stock were issued such that as of November 15, 2023, each Lender had been issued a pro rata portion of such shares equal the proportion of its participation in the Term Loan. 17 The Amended Investor Rights Agreement sets forth certain rights and obligations applicable to the Lenders and the Company, which include, among others, the right of: (x) Delta to designate and remove four directors to the Board so long as that Delta continues to hold at least 75% of the shares of Common Stock issued to Delta pursuant to the Amended Investor Rights Agreement; (y) CK Wheels to designate and remove four directors to the Board, so long as CK Wheels continues to hold at least 75% of the shares of Common Stock issued to CK Wheels pursuant to the Amended Investor Rights Agreement; and (z) CIH to designate and remove one director to the Board, so long as CIH holds at least 30% of the shares of Common Stock issued to CIH pursuant to the Amended Investor Rights Agreement.
The Investor Rights Agreement sets forth certain rights and obligations applicable to the Lenders and the Company, which include, among others, the right of: (x) Delta to designate and remove four directors to the Board so long as Delta continues to hold at least 75% of the shares of Common Stock issued to Delta pursuant to the Investor Rights Agreement; (y) CK Wheels to designate and remove four directors to the Board, so long as CK Wheels continues to hold at least 75% of the shares of Common Stock issued to CK Wheels pursuant to the Investor Rights Agreement; and (z) CIH to designate and remove one director to the Board, so long as CIH holds at least 19 30% of the shares of Common Stock issued to CIH pursuant to the Investor Rights Agreement.
There are numerous FAA regulations that may impact our operations and business. They include but are not limited to the following Parts found in Title 14 of the C.F.R. • “Part 91” contains the general operating rules for flight safety.
There are numerous FAA regulations that may impact our operations and business. They include but are not limited to the following Parts found in 14 C.F.R. • “Part 5” contains the rules that govern the requirements and processes of SMS applicable to air carriers operating pursuant to Part 135.
Information About the Company Wheels Up’s corporate headquarters is located at 2135 American Way, Chamblee, Georgia 30080. Our telephone number is (212) 257-5252 and our internet address is www.wheelsup.com . The information on, or that can be accessed through, Wheels Up’s website is not part of this Annual Report. The website address is included as an inactive textual reference only.
Our telephone number is (212) 257-5252 and our internet address is www.wheelsup.com . The information on, or that can be accessed through, such website is not deemed incorporated in, and does not form a part of, this Annual Report. The website address is included as an inactive textual reference only.
For Wheels Up operated flights, we utilize a fuel surcharge that is applied when the cost of Jet A fuel, as published by the Argus U.S. Jet Fuel Index TM , is more than $2.00 per gallon. The fuel surcharge is calculated based on estimated billable flight time.
We are currently able to obtain adequate supplies of aircraft fuel. For Wheels Up operated flights, we apply a fuel surcharge to the cost of the flight when the cost of Jet A fuel, as published by the Argus U.S. Jet Fuel Index TM , is more than $2.00 per gallon.
It operates tech service centers at Cincinnati/Northern Kentucky International Airport (“CVG”) and Fort Lauderdale-Hollywood International Airport, which provide comprehensive MRO facilities and services for aircraft operated by Wheels Up’s consolidated subsidiaries. • Wheels Up Partners LLC (“WUP LLC”) is a Part 135 operator providing private aviation charter services and the registered owner of all of our owned aircraft fleet, including Wheels Up branded aircraft.
It operates tech service centers strategically located across the country, which provide comprehensive MRO facilities and services for aircraft operated by WUPJ and WUP LLC (as defined below). • Wheels Up Partners LLC (“WUP LLC”) is an FAA Part 135 operator providing private aviation charter services and the registered owner of all of our owned aircraft fleet, including Wheels Up branded aircraft.
We have pricing agreements with various fuel providers located across the U.S., pursuant to which we receive agreed upon pricing for fuel and handling/facility fees at each location. We are currently able to obtain adequate supplies of aircraft fuel.
Fuel Our operations are impacted by changes in the price and availability of aircraft fuel. We have pricing agreements with various fuel providers located across the U.S., primarily at FBOs or with local airport authorities, pursuant to which we receive agreed upon pricing for fuel and handling/facility fees at each location.
We view our ability to drive member and customer demand through new member acquisitions, retention of existing members and customers, and increasing customer interest and utilization of our platform, as well through the success of our operations, as important drivers of our long-term success.
We view our ability to drive member and customer demand through new member 10 acquisitions, retention of existing members and customers, and increasing customer interest and utilization of our platform, as well through the success of our operations, as important drivers of our long-term success. • Realizing the Benefits of Strategic Transactions — Over the past several years, we made substantial progress to further integrate past acquisitions, realize cost savings and rationalize our asset portfolio.
Member Experience Sales and Account Management We have developed a sales organization to capitalize on the various lead generation efforts and customer acquisition channels of our business. Our sales organization includes the following teams: sales operations, sales directors, centralized inside sales, field sales, strategic enterprise sales, corporate sales and charter sales.
Member Experience Sales and Account Management We have developed a sales organization to capitalize on the various lead generation efforts and customer acquisition channels of our business, including through our partnership with Delta.
We regularly review our technology development efforts and branding strategy to identify and assess the protection of new intellectual property. Environmental We are committed to reducing the environmental impact of our fleets, as well as the long-term effects of our overall operations.
We regularly review our technology development efforts and branding strategy to identify and assess the protection of new intellectual property.
Also, in the case of a security threat, unusual environmental risk, or other emergency, the FAA has authority to shut down segments of airspace or even the entire U.S. airspace to civilian use, as occurred on September 11, 2001. U.S.
Also, in the case of a security threat, unusual environmental risk, or other emergency, the FAA has authority to shut down segments of airspace or even the entire U.S. airspace to civilian use. U.S. Transportation Security Administration (“TSA”) As an agency of the Department of Homeland Security (“DHS”), TSA is the principal regulator of security matters in the aviation industry.
In addition, Wheels Up has taken a progressive approach in the provision of comprehensive benefits including: • Multiple counseling sessions offered through Employee Assistance programs, that support employees and their families’ mental and emotional well-being; • Health plan coverage for infertility assistance; • Domestic partner health plan coverage; • Health plan coverage for gender reassignment surgery; and • Parental Leave for both birth and non-birthing parents, including adoption or foster care.
We currently offer an array of attractive benefits, including: (i) multiple counseling sessions offered through employee assistance programs, that support employees and their families’ mental and emotional well-being; (ii) health plan coverage for infertility assistance; (iii) domestic partner health plan coverage; (iv) health plan coverage for gender reassignment surgery; and (v) parental leave for both birth and non-birthing parents, including adoption or foster care. 18 Corporate History and Structure Overview Wheels Up was formed on July 1, 2013.
The additional shares owned by CK Wheels in excess of 24.9%, less the Whitebox Non-U.S. Voting Percentage (if any), and the additional shares owned by the Whitebox Non-U.S. Entities in excess of the Whitebox Non-U.S. Voting Percentage, in each case will not be counted as issued and outstanding for purposes of counting votes at any meeting of the Company’s stockholders.
The additional shares owned by CK Wheels in excess of 24.9%, less the Whitebox Non-U.S. Voting Percentage (if any), and the additional shares owned by the Whitebox Non-U.S. Entities in excess of the Whitebox Non-U.S.
Pilots Every Wheels Up flight is operated by pilots that meet stringent training and flight-hour requirements, which exceed the FAA’s requirements and training criteria. Each Captain is required to hold current FAA Airline Transport 11 Certificate. Each pilot is required to be FAA Pilot-in-Command Type-Rated in the aircraft they fly, as well as hold a valid First-Class Medical Certificate.
Pilots Every Wheels Up flight is operated by pilots that meet stringent training and flight-hour requirements, which exceed the FAA’s requirements and training criteria. Each Captain must hold current an FAA Airline Transport Certificate.
Wheels Up conducts its business through its direct subsidiary, WUP Holdings, and WUP Holdings’ operating subsidiaries, including, among others, Mountain Aviation, WUPJ and WUP LLC, each of which holds a Part 135 certificate.
Wheels Up conducts its business through its direct subsidiary, WUP, and WUP’s operating subsidiaries, including, among others, WUPJ and WUP LLC.
We expect that our continued efforts to integrate and optimize past acquisitions, as well as acquire new members and customers, are important to pursuing more profitable long-term growth.
We also implemented, and continue to pursue, additional measures to fully integrate past acquisitions and realize cost savings in areas that do not directly impact the member and customer experience. We expect that our continued efforts to integrate and optimize past acquisitions, as well as acquire new members and customers, are important to pursuing more profitable long-term growth.
Our operations, including flight revenue, are typically favorably affected by increased utilization of our aircraft in the summer months and close in time to major U.S. holidays. Fuel Our operations are impacted by changes in the price and availability of aircraft fuel.
Our operations, including Flight revenue, are typically favorably affected by increased utilization of our aircraft in the summer months and close in time to major U.S. holidays. In addition, we have historically experienced the highest volume of Prepaid Block purchases in the fourth quarter of each calendar year.
Wheels Up provides its members with a lifestyle program that enhances the member experience beyond our core aviation offerings. Our events include celebrations around popular sports and cultural events. Partnerships with certain of the world’s top lifestyle brands provide our members with benefits and special offers in the areas of fashion, travel, leisure, fitness and more.
We also offer Wheels Up members with a lifestyle program that enhances the member experience beyond our core aviation offerings, which includes celebrations around popular sports and cultural events, partnerships with certain of the world’s top lifestyle brands and other benefits, such as third-party luxury concierge, vacation and travel experience providers.
The complexity of interaction with the foreign regulators can be magnified by differences in language, culture, legal and social norms, tax and budgetary practices and perspective on economic development and competition. Privacy and Data Protection There are many requirements regarding the collection, use, transfer, security, storage, destruction and other processing of personally identifiable information and other data relating to individuals.
The complexity of interaction with the foreign regulators can be magnified by differences in language, culture, legal and social norms, tax and budgetary practices and perspective on economic development and competition.
See “Principal Domestic Regulatory Authorities” below for additional information on our Part 135 and Part 145 certificate operations. Flight Operations Our operations team operates nationwide and is primarily responsible for providing services necessary to facilitate flight activity for our owned and leased aircraft fleet.
See “Principal Domestic Regulatory Authorities” below for additional information on our FAA Part 135 and FAA Part 145 certificate operations. Controlled Fleet Flight Operations Our operations team is integral to our ability to provide flight and non-flight services to our members and customers.
The investments we have made since our inception in our brand, aircraft fleet, service offerings, sales network and technology, including through acquisitions, have advanced our development of a comprehensive platform that we believe would take years and significant investment of capital to replicate in its scale and breadth of offering.
Together, our controlled aircraft fleet and global network of third-party operators position us to provide our members and customers with the right aircraft for their mission, and give them the opportunity to select a mode of travel that works best for their specific needs. 9 We have made, and expect to continue to make, significant investments in our brand, aircraft fleet, service offerings, sales network and technology, including through strategic acquisitions, and have advanced our development of a comprehensive platform that we believe would take years and significant investment of capital to replicate in its scale and breadth of offering.
The cost of a flight is based on a fixed quoted amount at time of booking.
Capped and fixed rates are based on cabin class and rules associated with the applicable Prepaid Block. The cost of a flight is based on the quoted amount at time of booking.
In addition, our strategic 9 relationship with Delta provides exposure to high-value Delta individual and corporate customers.
We believe that our sales channels and marketing efforts are crucial to identifying and converting potential members and customers. In addition, our strategic relationship with Delta provides exposure to high-value Delta individual and corporate customers.
We are also taking actions to optimize our “asset-right” aircraft fleet to improve maintenance availability, drive higher utility and elevate our members’ experiences. We believe that leveraging the scale of our operations and breadth of our global charter relationships are important drivers of our long-term member and customer value proposition, as well as financial performance.
We believe that leveraging the scale of our operations and breadth of our global charter relationships are important drivers of our long-term member and customer value proposition, as well as financial performance. We also believe that the varying needs of individual, business and other travelers presents an opportunity to drive long-term growth and profitability outcomes.
We believe that our experienced operations team is vital to providing smooth experiences for our members and customers, and to ensuring safe operation of our flights. Our operations team is integral to our ability to provide flight services to our members and customers.
Since the opening of the Atlanta Member Operations Center, we have already experienced, and expect to continue to see, additional improvements in our service delivery and operations. We believe that our experienced operations team is vital to providing smooth experiences for our members and customers, and to ensuring safe operation of our flights.
Through our one-of-a-kind industry partnership with Delta, we also cross-collaborate on targeted sales efforts intended to showcase the breadth of our private aviation solutions and Delta’s premium travel offerings. We also have a Wheels Up account management team that is in regular contact with our members and educates them on the benefits of Wheels Up membership.
Through our first-of-its kind industry partnership with Delta, we also cross-collaborate on targeted sales efforts intended to showcase the breadth of our private aviation solutions and Delta’s premium travel offerings. Charter sales are generally handled by our global team of charter brokers or direct inquiries to our charter quotation team.
We connect private flyers to aircraft, and to one another, through an open platform that enables life’s most important experiences. Our offering is delivered through a mix of programmatic and charter options that strategically utilize our owned and leased aircraft fleet and an “asset-light” charter model to deliver a greater range of global travel alternatives.
Our offering is delivered through a mix of our member programs and charter solutions that strategically utilize our owned and leased aircraft fleet and an “asset-light” charter model to deliver a greater range of global travel alternatives. In addition, our first-of-its-kind partnership with Delta Air Lines, Inc.
Our goal is to maximize the impact of the Wheels Up team by attracting, engaging, and retaining the most talented, dedicated and passionate people in the marketplace. We have developed our DEI “Guiding Principles” to help ensure alignment across our internal and external programs/processes.
Our success is built upon creating and delivering highly competitive rewards for everyone. Our goal is to maximize the impact of the Wheels Up team by attracting, engaging and retaining the most talented, dedicated and passionate people in the marketplace.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, the governing documents for the Equipment Notes contain certain covenants and events of default, such as a liquidity covenant that requires the Company and its subsidiaries to maintain minimum aggregate available cash and Cash Equivalents (as defined in the Note Purchase Agreement), including certain amounts held in deposit for the benefit of the lenders, of $75.0 million on any date, and a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the Company.
Biggest changeFor example, the governing documents for the Revolving Equipment Notes contain certain covenants and events of default, such as a covenant that limits the maximum loan to value ratio of all aircraft financed under the Revolving Equipment Notes Facility, a covenant that limits the maximum concentration of the outstanding aggregate principal amount for Revolving Equipment Notes for specified models of aircraft relative to the outstanding aggregate principal amount of all aircraft financed under the Revolving Equipment Notes Facility, and a requirement to maintain a liquidity reserve in the form of a cash amount or a letter of credit equal to six months of interest charges based on the aggregate principal amount of Revolving Equipment Notes outstanding on any regularly scheduled principal and interest payment date, in each case subject to certain cure rights of the Company.
See also “― The residual value of our owned aircraft may be less than estimated in our depreciation policies. ” An impairment loss related to our tangible or intangible assets, including goodwill, could have a material adverse effect on our financial condition and results of operations.
See also “― The residual value of our owned aircraft may be less than estimated in our depreciation policies. ” An impairment loss related to our tangible or intangible assets, including goodwill, could have a material adverse effect on our results of operations and financial condition.
Any such delays may pose a risk to our business, financial condition and results of operations.
Any such delays may pose a risk to our business, results of operations and financial condition.
Significant increases in fuel costs could have a material adverse effect on our business, financial condition and results of operations. Fuel is essential to the operation of our aircraft and to our ability to carry out our transport services. Fuel costs are a key component of our operating expenses.
Significant increases in fuel costs could have a material adverse effect on our business, results of operations and financial condition. Fuel is essential to the operation of our aircraft and to our ability to carry out our transport services. Fuel costs are a key component of our operating expenses.
The air traffic control system, which is operated by the FAA, in the U.S., faces challenges in managing the growing demand for U.S. air travel and attracting air traffic controllers. U.S. and foreign air-traffic controllers rely on outdated technologies that routinely overwhelm the system and compel aviation operators to fly inefficient, indirect routes resulting in delays and increased operational cost.
The air traffic control system, which in the U.S. is operated by the FAA, faces challenges in managing the growing demand for U.S. air travel and attracting air traffic controllers. U.S. and foreign air-traffic controllers rely on outdated technologies that routinely overwhelm the system and compel aviation operators to fly inefficient, indirect routes resulting in delays and increased operational cost.
The operation of aircraft is subject to various risks, including catastrophic disasters, crashes, mechanical failures and collisions, which may result in loss of life, personal injury and/or damage to property and equipment. We, or other participants in the aviation industry, may experience accidents in the future.
The operation of aircraft is subject to various risks, including catastrophic disasters, collisions, crashes and mechanical failures, which may result in personal injury, loss of life and/or damage to property and equipment. We, or other participants in the aviation industry, may experience accidents in the future.
Such accidents or safety issues related to aircraft models that we operate could have a material adverse effect on our business, financial condition and results of operations. Terrorist activities, geopolitical hostilities or other security events may adversely impact our business, financial condition and results of operations.
Such accidents or safety issues related to aircraft models that we operate could have a material adverse effect on our business, results of operations and financial condition. Terrorist activities, geopolitical hostilities or other security events may adversely impact our business, results of operations and financial condition.
Terrorist activities, geopolitical hostilities or other security events, or the fear or threat of these events, have adversely impacted the aviation business in general and may adversely impact our business, financial condition and results of operations.
Terrorist activities, geopolitical hostilities or other security events, or the fear or threat of these events, have adversely impacted the aviation business in general and may adversely impact our business, results of operations and financial condition.
Any of these events could adversely affect our business, financial condition and results of operations. Risks Relating to Technology, Cybersecurity and Data Privacy A delay or failure to identify and devise, invest in and implement certain important technology, business and other initiatives could have a material adverse impact on our business, financial condition and results of operations.
Any of these events could adversely affect our business, results of operations and financial condition. Risks Relating to Technology, Cybersecurity and Data Privacy A delay or failure to identify and devise, invest in and implement certain important technology, business and other initiatives could have a material adverse impact on our business, results of operations and financial condition.
If we are unable to upgrade our operations or aircraft fleet with the latest technological advances in a timely manner, or at all, our business, financial condition and results of operations could be materially and adversely impacted.
If we are unable to upgrade our operations or aircraft fleet with the latest technological advances in a timely manner, or at all, our business, results of operations and financial condition could be materially and adversely impacted.
Moreover, some of our competitors or technology partners may take actions which disrupt the interoperability of our offerings with their own products or services, or exert strong business influence on our ability to, and the terms on which we, operate our platform and provide our products and service offerings to members and customers.
Moreover, some of our competitors or technology partners may take actions which disrupt the interoperability of our offerings with their own products or services, or exert strong business influence on our ability to, and the terms on which we, operate our platform and provide our service offerings to members and customers.
In addition, if any of our third-party providers cease to provide access to the third-party software that we use, do not provide access to such software on terms that we believe to be attractive or reasonable, do not provide us with the most current version of such software, modify their products, standards or terms of use in a manner that degrades the functionality or performance of our platform or is otherwise unsatisfactory to us or gives preferential treatment to competitive products or services, we may be required to seek comparable software from other sources, which may be more expensive or inferior, or may not be available at all.
In addition, if any of our third-party providers cease to provide access to the third-party software we use, do not provide access to such software on terms that we believe to be attractive or reasonable, do not provide us with the most current version of such software, modify their products, standards or terms of use in a manner that degrades the functionality or performance of our platform or is otherwise unsatisfactory to us or gives preferential treatment to competitive products or services, we may be required to seek comparable software from other sources, which may be more expensive or inferior, or may not be available at all.
Certain of the laws require disclosures about the use of personal information, require users to be able to opt out of information sharing, create causes of actions for data breaches and/or include significant enforcement and penalty regimes.
Certain of the laws require disclosures about the use of personal data, require users to be able to opt out of information sharing, create causes of actions for data breaches and/or include significant enforcement and penalty regimes.
We lease aircraft under long-term operating leases that include either fixed or variable rate lease payments and include certain return and end-of-lease conditions that we are obligated to satisfy upon expiration or termination of an aircraft lease, which may result in substantial payments by the Company for the benefit of the aircraft owner in the event of expiration or termination of a lease.
We lease aircraft under long-term operating leases that include either fixed or variable rate lease payments and certain return and end-of-lease conditions that we are obligated to satisfy upon expiration or termination of an aircraft lease, which may result in substantial payments by the Company for the benefit of the aircraft owner in the event of expiration or termination of a lease.
The laws enforced by these and other agencies impose substantial costs on us, may reduce air travel demand, and also may restrict the manner in which we conduct our business now or in the future, resulting in a material adverse effect on our operations.
The laws enforced by these and other agencies impose substantial costs on us, may reduce air travel demand, and may also restrict the manner in which we conduct our business now or in the future, resulting in a material adverse effect on our operations.
Any of the foregoing that increase the number of shares outstanding will result in a change in the percentage ownership held by existing stockholders in Wheels Up, which may cause relative voting power related to such shares of Common Stock to decrease.
Any of the foregoing that increase the number of outstanding shares of Common Stock will result in a change in the percentage ownership held by existing stockholders in Wheels Up, which may cause relative voting power related to such shares of Common Stock to decrease.
The restrictions imposed by federal law currently require that no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. Citizens, and that our chief executive officer, president, at least two-thirds of our officers and at least two-thirds of the members of our Board be U.S. Citizens.
The restrictions imposed by federal law currently require that no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. Citizens, and that our president/chief executive officer, at least two-thirds of our officers and at least two-thirds of the members of our Board be U.S. Citizens.
If the assumptions used in our assessments are 23 not realized, or such assumptions change due to a change in business or market conditions impacting our forecasts, rises in interest rates that impact our estimate of weighted average cost of capital, or if the trading price of our Common Stock declines significantly from historical levels, it is possible that an additional impairment charge for tangible or intangible assets, including goodwill, may need to be recorded in the future, including as result of the effects of factors outside our control on our business and operations.
If the assumptions used in our assessments are not realized, or such assumptions change due to a change in business or market conditions impacting our forecasts, rises in interest rates that impact our estimate of weighted average cost of capital, or if the trading price of our Common Stock declines significantly from historical levels, it is possible that an additional impairment charge for tangible or intangible assets, including goodwill, may need to be recorded in the future, including as a result of the effects of factors outside our control on our business and operations.
In addition, our past dilutive issuances, including the Common Stock issuances to the Lenders during the year ended December 31, 2023, which were entered into and consummated without the approval of the Company’s stockholders based on the Financial Distress Exception provided for in the Shareholder Approval Policy of the NYSE, and any future dilutive issuances, could be the subject of stockholder litigation or disputes, which could adversely impact our business, liquidity, financial condition and results of operations.
In addition, our past dilutive issuances, including the Common Stock issuances to the Lenders during the year ended December 31, 2023, which were entered into and consummated without the approval of the Company’s stockholders based on the Financial Distress Exception provided for in the Shareholder Approval Policy of the NYSE, and any future dilutive issuances, could be the subject of stockholder litigation or disputes, which could adversely impact our business, results of operations and financial condition.
To the extent that our existing insurance carriers are unable or unwilling to provide us with sufficient insurance coverage, and if insurance coverage is not available from another source, our insurance costs may increase and may result in our being in breach of regulatory requirements or contractual arrangements requiring that specific insurance be maintained, which may have a material adverse effect on our business, financial condition and results of operations.
To the extent that our existing insurance carriers are unable or unwilling to provide us with sufficient insurance coverage, and if insurance coverage is not available from another source, our insurance costs may increase and may result in our being in breach of regulatory requirements or contractual arrangements requiring that specific insurance be maintained, which may have a material adverse effect on our business, prospects, results of operations and financial condition.
The continuing and uninterrupted performance of our mobile and web-based applications, UP FMS, and cloud infrastructure services provided by a third party is critical to our success. While we have engaged reputable vendors to provide certain of these products or services, we do not have control over the operations of the facilities or systems used by our third-party providers.
The continuing and uninterrupted performance of our mobile and web-based applications, UP FMS and cloud infrastructure services provided by a third party is critical to our success. While we have engaged reputable vendors to provide certain of these products or services, we do not have control over the operations of the facilities or 33 systems used by our third-party providers.
Such activity may also impact us indirectly by increasing our operating costs. More stringent environmental laws, regulations or enforcement policies, as well as motivation to adopt environmental initiatives to maintain our reputation with our key stakeholders, could have a material adverse effect on our business, financial condition and results of operations.
Such activity may also impact us indirectly by increasing our operating costs. More stringent environmental laws, regulations or enforcement policies, as well as motivation to adopt environmental initiatives to maintain our reputation with our key stakeholders, could have a material adverse effect on our business, prospects, results of operations and financial condition.
In addition, any assumptions underlying estimates of expected cost savings, revenues, or operational or profitability goals may turn out to be inaccurate or the timing of such results may not be predicable with certainty. We have a history of net losses and have not consistently generated positive cash flow from operations.
In addition, any assumptions underlying estimates of growth, expected cost savings, revenues, or operational or profitability goals may turn out to be inaccurate and the timing of such results may not be predicable with certainty. We have a history of net losses and have not consistently generated positive cash flow from operations.
In addition, any other costs or notice requirements associated with the termination or expiration of an aircraft lease may result in significant financial payments or limit our ability to strategically optimize our fleet, which may adversely impact our cost and fleet optimization initiatives. We are exposed to operational disruptions due to maintenance.
In addition, any other costs or notice requirements associated with the termination or expiration of an aircraft lease may result in significant financial payments or limit our ability to strategically optimize our fleet, which may adversely impact our cost and fleet optimization initiatives. We are exposed to operational disruptions and costs due to maintenance and repairs to our aircraft.
The value of the aircraft model might also be permanently reduced in the secondary market if the model were to be considered less desirable for future service, which may adversely impact our ability to comply with certain covenants under the agreements governing our indebtedness or require us to post additional collateral to comply with such covenants.
The value of the aircraft model might also be permanently reduced in the secondary market if the model were to be considered less desirable for future service, which may adversely impact our ability to comply with certain covenants under the agreements governing our indebtedness or 29 require us to post additional collateral to comply with such covenants.
Any adverse judgment against the Company, the Board or management not covered by applicable insurance policies may have a material adverse effect on our liquidity and financial condition, or could harm our reputation in a manner that adversely impacts our business and results of operations for an indefinite period.
Any adverse judgment against the Company, the Board or management, whether or not covered by applicable insurance policies may have a material adverse effect on our liquidity and financial condition, or could harm our reputation in a manner that adversely impacts our business and results of operations for an indefinite period.
Sustained or repeated system failures would reduce the attractiveness of our offerings and could disrupt our customers’, suppliers’, third-party vendors’ and aircraft providers’ businesses. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our products and service offerings.
Sustained or repeated system failures would reduce the attractiveness of our offerings and could disrupt our customers’, suppliers’, third-party vendors’ and aircraft providers’ businesses. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our service offerings.
There can be no assurance that we will meet these standards in the future to maintain the listing of our Common Stock on the 40 NYSE, which could be impacted by, among others, the trading price of our Common Stock, our reported results of operations in future periods, and general economic, market and industry conditions.
There can be no assurance that we will meet these standards in the future to maintain the listing of our Common Stock on the NYSE, which could be impacted by, among others, the trading price of our Common Stock, our reported results of operations in future periods and general economic, market and industry conditions.
The GDPR increased covered businesses’ data privacy and security obligations and imposed stringent data privacy and security requirements, including, for example, detailed notices about how such businesses process personal data, the implementation of security measures, 33 mandatory security breach notification requirements, contractual data protection requirements on data processors and limitations on the retention of records of personal data processing activities.
The GDPR increased covered businesses’ data privacy and security obligations and imposed stringent data privacy and security requirements, including, for example, detailed notices about how such businesses process personal data, the implementation of security measures, mandatory security breach notification requirements, contractual data protection requirements on data processors and limitations on the retention of records of personal data processing activities.
In addition, any adverse decision that results in the temporary suspension or revocation of our FAA operating certificates or an inability to obtain other licenses, clearances or bonds from governmental agencies would have a material adverse effect on our business, operations, liquidity, financial condition and results of operations.
In addition, any adverse decision that results in the temporary suspension or revocation of our FAA operating certificates or an inability to obtain other licenses, clearances or bonds from governmental agencies would have a material adverse effect on our business, results of operations and financial condition.
We are or may be subject to new or proposed laws and regulations that may have a direct effect, or indirect effect through our third-party specialists or airport facilities at which we operate, on our operations, 36 including related to the environment, climate change and related reporting.
We are or may be subject to new or proposed laws and regulations that may have a direct effect, or indirect effect through our third-party specialists or airport facilities at which we operate, on our operations, including related to the environment, climate change and related reporting.
A delisting of our Common Stock from the NYSE could also adversely affect our ability to obtain new or replacement financing and/or result in a loss of confidence by our members, customers, business partners, stockholders, the holders of Warrants (as defined below) or employees.
A delisting of our Common Stock from the NYSE could also 41 adversely affect our ability to obtain new or replacement financing and/or result in a loss of confidence by our members, customers, business partners, stockholders, the holders of Warrants (as defined below) or employees.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or losses could be material. The Public Warrants ceased to be publicly traded on the NYSE on July 17, 2023.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on the Warrants each reporting period and that the amount of such gains or losses could be material. The Public Warrants ceased to be publicly traded on the NYSE on July 17, 2023.
Such transactions may be in the form of joint ventures, the issuance of additional dilutive equity interests, the implementation of leasing structures or sale-leaseback arrangements, commercial understandings and licensing arrangements, or transactions that result in the Company’s capital stock no longer being publicly traded.
Such transactions may be in the form of commercial partnerships, joint ventures, the issuance of additional dilutive equity interests, the implementation of leasing structures or sale-leaseback arrangements, commercial understandings and licensing arrangements, or transactions that result in the Company’s capital stock no longer being publicly traded.
In addition, we have expended, and expect to continue to expend, significant resources, including accounting-related costs and significant management oversight, in order to assess, implement, maintain, remediate and improve the effectiveness of our internal control over financial reporting and our general control environment.
In addition, we have expended, and expect to continue to expend, significant resources, including accounting-related costs and significant management oversight, in order to assess, implement, maintain, remediate and improve the effectiveness of our internal controls over financial reporting and our general control environment.
Similarly, any factor that may cause an impairment on any of the aircraft types we operate may result in lower appraised values for such aircraft, which could cause adverse impacts to us under the agreements governing our indebtedness obligations.
Similarly, any factor that may cause an impairment on any of the aircraft types we operate may result in lower appraised values for such aircraft, which in turn could cause adverse impacts to us under the agreements governing our indebtedness obligations.
If we identify any new deficiencies in the future or are not able to successfully remediate material weaknesses, including any deficiencies in 38 our disclosure controls and procedures, the accuracy and timing of our financial reporting may be adversely affected, stockholders, investors, members and customers may lose confidence in the accuracy and completeness of our financial reports, the trading prices for our Common Stock could decline, we could be subject to sanctions or investigations by the SEC, NYSE or other regulatory authorities, and we may not be able to source external financing for our capital needs on acceptable terms or at all.
If we identify any new deficiencies in the future or are not able to successfully remediate any material weaknesses, including any deficiencies in our disclosure controls and procedures, the accuracy and timing of our financial reporting may be adversely affected, stockholders, investors, members and customers may lose confidence in the accuracy and completeness of our financial reports, the trading prices for our Common Stock and the Warrants could decline, we could be subject to sanctions or investigations by the SEC, NYSE or other regulatory authorities, and we may not be able to source external financing for our capital needs on acceptable terms or at all.
Although we have taken measures to secure additional pilot training resources and flight simulator availability, the training of our pilots may not be accomplished in a cost-efficient manner or in a manner timely enough to support our operational needs.
Although we have taken measures to secure pilot training resources and flight simulator availability, the training of our pilots may not be accomplished in a cost-efficient manner or in a manner timely enough to support our operational needs.
We also have contractual obligations to perform services in the future for which we have already received deferred revenue from our members and customers, which require that we have sufficient levels of working capital and liquidity on-hand in the future to perform such services.
We also have contractual obligations to provide future services for which we have already received deferred revenue from our members and customers, which require that we have sufficient levels of working capital and liquidity on-hand in the future to perform such services.
Our ability to incur additional indebtedness and issue any equity or equity-linked securities without obtaining the consent of third parties is limited under the documents governing the Equipment Notes, Credit Agreement and Investor Rights Agreement.
Our ability to incur additional indebtedness and issue any equity or equity-linked securities without obtaining the consent of third parties is limited under the documents governing the Revolving Equipment Notes, Credit Agreement and Investor Rights Agreement.
We may take action to avoid such delisting, which may not be successful and could have a material adverse effect on our business, results of operations and financial condition.
We may take action to avoid such delisting, which may not be successful and could have a material adverse effect on our business, prospects, results of operations and financial condition.
Wheels Up is required to annually provide management’s attestation on internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). We are also required to disclose significant changes made to our internal control procedures on a quarterly basis and any material weaknesses identified by our management in our internal control over financial reporting during related assessments.
Wheels Up is required to annually provide management’s attestation on internal controls pursuant to Section 404 of the Sarbanes-Oxley Act 38 of 2002 (“Sarbanes-Oxley”). We are also required to disclose significant changes made to our internal controls procedures on a quarterly basis and any material weaknesses identified by our management in our internal controls over financial reporting during related assessments.
Furthermore, we have historically relied on Prepaid Blocks as a source of capital to fund our ongoing operations and as an indicator of potential future demand.
Furthermore, we have historically relied on Prepaid Blocks as a source of capital to fund our ongoing operations and as an indicator of potential future flight demand.
In addition, union activity could result in demands that may increase our operating expenses and adversely affect our business, operations, liquidity, financial condition, results of operations and competitive position.
In addition, union activity could result in demands that may increase our operating expenses and adversely affect our business, results of operations, financial condition and competitive position.
Among other things, our Organizational Documents include provisions regarding: • providing for a classified board of directors with staggered, three-year terms; • the ability of our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the ability of stockholders to act by written consent without a meeting of our stockholders if consent is received by the holders of outstanding shares of the relevant class or series having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting; • our Certificate of Incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our Board to amend our Bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our Bylaws to facilitate an unsolicited takeover attempt; and 42 • advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, our Organizational Documents include provisions: • providing for a classified board of directors with staggered, three-year terms; • regarding the ability of our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • regarding the ability of stockholders to act by written consent without a meeting of our stockholders if consent is received by the holders of outstanding shares of the relevant class or series having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting; • prohibiting cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • regarding the limitation of the liability of, and the indemnification of, our directors and officers; • regarding the ability of our Board to amend our Bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our Bylaws to facilitate an unsolicited takeover attempt; and • that set forth advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in 42 our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
The following restrictions and future laws and regulations could increase our exposure to regulatory enforcement action, increase our compliance costs, and adversely affect our business: • In the U.S., these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, and the CCPA and other state and federal laws relating to privacy and data security.
The following restrictions and future laws and regulations could increase our exposure to regulatory enforcement action, increase our compliance costs and adversely affect our business: 34 • In the U.S., these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act and other state and federal laws relating to privacy and data security.
Our pilots are subject to stringent pilot qualification and crew member flight training standards (“FAA Qualification Standards”), which among other things require minimum flight time for pilots, mandate strict rules to minimize pilot fatigue and require periodic recertification. The existence of such requirements effectively limits the supply of qualified pilot candidates and increases pilot salaries and related labor costs.
Our pilots are subject to stringent pilot qualification and crew member flight training standards, which, among other things, require minimum flight time for pilots, mandate strict rules to minimize pilot fatigue and require periodic recertification. The existence of such requirements effectively limits the supply of qualified pilot candidates and increases pilot salaries and related labor costs.
As of December 31, 2023, there were 7,991,544 public warrants (“Public Warrants”) and 4,529,950 private warrants (“Private Warrants” and, together with the Public Warrants, the “Warrants”) outstanding, which are classified as derivative liabilities measured at fair value on our balance sheet, with changes in fair value each period reported in earnings.
As of December 31, 2024, there were 7,991,544 public warrants (“Public Warrants”) and 4,529,950 private warrants (“Private Warrants” and, together with the Public Warrants, the “Warrants”) outstanding, which are classified as derivative liabilities measured at fair value on our balance sheet, with changes in fair value each period reported in earnings.
A compromise of the technology systems we use resulting in the loss, disclosure, misappropriation of, misuse, or access to, members’, customers’, employees, third-party operators’ or other business partners’ information, or any inability to operate our information systems, could result in legal claims or proceedings, liability or regulatory penalties under FAA regulations and laws protecting the privacy of personally identifiable information, disruption to our operations, heightened safety concerns given the nature of our flight operations, and damage to our reputation, any, or all of which could adversely affect our business and financial condition.
A compromise of the technology systems we use resulting in the loss, disclosure, misappropriation of, misuse, or access to, members’, customers’, employees’, third-party operators’ or other business partners’ information, or any inability to operate our information systems, could result in legal claims or proceedings, liability or regulatory penalties under FAA regulations and laws protecting the privacy of personally identifiable information, disruption to our operations, heightened safety concerns given the nature of our flight operations and damage to our reputation, any, or all of which could adversely affect our, results of operations and financial condition.
Each of the foregoing items could adversely affect our business, results of operations, financial condition, and the market price and volatility of our Common Stock.
Each of the foregoing items could adversely affect our business, prospects, results of operations, financial condition and the market price and volatility of our Common Stock.
We compete against commercial and private aviation operators, including the major U.S. airlines, for pilots, mechanics and other skilled labor, and some of the airlines or private aviation operators may offer wage and benefit packages which exceed ours. We may not be successful in retaining key personnel or in attracting other highly qualified personnel.
We compete against commercial and private aviation operators, including the major airlines, for pilots, mechanics and other skilled labor, and some of the airlines or private aviation operators may offer wage and benefit packages which exceed ours. We may not be successful in retaining key personnel or in attracting other highly qualified personnel.
We cannot provide any assurance that these events will not harm the aviation industry generally or our business, financial condition or results of operations, in particular. Any damage to our reputation or brand image could adversely affect our business or financial results. Maintaining a good reputation globally is critical to our business.
We cannot provide any assurance that these events will not harm the aviation industry generally or our business, prospects, results of operations and financial condition, in particular. Any damage to our reputation or brand image could adversely affect our business or financial results. Maintaining a good reputation globally is critical to our business.
We perform certain maintenance activities internally and may be unsuccessful in balancing the mix of maintenance activities handled at our MRO facilities and by external parties, which could impact our relationships with key vendors and have an adverse effect on our future business and results of operations.
We perform certain maintenance activities internally and may be unsuccessful in balancing the mix of maintenance activities handled at our MRO facilities and by third parties, which could impact our relationships with key vendors and have an adverse effect on our future business and results of operations.
If the estimated residual value of any of our aircraft types is determined to be lower than the residual value assumptions used in our depreciation policies, the applicable aircraft type in our fleet may be impaired and may result in a material reduction in the book value of applicable aircraft types we operate or we may need to prospectively modify our depreciation policies.
If the estimated residual value of any of our aircraft types is determined to be lower than the residual value assumptions used in our depreciation policies, the applicable aircraft type in our fleet may be impaired and may result in a material reduction in the book value of such aircraft types or we may need to prospectively modify our depreciation policies.
We rely on third-party Internet, mobile, and other products and services to deliver our mobile and web applications and facilitate our flight management systems, and any disruption of, or interference with, our use of those services could adversely affect our business, financial condition, results of operations and customers.
We rely on third-party Internet, mobile and other offerings and services to deliver our mobile and web applications and facilitate our flight management systems, and any disruption of, or interference with, our use of those services could adversely affect our customers, business, results of operations and financial condition.
As a result of their beneficial ownership of our Common Shares, they have sufficient voting power to significantly influence all matters requiring stockholder approval, including the election of directors, approval of strategic corporate transactions, such as changes in control, or changes in our Board or management.
As a result of their beneficial ownership of our Common Stock, they have sufficient voting power to significantly influence all matters requiring stockholder approval, including the election of directors, approval of strategic corporate transactions, such as changes in control, or changes in our Board or management.
We may never realize the full value of our tangible and intangible assets, including goodwill or our long-lived assets, which has caused us to, and may cause us in the future to, record impairments that may materially adversely affect our financial conditions and results of operations.
We may never realize the full value of our tangible and intangible assets, including goodwill or our long-lived assets, which has caused us to, and may cause us in the future to, record impairments that may materially adversely affect our results of operations and financial condition.
See “― Aviation businesses are often affected by factors beyond their control including: air traffic congestion at airports; airport slot restrictions; air traffic control inefficiencies; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; any of which could have a material adverse effect on our business, results of operations and financial condition. ” We may be subject to unionization, work stoppages, slowdowns or increased labor costs and the unionization of our pilots, maintenance workers and inflight crewmembers could result in increased labor costs.
See “― Aviation businesses are often affected by factors beyond their control including: air traffic and ground congestion at airports; airport capacity restrictions; air traffic control inefficiencies; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; any of which could have a material adverse effect on our business, results of operations and financial condition. ” 24 We may be subject to unionization, work stoppages, slowdowns or increased labor costs and the unionization of our pilots, maintenance workers and inflight crewmembers could result in increased labor costs.
Methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving, and may be difficult to anticipate or to detect for long periods of time. We may not be able to prevent future data security breaches or unauthorized uses of data.
Methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or to detect for extended periods of time. We may not be able to prevent future data security breaches or unauthorized uses of data.
If our third-party service providers terminate their contracts with us, including Program Agreements, or do not provide timely or consistently high-quality service, we may not be able to replace them in a cost-efficient manner or in a manner timely enough to support our operational needs, which could have a material adverse effect on our business, financial condition and results of operations.
If our third-party service providers terminate their contracts with us or do not provide timely or consistently high-quality service, we may not be able to replace them in a cost-efficient manner or in a manner timely enough to support our operational needs, which could have a material adverse effect on our business, results of operations and financial condition.
Aviation businesses are often affected by factors beyond their control including: air traffic congestion at airports; airport slot restrictions; air traffic control inefficiencies; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; any of which could have a material adverse effect on our business, results of operations and financial condition.
Aviation businesses are often affected by factors beyond their control including: air traffic and ground congestion at airports; airport capacity restrictions; air traffic control inefficiencies; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; any of which could have a material adverse effect on our business, results of operations and financial condition.
In addition, to the extent an accident occurs with an aircraft we operate or charter, we could be held liable for resulting damages, which may involve claims from injured passengers, and survivors of deceased passengers and property owners.
To the extent an accident occurs with an aircraft we operate or charter, we could be held liable for resulting damages, which may involve claims from injured passengers, survivors of deceased passengers and property owners.
We may not be successful in implementing these initiatives or fail to realize the expected benefits on the timelines that we anticipate, which may adversely impact our business, operations, liquidity, financial condition and results of operations.
We may not be successful in implementing these initiatives or may fail to realize the expected benefits on the timelines that we anticipate, which may adversely impact our business, prospects, results of operations and financial condition.
Any failure to comply with applicable laws, rules and regulations related to data security to which we are subject or may in the future be subject to could result in, among other things, regulatory proceedings or disputes or litigation against us, losses, damages and fines, or may harm our reputation and adversely affect our business, liquidity, financial condition and results of operations.
Any failure to comply with applicable laws, rules and regulations related to data security to which we are subject or may in the future be subject to could result in, among other things, regulatory proceedings or disputes or litigation against us, losses, damages and fines, or may adversely affect our business, results of operations and financial condition.
Similarly, if these stockholders were to assign or transfer their rights and obligations under the Term Loan and Credit Facility to third parties, the third parties could exercise, among other things, certain consent and voting rights pursuant to the terms of the Credit Agreement, which could have a material adverse effect on our business, liquidity, financial condition and results of operations.
Similarly, if these stockholders were to assign or transfer their rights and obligations under the Term Loan or Revolving Credit Facility to third parties, the third parties could exercise, among other things, certain consent and voting rights pursuant to the terms of the Credit Agreement, which could have a material adverse effect on our business, prospects, results of operations and financial condition.
We periodically evaluate strategic transactions involving our business, including acquisitions, divestitures, joint ventures, mergers and similar transactions, which involve risk and may adversely affect our ability to execute our strategic business initiatives or achieve our previously announced financial goals.
We periodically evaluate strategic transactions involving our business, including acquisitions, divestitures, joint ventures, mergers and similar transactions, which involve risk and may adversely affect our ability to execute our strategic business initiatives or achieve our financial goals.
Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable. We may acquire or introduce new technology offerings, which may increase our exposure to patent and other intellectual property claims. Any intellectual property claims asserted against us, whether or not having any merit, could be time-consuming and expensive to settle or litigate.
Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable. We may acquire or introduce new technology into our operations, which may increase our exposure to patent and other intellectual property claims. Any intellectual property claims asserted against us, whether or not having any merit, could be time-consuming and expensive to settle or litigate.
In recent years, governments, members, customers, suppliers, employees and other of our stakeholders have increasingly focused on climate change, carbon emissions, waste generation and energy use and the public disclosure of such items.
In recent years, governments, investors, members, customers, suppliers, employees and other of our stakeholders have increasingly focused on climate change, carbon emissions, waste generation and energy use and 37 the public disclosure of such items.
Any new deficiencies identified in our internal control over financial reporting or any deficiencies in our disclosure controls and procedures, if not timely remediated, could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements, or the failure to timely file required reports under the Exchange Act.
The material weaknesses in internal control over financial reporting described above, any new deficiencies identified in our internal control over financial reporting or any deficiencies in our disclosure controls and procedures, if not timely remediated, could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements, or the failure to timely file required reports under the Exchange Act.
We have a history of net losses and have not consistently generated positive cash flow from operations, including during years ended December 31, 2023 and 2022. Given the significant operating and capital expenditures associated with our strategic business initiatives and previously announced financial goals, we anticipate continued variability in our net losses during the period of transition.
We have a history of net losses and have not consistently generated positive cash flow from operations, including during years ended December 31, 2024, 2023 and 2022. Given the significant operating and capital expenditures associated with our strategic business initiatives and financial goals, we anticipate continued variability in our net losses during the period of transition.
In their capacity as lenders, such stockholders must consent to certain transactions and have the ability to waive defaults or direct the agent under the Credit Agreement to exercise remedies in an event of default.
In their capacity as lenders, such stockholders must consent to certain transactions and have the ability to waive defaults or direct the agent under the Credit Agreement to exercise remedies in the event of a default.
In addition, as a result of the prior period material weaknesses in internal control over financial reporting described above, past restatements of our financial statements, and other matters raised or that may in the future be raised by the SEC, we are currently subject to, and face the potential for additional, litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the deficiencies in our internal control over financial reporting described above, the preparation of our financial statements and the restatement described above.
In addition, as a result of reported material weaknesses in internal control over financial reporting described above, a past restatement of our financial statements and other matters raised or that may in the future be raised by the SEC, we are currently subject to, and face the potential for additional, litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the deficiencies in our internal control over financial reporting described above, the preparation of our financial statements and the restatement described above.
We can provide no assurance that external financing will be available to us in the future on terms that we deem attractive, or at all, to fund the capital needs for our business.
We can provide no assurance that external financing will be available to us in the future on terms that we deem attractive, or at all, to fund the capital needs of our business.
Moreover, any aircraft accident or incident, even if fully insured, and whether involving us or other private aircraft operators, could create a public perception that we are less safe or reliable than other private aircraft operators, which could cause our customers to lose confidence in us and switch to other private aircraft operators or other means of transportation.
Moreover, any aircraft accident or other safety incident, even if fully insured, and whether involving us or other private aircraft operators, could create a public perception that we are less safe or reliable than other private aircraft operators, which could cause our members and customers to lose confidence in us, switch to other private aircraft operators or seek other means of transportation.
Our intellectual property includes our trademarks, domain names, website, mobile and web applications, software (including our proprietary algorithms and data analytics engines), copyrights, trade secrets and inventions 30 (whether or not patentable). We believe that our intellectual property plays an important role in protecting our brand and the competitiveness of our business.
Our intellectual property includes our trademarks, domain names, websites, mobile and web applications, software (including our proprietary algorithms and data analytics engines), copyrights, trade secrets and inventions (whether or not patentable). We believe that our intellectual property plays an important role in protecting our brand and the competitiveness of our business.
In recent years, we have realized non-cash goodwill impairment charges, including during each of the three months ended September 30, 2022, December 31, 2022, June 30, 2023, and September 30, 2023, for our WUP Legacy reporting unit (excluding Air Partner), as a result of, among other things, changes in our business plan and forecasts and fluctuations in the trading price per share of our Common Stock.
In recent years, we have realized non-cash, pre-tax impairment charges related to goodwill, including during each of the three months ended September 30, 2022, December 31, 2022, June 30, 2023, and September 30, 2023, for our WUP Legacy reporting unit (excluding Air Partner), as a result of, among other things, changes in our business plan and forecasts and fluctuations in the trading price per share of our Common Stock.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on certain factors, some which are outside of our control.
Such changes could adversely impact our cash flows from operations, unexpectedly accelerate our liquidity needs and require us to seek alternate sources of capital, including debt financings, which may not be available on acceptable terms or at all.
Such changes could adversely impact our cash flows from operations, unexpectedly accelerate our liquidity needs and require us to seek alternate sources of capital, including from equity or debt financings or asset sales, which may not be available on acceptable terms or at all.
To the extent there is a significant increase in fuel costs that affects the costs of our flight operations or the amount our customers and members choose to fly with us, it may have a material adverse effect on our business, operations, liquidity, financial condition and results of operations.
To the extent there is a significant increase in fuel costs that affects the costs of our flight operations or the amount our members and charter customers choose to fly with us, it may have a material adverse effect on our business, prospects, results of operations and financial condition.
In addition, an impairment loss that is based on, among others, changes in business or market conditions impacting our forecasts, the weighted average cost of capital or the market price of our Common Stock, may adversely impact the perception of the Company held by stockholders, investors, members and customers, which may adversely impact our business, liquidity, financial condition and results of operations, and the volatility and trading prices for our Common Stock and Warrants.
In addition, an impairment loss that is based on, among others, changes in business or market conditions impacting our forecasts, the weighted average cost of capital or the market price of our Common Stock, may adversely impact the perception of the Company held by stockholders, investors, members and customers, which in turn may adversely impact our business, prospects, results of operations, financial condition and the volatility and trading prices for our Common Stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+2 added−0 removed12 unchanged
Biggest changeSee Part I, Item 1A “ Risk Factors — Risks Relating to Technology, Cybersecurity and Data Privacy ” for more information about cybersecurity and data privacy risks. Governance The Board, the Audit Committee and management each actively assess the Company’s cybersecurity and data privacy risk management practices with the goal of being proactive rather than reactive.
Biggest changeSee the caption titled “ Risks Relating to Technology, Cybersecurity and Data Privacy ” in Part I, Item 1A “Risk Factors” in this Annual Report for more information about cybersecurity and data privacy risks.
Our third-party assessors regularly conduct penetration 44 testing and measure our processes, procedures and responses against industry standard frameworks. We use the results of these periodic assessments to implement programmatic changes and continuous improvements in alignment with business requirements, industry standards and regulatory requirements.
Our third-party assessors regularly conduct penetration testing and measure our processes, procedures and responses against industry standard frameworks. We use 44 the results of these periodic assessments to implement programmatic changes and continuous improvements in alignment with business requirements, industry standards and regulatory requirements.
When a cybersecurity incident occurs or we identify a vulnerability, our cross-functional teams lead the initial assessment of priority and severity, and external experts may also be engaged as appropriate. Our cybersecurity teams assist in responding to incidents depending on severity levels and seek to improve our cybersecurity incident management plan through periodic simulations of common incidents.
If a cybersecurity incident occurs or we identify a vulnerability, our cross-functional teams lead the initial assessment of priority and severity, and external experts may also be engaged as appropriate. Our cybersecurity teams assist in responding to incidents depending on severity levels and seek to improve our cybersecurity incident management plan through periodic simulations of common incidents.
The Audit Committee then briefs the Board at scheduled meetings about cybersecurity and data privacy developments. Management is responsible for day-to-day monitoring of the prevention, detection, mitigation and remediation of cybersecurity incidents. Our CISO, who reports to our Chief Digital Officer, has primary oversight of material risks from cybersecurity and data privacy matters.
The Audit Committee then briefs the Board at scheduled meetings about cybersecurity and data privacy developments. Management is responsible for day-to-day monitoring of the prevention, detection, mitigation and remediation of cybersecurity incidents. Our CISO, who reports to our Chief Digital Officer, has primary oversight of material risks from cybersecurity threats.
We believe our cybersecurity risk management practices are an important part of our enterprise risk management processes, and must be continuously updated and improved.
We believe our cybersecurity risk management practices are an important part of our enterprise risk management processes, which must be continuously updated and improved.
As of the date of this Annual Report, we have not identified material risks from known cybersecurity threats, including as a result of any past cybersecurity incidents, since the beginning of the last full fiscal year that have materially affected the Company, including our business strategy, results of operations or financial condition.
As of the date of this Annual Report, we have not identified risks from cybersecurity threats, including as a result of any past cybersecurity incidents, since the beginning of the last full fiscal year that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
In addition, our CISO holds degrees in Engineering Technology and Information Systems and Technology, and industry certifications awarded by the International Information System Security Certification Consortium (ISC2); Certified Information Systems Security Professional (CISSP), and Information Systems Security Engineering Professional (ISSEP).
In addition, our CISO holds degrees in Engineering Technology and Information Systems and Technology, and industry certifications awarded by the International Information System Security Certification Consortium (ISC2); Certified Information Systems Security Professional (CISSP), and Information Systems Security Engineering Professional (ISSEP). We also have a U.S.
Our CISO supervises a team of cyber risk architects, engineers and managers who actively work to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means. Our cyber risk team collaborates with internal stakeholders to identify and analyze cybersecurity risks to the Company, implement appropriate controls and enable leaders to make risk-based business decisions that implicate cybersecurity considerations.
Our cyber risk team collaborates with internal stakeholders to identify and analyze cybersecurity risks to the Company, implement appropriate controls and enable leaders to make risk-based business decisions that implicate cybersecurity considerations.
The Board and the Audit Committee regularly review the Company’s cybersecurity and data privacy risks, including our policies, controls and procedures for identifying, managing and mitigating such risks.
Governance The Board, the Audit Committee and management each actively assess the Company’s cybersecurity and data privacy risk management practices with the goal of being proactive rather than reactive. The Board and the Audit Committee regularly review the Company’s cybersecurity and data privacy risks, including our policies, controls and procedures for identifying, managing and mitigating such risks.
Added
Data Privacy Officer, who reports to our Chief Legal Officer, and a European Data Privacy Officer, who reports to our CISO, each of whom have primary oversight of material risks related to data privacy in their respective territories. Our U.S. Data Privacy Officer, who is a licensed attorney, holds industry certifications awarded by the International Association of Privacy Professionals (IAPP).
Added
Our European Data Privacy Officer has a master’s degree in public international law and over 10 years of experience working in cybersecurity, data protection and governance. Our CISO supervises a team of cyber risk architects, engineers and managers who actively work to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means.

Item 2. Properties

Properties — owned and leased real estate

11 edited+16 added−2 removed2 unchanged
Biggest changeThird-Party Network Aircraft We have access to approximately 1,500 aircraft in all private aircraft cabin classes through our network of third-party operators. Our third-party aircraft operators must satisfy our rigorous and stringent safety standards for aircraft, crew and operations. To become approved for use, the operator must complete an assessment process to verify compliance with our standards.
Biggest changeOur third-party aircraft operators must satisfy our rigorous and stringent safety standards for aircraft, crew and operations. To become approved for use, the operator must complete an assessment process to verify compliance with our standards. Additionally, we verify compliance with our crew and aircraft standards using a safety database system for every flight.
Our maintenance facilities also house certain mobile maintenance equipment that we use when responding to maintenance requests on aircraft located away from such facilities. 46 Offices During the first quarter of 2024, we relocated our corporate headquarters to the Atlanta Member Operations Center in Chamblee, Georgia, which is situated nearby DeKalb-Peachtree Airport.
Our maintenance facilities also house certain mobile maintenance equipment that we use when responding to maintenance requests on aircraft located away from such facilities. 47 Offices During the first quarter of 2024, we relocated our corporate headquarters to the Atlanta Member Operations Center in Chamblee, Georgia, which is situated nearby DeKalb-Peachtree Airport.
We have long-term leases for our corporate headquarters at the Atlanta Member Operations Center and our New York, New York corporate office. We use these facilities for executive management, finance and accounting, legal, human resource management, operations, technology, marketing, sales and other administrative functions.
We have long-term leases for our corporate headquarters at the Atlanta Member Operations Center and our New York, New York corporate offices. We use these facilities for executive management, finance and accounting, legal, human resource management, operations, technology, marketing, sales and other administrative functions.
We believe that our existing facilities are in good condition and suitable for the conduct of our business; however, we continue to rationalize our real estate portfolio as part of our strategic cost cutting initiatives.
We believe that our existing facilities are in good condition and suitable for the conduct of our business; however, we continue to rationalize our real estate portfolio as part of our strategic cost reduction initiatives.
(2) Primarily consists of Cessna Citation X aircraft. (3) Primarily consists of Cessna Citation Excel/XLS aircraft. (4) Primarily consists of Cessna CJ3 and Hawker 400XP aircraft. (5) Primarily consists of Textron and Beechcraft King Air 350i twin turboprop aircraft.
(2) Consists of Gulfstream G-IVSP aircraft. (3) Primarily consists of Cessna Citation X aircraft. (4) Primarily consists of Cessna Citation Excel/XLS aircraft. (5) Primarily consists of Cessna CJ3 and Hawker 400XP aircraft. (6) Primarily consists of Textron and Beechcraft King Air 350i turboprop aircraft.
ITEM 2. PROPERTIES Aircraft Assets As of December 31, 2023, we owned and leased certain aircraft utilized in our fleet. As part of our “floating fleet” model, our aircraft do not return to a home base.
ITEM 2. PROPERTIES Aircraft Assets As of December 31, 2024, we owned and leased certain aircraft utilized in our fleet. We use a “floating fleet” model, which means that our aircraft are geographically dispersed and do not return to a home base.
Additionally, we verify compliance with our crew and aircraft standards using a safety database system for every flight. Under the terms of our agreements with approved third-party operators, they provide service to members and non-member flyers subject to continued compliance with our flight standards. Approved operators are subject to recurring assessments.
Under the terms of our agreements with approved third-party operators, they provide service to members and non-member flyers subject to continued compliance with our flight standards. Approved operators are subject to recurring assessments.
We believe this allows us to keep our aircraft positioned to most efficiently address our member flight requests, ensuring broad geographic coverage with the fleet and limiting costly repositioning flights. Lower repositioning costs can provide Wheels Up with a meaningful cost advantage on one-way and multi-city itineraries.
We believe this model allows us to most efficiently address the flight needs of our members and customers, limit costly repositioning flights and provide a meaningful cost advantage on one-way and multi-city itineraries.
These leases are generally longer in duration and contain a mix of hangars and accompanying office space.
Our maintenance facilities primarily consist of specialized hangars with equipment and tools necessary to maintain and repair our aircraft. These leases are generally longer in duration and contain a mix of hangars and accompanying office space.
These leases are generally shorter in duration and permit access from both the air and land sides. In addition, we lease an FBO at CVG. Maintenance Facilities We lease maintenance facilities utilized in our operations across the U.S. Our maintenance facilities primarily consist of specialized hangars with equipment and tools necessary to maintain and repair our aircraft.
Certain hangar leases are accompanied by ramp or ground leases. These leases are generally shorter in duration and permit access from both the air and land sides. In addition, we lease and operate an FBO at Cincinnati/Northern Kentucky International Airport. Maintenance Facilities We lease four primary maintenance facilities utilized in our operations across the U.S.
We lease the land and buildings that we occupy, which primarily consist of FBOs, storage hangars, maintenance facilities and office space. FBOs and Storage Hangars We lease aircraft storage hangars utilized in our operations at airports across the U.S. Certain hangar leases are accompanied by ramp or ground leases.
We lease the land and buildings that we occupy, which primarily consist of FBOs, storage hangars, maintenance facilities and office space.
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Our aircraft are subject to regular maintenance, inspection and certifications schedules that may result in an aircraft being located at a one of our controlled or third-party maintenance facilities from time-to-time. 45 Wheels Up Owned and Leased Aircraft As of December 31, 2023, our owned and long-term leased aircraft fleet was as follows: Category Owned Leased Total Large Cabin Jets (1) 0 1 1 Super-Midsize Jets (2) 16 30 46 Midsize Jets (3) 13 6 19 Light Jets (4) 33 22 55 Turboprops (5) 64 0 64 Total 126 59 185 __________________ (1) Consists of one Gulfstream G-IVSP aircraft.
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Our aircraft are 45 subject to regular maintenance, inspection, certification and safety check schedules that may result in aircraft being located at one of our controlled or third-party maintenance facilities from time-to-time.
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The majority of our owned aircraft fleet are painted in the blue and white Wheels Up livery with the “UP” insignia painted on the tail. We also own certain Textron and Beechcraft King Air 350i aircraft painted in special Wheels Up liveries to support special charitable causes, such as breast cancer awareness (pink), hunger awareness (orange) and veterans’ initiatives (camouflage).
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Fleet Modernization Strategy In October 2024, we announced our current fleet modernization strategy, which we expect will result in the transition from the operation of four current private jet models — Cessna Citation CJ3, X, and Excel/XLS and Hawker 400XP aircraft — to two different private jet models — Embraer Phenom 300 series and Bombardier Challenger 300 series aircraft, while continuing to operate our King Air 350i turboprop aircraft.
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We intend to achieve this fleet transition through a mix of opportunistic aircraft acquisitions and strategic leasing activity. In November 2024, we introduced our Embraer Phenom 300 series fleet into our programmatic membership offerings and made it available to our charter customers.
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Subsequent to the year ended December 31, 2024, we purchased one and began leasing two Bombardier Challenger 300 aircraft, which we expect to introduce into our operations starting in April 2025.
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We anticipate that the Revolving Equipment Notes Facility (as defined in Note 8 , Long-Term Debt in the Notes to Financial Statements in Part II, Item 8 “Financial Statements and Supplementary Data” in this Annual Report) will provide us with the flexibility to opportunistically add additional Embraer Phenom 300 series and Bombardier Challenger 300 series aircraft to our fleet over the next three years.
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Our current fleet modernization strategy is the result of our continuous review of our aircraft fleet in relation to our anticipated future needs, taking into account the age and composition of our fleet, maintenance costs and availability, anticipated aircraft utilization and the efficiency of and demand for new aircraft types.
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To achieve our fleet transition, we expect to engage in strategic acquisitions and dispositions of aircraft, as well as enter into leasing arrangements in order to replenish our fleet while maintaining high levels of member and customer service.
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We believe that our current fleet modernization strategy, latest member program changes and the growth of our charter offerings position us well to strategically utilize our controlled aircraft fleet alongside an “asset-light” charter model to deliver a greater range of global travel alternatives.
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Wheels Up Controlled Aircraft As of December 31, 2024, our owned and leased aircraft fleet was as follows: Category Owned Leased Total Premium Jets (1) 17 1 18 Large Jets (2) — 2 2 Super-Midsize Jets (3) 13 19 32 Midsize Jets (4) 12 5 17 Light Jets (5) 26 15 41 Total Jets 68 42 110 Turboprops (6) 44 — 44 Total Aircraft 112 42 154 __________________ (1) Consists of Embraer Phenom 300 series premium midsize jet aircraft.
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As part of our fleet modernization strategy, we are introducing a new standardized brand livery and interior design across new aircraft types entering the Wheels Up fleet, including Embraer Phenom 300 series and Bombardier Challenger 300 series aircraft.
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The updated exterior livery reflects a modern and sophisticated aesthetic, with the iconic UP logo prominently displayed on the tail, winglets and belly. Inside, redesigned cabin interiors will feature premium materials and finishes intended to enhance comfort and style and provide a refined in-flight 46 experience.
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Additionally, we anticipate that both aircraft types will be equipped with Gogo Business Aviation Galileo HDX satellite-based Wi-Fi, providing high-speed connectivity for an improved passenger experience. We believe that these enhancements align with our commitment to delivering a best-in-class private aviation experience, strengthening brand recognition and enhancing member and customer satisfaction.
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Third-Party Network Aircraft We utilize our global network of third-party operators to fulfill flight demand for both Wheels Up Membership and Wheels Up Charter to provide an enhanced customer experience at an attractive price point.
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We have access to thousands of aircraft in all private aircraft cabin classes through our global network of third-party operators, which allows us to source a range of aircraft and provide our members and customers with the right aircraft for their specific mission.
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We believe that our ability to source third-party aircraft globally will continue to be an important part of our business strategy and allow us to fulfill the various needs of our members and customers with a seamless global solution. At Wheels Up, safety is our first priority.
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We undertook a review of our leased property portfolio in 2024, and have taken actions to strategically consolidate our operations to improve our efficiency and eliminate spending on leased properties that we do not believe are necessary for our operations. FBOs and Storage Hangars We lease aircraft storage hangars utilized in our operations at airports across the U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf such third-party operators do not perform adequately or terminate their relationships with us, our costs may increase and our business, operations, liquidity, financial condition, and results of operations could be adversely affected ” for further information. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II.
Biggest changeSee the caption titled “ If third-party operators that we rely on to provide certain flights to our members and charter customers do not perform adequately or terminate their relationships with us, our costs may increase and our business, prospects, operations, results of operations and financial condition could be adversely affected ” in Part I, Item 1A “Risk Factors” in this Annual Report for further information.
We believe that FE wrongfully terminated such agreement in breach thereof. We are seeking compensatory damages, including the return of the material deposits held by FE under the GRP Agreement that are recorded in Other non-current assets on our consolidated balance sheets for each of the years ended December 31, 2023 and 2022, as well as attorneys’ fees and costs.
We believe that FE wrongfully terminated such agreement in breach thereof. We are seeking compensatory damages, including the return of the material deposits held by FE under the GRP Agreement (collectively, the “GRP Deposit”) that were recorded in Other non-current assets on our consolidated balance sheets as of December 31, 2024 and 2023, as well as attorneys’ fees and costs.
See Note 1 5 “Commitments and Contingencies” of the Notes to the Financial Statements contained herein for a discussion of loss contingencies, if any. Below is a discussion of our significant pending legal proceedings: GRP Litigation On July 5, 2023, we filed a lawsuit against Exclusive Jets, LLC d/b/a flyExclusive, a subsidiary of flyExclusive, Inc.
Below is a discussion of our significant pending legal proceedings: GRP Litigation On July 5, 2023, we filed a lawsuit against Exclusive Jets, LLC d/b/a flyExclusive, a subsidiary of flyExclusive, Inc.
We intend to vigorously pursue the action to recover the outstanding deposits and other damages from FE, but there can be no assurance as to the outcome of the lawsuit against FE. Our success in recovering the amounts from FE will depend upon several factors including the availability of funds by FE for the recoverable amounts.
We intend to vigorously pursue the action to recover the outstanding deposits and other damages from FE and defend against any counterclaims, but there can be no assurance as to the outcome of the dispute with FE.
We are in the process of evaluating the effects of the foregoing events and we cannot make a reasonable estimate of any outcome, recovery or loss at this time. See Item 1A. Risk Factors – “ Some of our business is dependent on our third-party operators to provide flights for our members and customers.
We are in the process of evaluating the 48 effects of the foregoing events and we cannot make a reasonable estimate of any outcome, recovery or loss at this time.
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See Note 1 4 , Commitments and Contingencies in the Notes to Consolidated Financial Statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in this Annual Report for a discussion of loss contingencies, if any.
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On October 31, 2024, FE filed its defenses to the Company’s claims and simultaneously presented certain counterclaims for unpaid amounts it claims it is owed under the GRP Agreement. We filed our answer and defenses to such counterclaims on November 20, 2024.
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Our success in recovering the amounts from FE will depend upon several factors including the ability of FE to satisfy recoverable amounts using available liquidity or other assets.
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In its Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on May 1, 2024, FE disclosed that upon termination of the GRP Agreement, it applied a portion of the GRP Deposit against certain receivable balances that FE claims it was owed under the GRP Agreement and eliminated the GRP Deposit liability in its financial statements.
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In its Quarterly Report on Form 10-Q for the three months ended September 30, 2024 filed with the SEC on November 14, 2024, FE disclosed that: (i) it “expects to incur operating losses in the near term as [FE] advances its fleet modernization and associated cost savings initiatives”; (ii) as of September 30, 2024, FE had cash and cash equivalents of approximately $18.7 million and available borrowing capacity of approximately $9.4 million under existing lines of credit, against a working capital deficit of approximately $132.8 million; (iii) FE’s net cash flows used by operating activities was approximately $54.4 million during the nine months ended September 30, 2024; and (iv) FE claims that its cash and cash equivalents on hand, operating cash flows, and proceeds from its fractional program will be sufficient to fund its operations, including capital expenditure requirements, for at least 12 months after November 14, 2024, but it might need additional capital to fund growth plans or as circumstances change, which it claims it could obtain through equity issuances, refinancing existing debt or new borrowings, and if it is not able to refinance existing indebtedness, FE’s liquidity and business would be negatively impacted.
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ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is listed on the NYSE under the symbol “UP”. 47 Holders As of March 4, 2024, there were approximately 118 holders of record of our Common Stock, which does not include beneficial owners holding our securities through nominee names.
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is listed on the NYSE under the symbol “UP”. Holders As of March 7, 2025, there were approximately 109 holders of record of our Common Stock, which does not include beneficial owners holding our securities through nominee names.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDeferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. 61 Results of Our Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following table sets forth our results of operations for the years ended December 31, 2023 and 2022 (in thousands, except percentages): Year Ended December 31, Change in 2023 2022 $ % Revenue $ 1,253,317 $ 1,579,760 $ (326,443) (20.7) % Costs and expenses: Cost of revenue 1,232,506 1,540,325 (307,819) (20.0) % Technology and development 61,873 57,240 4,633 8.1 % Sales and marketing 88,828 117,110 (28,282) (24.1) % General and administrative 145,873 183,531 (37,658) (20.5) % Depreciation and amortization 58,533 65,936 (7,403) (11.2) % Gain on sale of aircraft held for sale (16,939) (4,375) (12,564) 287.2 % Impairment of goodwill 126,200 180,000 (53,800) (29.9) % Total costs and expenses 1,696,874 2,139,767 (442,893) (20.7) % Loss from operations (443,557) (560,007) 116,450 20.8 % Other income (expense): Change in fair value of warrant liability 739 9,516 (8,777) (92.2) % Loss on divestiture (2,991) — (2,991) n/m Loss on extinguishment of debt (4,401) — (4,401) n/m Interest income 6,121 3,670 2,451 66.8 % Interest expense (41,255) (7,515) (33,740) (449.0) % Other expense, net (660) (1,041) 381 (36.6) % Total other income (expense) (42,447) 4,630 (47,077) (1,016.8) % Loss before income taxes (486,004) (555,377) 69,373 (12.5) % Income tax expense (1,383) (170) (1,213) 713.5 % Net loss (487,387) (555,547) 68,160 12.3 % Less: net income (loss) attributable to non-controlling interests — (387) 387 (100.0) % Net loss attributable to Wheels Up Experience Inc. $ (487,387) $ (555,160) $ 67,773 12.2 % n/m - not meaningful 62 Revenue Revenue decreased by for the year ended December 31, 2023 compared to the year ended December 31, 2022, as follows (in thousands): Year Ended December 31, Change in 2023 2022 $ % Membership $ 82,857 $ 90,132 $ (7,275) (8.1) % Flight 884,065 1,073,094 (189,029) (17.6) % Aircraft management 175,829 242,032 (66,203) (27.4) % Other 110,566 174,502 (63,936) (36.6) % Total $ 1,253,317 $ 1,579,760 $ (326,443) (20.7) % The decrease in membership revenue was driven by a 21% decrease in Active Members year-over-year as a result of the regionalization of our member programs and focus on more profitable flying.
Biggest changeDeferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. 64 Results of Our Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentages): Year Ended December 31, Change in 2024 2023 $ % Revenue $ 792,104 $ 1,253,317 $ (461,213) (36.8) % Costs and expenses: Cost of revenue (exclusive of items shown separately below) 733,075 1,232,506 (499,431) (40.5) % Technology and development 40,690 61,873 (21,183) (34.2) % Sales and marketing 84,317 88,828 (4,511) (5.1) % General and administrative 137,594 145,873 (8,279) (5.7) % Depreciation and amortization 56,546 58,533 (1,987) (3.4) % (Gain) loss on sale of aircraft held for sale (4,622) (16,939) 12,317 72.7 % Loss on disposal of assets, net 3,295 — 3,295 n/m Impairment of goodwill — 126,200 (126,200) (100.0) % Total costs and expenses 1,050,895 1,696,874 (645,979) (38.1) % Loss from operations (258,791) (443,557) 184,766 41.7 % Other income (expense): Change in fair value of warrant liability (8) 739 (747) (101.1) % Gain (loss) on divestiture 2,003 (2,991) 4,994 n/m Loss on extinguishment of debt (17,714) (4,401) (13,313) n/m Interest income 2,170 6,121 (3,951) (64.5) % Interest expense (65,352) (41,255) (24,097) (58.4) % Other expense, net (717) (660) (57) (8.6) % Total other income (expense) (79,618) (42,447) (37,171) (87.6) % Loss before income taxes (338,409) (486,004) 147,595 (30.4) % Income tax expense (1,226) (1,383) 157 11.4 % Net loss (339,635) (487,387) 147,752 30.3 % Less: net income (loss) attributable to non-controlling interests — — — — % Net loss attributable to Wheels Up Experience Inc. $ (339,635) $ (487,387) $ 147,752 30.3 % n/m - not meaningful 65 Revenue Revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023, was as follows (in thousands): Year Ended December 31, Change in 2024 2023 $ % Membership $ 57,614 $ 82,857 $ (25,243) (30.5) % Flight 633,865 884,065 (250,200) (28.3) % Aircraft management 9,707 175,829 (166,122) (94.5) % Other 90,918 110,566 (19,648) (17.8) % Total $ 792,104 $ 1,253,317 $ (461,213) (36.8) % The decrease in Membership revenue was driven by a 46% decrease in Active Members year-over-year.
We use Active Members to assess the adoption of our premium offerings which is a key factor in our penetration of the market in which we operate and a key driver of membership and flight revenue.
We use Active Members to assess the adoption of our premium offerings which is a key factor in our penetration of the market in which we operate and a key driver of Membership revenue and Flight revenue.
We include Adjusted EBITDA as a supplemental measure for assessing operating performance and for the following: • To be used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions; and • To provide useful information for historical period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and other items not indicative of our ongoing operating performance.
We include Adjusted EBITDA as a supplemental measure for assessing operating performance and for the following: • To be used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions; and 57 • To provide useful information for historical period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and other items not indicative of our ongoing operating performance.
(“Aspirational”), a blank check company (the “Business Combination’), including 7,991,544 public warrants (“Public Warrants”) and 4,529,950 private warrants (the “Private Warrants” and, together with the Public Warrants, the “Warrants”), in each case exercisable for 1/10th of one share of Common Stock at an exercise price of $115.00 per whole share of Common Stock.
(“Aspirational”), a blank check company (the “Business Combination”), including 7,991,544 redeemable public warrants (“Public Warrants”) and 4,529,950 redeemable private warrants (the “Private Warrants” and, together with the Public Warrants, the “Warrants”), in each case exercisable for 1/10th of one share of Common Stock at an exercise price of $115.00 per whole share of Common Stock.
Revenue Recognition We determine revenue recognition through the following steps in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers : 68 • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, a performance obligation is satisfied.
Revenue Recognition We determine revenue recognition through the following steps in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers : • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, a performance obligation is satisfied.
Sales and Marketing Sales and marketing expense primarily consists of compensation expenses in support of sales and marketing such as commissions, salaries, equity-based compensation and related benefits. Sales and marketing expense also includes expenses associated with advertising, promotions of our services, member experience, account management and brand marketing.
Sales and Marketing Sales and marketing expense primarily consists of compensation expenses in support of sales and marketing such as commissions, salaries, equity-based compensation and related benefits. Sales and marketing expense also includes expenses associated with advertising, promotions of our services, member experience, account management and marketing.
Our qualitative approach evaluates various events including, but not limited to, macroeconomic conditions, changes in the business environment in which we operate, a sustained decrease in our share price and other specific facts and circumstances.
Our qualitative approach evaluates various events including, but not limited to, macroeconomic 73 conditions, changes in the business environment in which we operate, a sustained decrease in our share price and other specific facts and circumstances.
In addition, other revenue includes flight management fees, software subscription fees from third-party operators for access to UP FMS, fees from third-party sponsorships and partnership fees and special missions revenue, including government, defense, emergency and medical transport.
In addition, Other revenue includes flight management fees, software subscription fees from 62 third-party operators for access to UP FMS, fees from third-party sponsorships and partnership fees and special missions revenue, including government, defense, emergency and medical transport.
Assumptions that we make in estimating the fair value of acquired developed 69 technology, trade names, customer relationships and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.
Assumptions that we make in estimating the fair value of acquired developed technology, trade names, customer relationships and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.
The carrying value of goodwill is tested for impairment on an annual basis or on an interim basis if events or changes in circumstances indicate that an impairment loss may have occurred (i.e., a triggering event). Our annual goodwill impairment testing date is October 1st. The test for impairment is performed at the reporting unit level.
The carrying value of goodwill is tested for impairment on an annual basis or on an interim basis if events or changes in circumstances indicate that an impairment loss may have occurred (i.e., a triggering event). Our annual goodwill impairment testing date is September 1st. The test for impairment is performed at the reporting unit level.
Off-Balance Sheet Arrangements As of December 31, 2023, we were not a party to any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or cash flows.
Off-Balance Sheet Arrangements As of December 31, 2024, we were not a party to any off-balance sheet arrangements (as defined in Regulation S-K) that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or cash flows.
Our charter offerings customize the member and non-member experience for short- or long-haul flights with bespoke private jet arrangements or group charters, including for commercial-size charters with large passenger groups of 15 or more, sports teams, global corporate events and tour operations.
Our charter offerings customize the member and customer experience for short- or long-haul flights with bespoke private jet arrangements or group charters, including for commercial-size charters with large passenger groups of 15 or more, sports teams, global corporate events and tour operations.
When a quantitative impairment assessment is performed, we primarily determine the fair value of our reporting unit using a discounted cash flow model, or income approach, and supplement this with observable valuation multiples for comparable companies, as appropriate.
When a quantitative impairment assessment is performed, we primarily determine the fair value of our reporting units using a discounted cash flow model, or income approach, and supplement this with observable valuation multiples for comparable companies, as appropriate.
Revenue related to the annual dues are deferred and recognized on a straight-line basis over the related contractual period. If a member qualifies to earn Delta miles in the Delta SkyMiles Program as part of their membership, then a portion of the membership fee is allocated at contract inception.
Revenue related to the annual fees is deferred and recognized on a straight-line basis over the related contractual period. If a member qualifies to earn Delta miles in the Delta SkyMiles® program as part of their membership, then a portion of the membership fee is allocated at contract inception.
In addition, other companies may calculate non-GAAP financial measures differently or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
Other companies may calculate non-GAAP financial measures differently or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
Contractual Obligations and Commitments As of December 31, 2023, our principal ongoing commitments consisted of contractual cash obligations to pay principal and interest payments under the Equipment Notes, principal and accrued interest under the Credit Agreement when due at maturity, operating leases for certain controlled aircraft, leased facilities, including our corporate headquarters at the Atlanta Member Operations Center, our corporate office in New York, New York, and other operational facilities, such as hangars and maintenance facilities, and ordinary course arrangements involving our obligation to provide services for which we have already received deferred revenue.
Future Obligations and Commitments As of December 31, 2024, our principal ongoing commitments consisted of contractual cash obligations to pay principal and interest payments under the Revolving Equipment Notes, principal and accrued interest under the Credit Agreement when due at maturity, operating leases for certain controlled aircraft, leased facilities, including our corporate headquarters at the Atlanta Member Operations Center, our corporate office in New York, New York, and other operational facilities, such as hangars and maintenance facilities, trade payables and ordinary course arrangements involving our obligation to provide services for which we have already received deferred revenue.
We are working to find additional opportunities to enhance margins and operate more efficiently, while elevating the member experience and delivering operational excellence. In addition, we are investing significant time and resources into developing sophisticated pricing and scheduling algorithms and data optimization engines to help optimize the utility and efficiency of our fleet.
We are working to find additional opportunities to enhance margins and operate more efficiently, while elevating the member experience and delivering operational excellence. In addition, we are investing significant time and resources into advancing our sophisticated pricing and scheduling algorithms and data optimization engines to help optimize the utility and efficiency of our operations.
This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This section generally discusses the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Active Users We define Active Users as Active Members as of the reporting date plus unique customers who completed a revenue generating flight at least once in a given period and excluding wholesale flight activity.
Active Users We define Active Users as Active Members as of the reporting date plus unique non-member customers who completed a revenue generating flight at least once in the applicable period and excluding wholesale flight activity.
A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results of operations and that involves difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results of operations and that involves management’s judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Costs and Expense Management Our operating results are impacted by our ability to manage costs and expenses, as well as realize cost savings from improving our operations, leveraging our scale and optimizing previously acquired assets and businesses.
Costs and Expense Management Our operating results are impacted by our ability to manage costs and expenses, as well as realize cost savings from improving our operations, leverage our scale and optimize previously acquired assets and businesses.
Interest on the Term Loan and any borrowings under the Revolving Credit Facility accrues at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding.
Interest on the Term Loan and any borrowings under the Revolving Credit Facility (each, a “Loan” and, collectively, the “Loans”) accrues at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding.
We also engage in group charter, maintenance, repair and operations (“MRO”), fixed-base operator (“FBO”) services, safety and security services, and special missions, including government, defense, emergency and medical transport. We believe that these primarily non-member facing activities and services complement our core private aviation business and provide additional sources of revenue.
We also generate Other revenue from group charter flights, cargo flights, maintenance, repair and operations (“MRO”) services, fixed-base operator (“FBO”) services, safety and security services, and special missions, including government, defense, emergency and medical transport. We believe that these primarily non-member facing activities and services complement our core private aviation business and provide additional sources of revenue.
Non-GAAP Financial Measures In addition to our results of operations below, we report certain key financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”).
Non-GAAP Financial Measures In addition to our results of operations below, we report certain key financial measures that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”).
(2) For the year ended December 31, 2023, includes restructuring charges related to the Restructuring Plan and other employee separation programs as part of our cost reduction initiatives.
For the year ended December 31, 2023, primarily consists of restructuring charges related to the Restructuring Plan and other employee separation programs as part of our cost reduction initiatives.
Interest Income Interest income primarily consists of interest earned on cash equivalents in money market funds, U.S. treasury bills and time deposits. Interest Expense Interest expense primarily consists of the interest paid or payable and the amortization of debt discounts and deferred financing costs on our credit facilities, promissory notes and other debt obligations.
Interest Income Interest income primarily consists of interest earned on cash equivalents in money market funds. Interest Expense Interest expense primarily consists of the interest paid or payable and the amortization of debt discounts and deferred financing costs on our credit facilities, promissory notes and other debt obligations.
However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, 54 including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up’s financial measures.
However, there are certain limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required to be recorded in Wheels Up’s financial measures under GAAP.
The Credit Agreement is guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company. In the future, the Company may be required to add any new or after-acquired subsidiaries of the Company that meet certain criteria as guarantors.
The Credit Agreement is guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company and the equity interests of such subsidiaries have been pledged as collateral . In the future, the Company may be required to add any new or after-acquired subsidiaries of the Company that meet certain criteria as guarantors.
We utilize registered independent third-party air carriers in the performance of a portion of our flights. We evaluate whether there is a promise to transfer services to the customer, as the principal, or to arrange for services to be provided by another party, as the agent, using a control model.
We generally do not have contracts that include variable terms. We utilize registered independent third-party air carriers in the performance of a portion of our flights. We evaluate whether there is a promise to transfer services to the customer, as the principal, or to arrange for services to be provided by another party, as the agent, using a control model.
Liquidity Initiatives Term Loan and Revolving Credit Facility On September 20, 2023 (the “First Closing Date”), the Company entered into a Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”) and Cox Investment Holdings, Inc.
Term Loan & Revolving Credit Facility On September 20, 2023 (the “Credit Agreement Closing Date”), the Company entered into a Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company, as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”), and Cox Investment Holdings LLC (“CIH” and, collectively with Delta and CK Wheels, the “Initial Lenders”), and U.S.
The remainder of the initiation fee, less any flight credits, is deferred and recognized on a straight-line basis over the estimated duration of the customer relationship period, which is currently estimated to be three years as of December 31, 2023. Members are charged recurring annual dues to maintain their membership.
The remainder of the initiation fee, less any flight credits, is deferred and recognized on a straight-line basis over the estimated duration of the member relationship period, which is estimated to be three years. Members are charged recurring annual fees to maintain their membership.
Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of our operations is based on our consolidated financial statements and accompanying notes, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of our operations is based on our consolidated financial statements and accompanying notes, which have been prepared in accordance with GAAP.
Wheels Up has one of the largest and most diverse mix of available aircraft in the industry. As of December 31, 2023, we had 185 aircraft in our owned and leased fleet that includes Turboprops, Light, Midsize, Super-Midsize and Large-Cabin jets.
Wheels Up has one of the largest and most diverse mixes of available aircraft in the industry. As of December 31, 2024, we had 154 aircraft in our owned and leased fleet that includes Light, Midsize, Super-Midsize, Large and Premium jets and Turboprops.
We create custom enterprise solutions to streamline corporate travel needs. The flexibility of our offering provides our UP for Business members with the ability to book, purchase and manage their private travel needs and book commercial travel through Delta, all from a single source.
The flexibility of our offering also provides our UP for Business members with the ability to book, purchase and manage their private travel needs and book commercial travel through Delta, all from a single source.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “Wheels Up,” “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Wheels Up Experience Inc. and its consolidated subsidiaries for all periods discussed.
Unless the context otherwise requires, references in this MD&A section to “Wheels Up,” “we,” “us,” 49 “our,” and “the Company” are intended to mean the business and operations of Wheels Up Experience Inc. and its consolidated subsidiaries for all periods discussed.
While we offer numerous products and services to our customers and industry partners, we generate the majority of our revenue from flight activity through our member programs and charter solutions.
We offer numerous services to our members, customers and industry partners, and generate the majority of our revenue from flights through our member programs and charter solutions.
(2) For the year ended December 31, 2023, includes restructuring charges related to the Restructuring Plan and related strategic business expenses incurred to support significant changes to our member programs and certain aspects of our operations, primarily consisting of consultancy fees associated with designing and implementing changes to our member programs and obtaining financing, and severance and recruiting expenses associated with executive transitions and other employee separation programs as part of our cost reduction initiatives.
For the year ended December 31, 2023, primarily consists of restructuring charges related to the restructuring plan that we announced on March 1, 2023 (the “Restructuring Plan”) and related strategic business expenses incurred to support significant changes to our member programs and certain aspects of our operations, which primarily include consultancy fees associated with designing and implementing changes to our member programs and obtaining financing, and severance and recruiting expenses associated with executive transitions and other employee separation programs as part of our cost reduction initiatives.
Overview of Our Business Wheels Up is a leading provider of on-demand private aviation in the United States (“U.S.”) and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by an uncompromising commitment to safety and service.
Securities and Exchange Commission (“SEC”) on March 7, 2024. Overview of Our Business Wheels Up is a leading provider of on-demand private aviation in the U.S. and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by an uncompromising commitment to safety and service.
(3) Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations primarily including redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees. The Atlanta Member Operations Center began operating on May 15, 2023.
(3) Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations, which primarily includes redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees.
Consumer confidence, fluctuations in fuel prices, inflation, increases in interest rates, geopolitical instability, changes in governmental regulations, safety concerns and other factors all could negatively impact our business. In addition, our members and customers may resort to other options for travel more or less frequently depending on the economic cycle.
Consumer confidence, changes in fuel prices, inflation, interest rates, geopolitical instability, governmental regulations or actions, taxes, tariffs and trade policies, safety concerns and other factors all could negatively impact our business, prospects, results of operations and financial condition. In addition, our members and customers may resort to other options for travel more or less frequently depending on the economic cycle.
In addition, we had a working capital deficit of $471.9 million as of December 31, 2023 and net cash used in operating activities was $665.3 million for the year ended December 31, 2023.
In addition, we had a working capital deficit of $583.7 million as of December 31, 2024 and Net cash used in operating activities was $77.9 million for the year ended December 31, 2024.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K (“Annual Report”).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our consolidated financial statements and the related notes to our consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”).
We generally do not issue refunds for flights unless there is a failure to meet our service obligations. Refunded amounts for initiation fees and annual dues are granted to some customers that no longer wish to remain members following their first flight. We generally do not have contracts that include variable terms.
Our revenue is reported net of discounts and incentives. We generally do not issue refunds for flights unless there is a failure to meet our service obligations. Refunded amounts for annual membership and initiation fees are granted to some customers that no longer wish to remain members following their first flight.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2023.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S.
Pursuant to the Credit Agreement, Delta has provided commitments for the Revolving Credit Facility in the aggregate original principal amount of $100.0 million, which may be drawn under certain circumstances and is subject to liquidity-driven repayment conditions. As of December 31, 2023, no amounts were outstanding under the Revolving Credit Facility.
Pursuant to the Credit Agreement (as defined below), Delta has provided a commitment for the Revolving Credit Facility in the aggregate original principal amount of $100.0 million, which may be drawn under certain circumstances and is subject to liquidity-driven repayment conditions.
If our forecasts are inaccurate, we do not effectively balance the number of pilots we employ with demand, or the supply of pilots becomes constricted, our operations and financial results could be adversely affected.
If our forecasts are inaccurate, we do not effectively balance the number of personnel we employ with the size of our aircraft fleet and market demand, or the supply of qualified, experienced and skilled personnel, including pilots, becomes constricted, our results of operations and financial condition could be adversely affected.
While we believe we have positioned our “asset-right” aircraft fleet and charter capabilities to best serve our total addressable market, the foregoing factors, many of which are outside of our control, may adversely impact our ability to retain members and sustain previous levels of flight activity, efficiently utilize our assets, grow our business, or provide products and services on terms attractive to our members and customers.
While we believe our current member programs and charter offerings, as well as our aircraft fleet, are well positioned to best serve our total addressable market, the foregoing factors, many of which are outside of our control, may adversely impact our ability to retain members and customers, grow or sustain previous levels of flight activity, efficiently utilize our 56 assets, manage our costs and expenses, or provide service offerings on terms attractive to our members and customers.
The Atlanta Member Operations Center began operating on May 15, 2023. 55 (4) Consists of expenses incurred to execute consolidation of our FAA operating certificates primarily including pilot training and retention programs and consultancy fees associated with planning and implementing the consolidation process.
The Atlanta Member Operations Center began operating on May 15, 2023, and related expenses concluded during the second quarter of 2024, approximately one year after operations began. (4) Consists of expenses incurred to execute consolidation of our FAA operating certificates, which primarily includes pilot training and retention programs and consultancy fees associated with planning and implementing the consolidation process.
The following table reconciles Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure (in thousands): Year Ended December 31, 2023 2022 Net loss $ (487,387) $ (555,547) Add back (deduct): Interest expense 41,255 7,515 Interest income (6,121) (3,670) Income tax expense 1,383 170 Other expense, net 660 1,041 Depreciation and amortization 58,533 65,936 Change in fair value of warrant liability (739) (9,516) Loss on divestiture 2,991 — Equity-based compensation expense 25,633 88,979 Acquisition and integration expenses (1) 2,108 21,269 Restructuring charges (2) 43,655 10,380 Atlanta Member Operations Center set-up expense (3) 30,568 — Certificate consolidation expense (4) 11,375 — Impairment of goodwill (5) 126,200 180,000 Other (6) 4,018 8,192 Adjusted EBITDA $ (145,868) $ (185,251) __________________ (1) Consists of expenses incurred associated with acquisitions, as well as integration-related charges incurred within one year of acquisition date primarily related to system conversions, re-branding costs and fees paid to external advisors.
The following table reconciles Adjusted EBITDA to Net loss, which is the most directly comparable GAAP measure (in thousands): Year Ended December 31, 2024 2023 Net loss $ (339,635) $ (487,387) Add back (deduct): Interest expense 65,352 41,255 Interest income (2,170) (6,121) Income tax expense 1,226 1,383 Other expense, net 717 660 Depreciation and amortization 56,546 58,533 Change in fair value of warrant liability 8 (739) (Gain) loss on divestiture (2,003) 2,991 Loss on disposal of assets, net 3,295 — Equity-based compensation expense 45,977 25,633 Impairment of goodwill — 126,200 Acquisition and integration expense (1) — 2,108 Restructuring charges (2) 7,850 43,655 Fleet modernization expense (3) 28,135 — Atlanta Member Operations Center set-up expense (4) 3,481 30,568 Certificate consolidation expense (5) 6,749 11,375 Other (6) 6,599 4,018 Adjusted EBITDA $ (117,873) $ (145,868) __________________ (1) Consists of expenses incurred associated with acquisitions, as well as integration-related charges incurred within one year of the applicable acquisition date, which are primarily related to system conversions, re-branding costs and fees paid to external advisors.
See Part I, Item 1A “ Risk Factors—Risks Relating to Our Indebtedness and Contractual Obligations—Our obligations in connection with our contractual agreements, including operating leases and debt financing obligations, could impair our liquidity and thereby harm our business, results of operations and financial condition ” for more information about our contractual obligations.
See the caption titled “ Our obligations in connection with our contractual agreements, including operating leases and debt financing obligations, could impair our liquidity and thereby harm our business, results of operations and financial condition ” in Part I, Item 1A “Risk Factors” in this Annual Report for more information about our contractual obligations.
This discussion contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons including the risks faced by us described in Item 1A “Risk Factors” and elsewhere in this Annual Report. Please refer to our Cautionary Note Regarding Forward-Looking Statements above.
This discussion contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See our Cautionary Note Regarding Forward-Looking Statements, Part I, Item 1A “Risk Factors” and the risks described elsewhere in this Annual Report for more information.
The industry has also seen increased consolidation over the past several years as participants aim to leverage the scale of their operations. Our ability to retain members and customers is a key factor in our ability to generate revenue.
We expect that competition in the private aviation industry will remain strong and that increased consolidation over the past several years as participants aim to leverage the scale of their operations will continue. Our ability to retain members and customers is a key factor in our ability to generate revenue.
Costs and Expenses Cost of Revenue Cost of revenue decreased $307.8 million, or 20%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Costs and Expenses Cost of Revenue Cost of revenue decreased $499.4 million, or 41%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
While we believe that our latest member programs appeal to a broad base of private aviation users, we must continue to adapt our programmatic offerings, charter solutions and new member outreach efforts to meet the needs of private flyers, including small and medium enterprises and large corporate customers.
While we believe that our latest member programs and charter offerings appeal to a broad base of private aviation users, we must continue to adapt our service offerings and customer outreach efforts to meet the needs of a variety of private flyers.
Change in Fair Value of Warrant Liability Change in fair value of warrant liability consists of unrealized gain (loss) on warrants assumed as part of the business combination consummated on July 13, 2021 between Wheels Up Partners Holdings LLC, a Delaware limited liability company (“WUP”), and Aspirational Consumer Lifestyle Corp.
Change in Fair Value of Warrant Liability Change in fair value of Warrant liability consists of unrealized gain (loss) on the Warrants (as defined below) assumed as part of the business combination consummated on July 13, 2021 between WUP and Aspirational Consumer Lifestyle Corp.
See Note 7 , Goodwill and Intangible Assets of the Notes to Consolidated Financial Statements included herein for additional information about impairment testing for goodwill and intangible assets, including the goodwill impairment charges that we recognized during the fiscal years ended December 31, 2022, and 2023.
See Note 6 , Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in this Annual Report for additional information about impairment testing for goodwill and intangible assets, including the goodwill impairment charges that we recognized during the fiscal years ended December 31, 2022, and 2023.
See “ Term Loan and Revolving Credit Facility ” below for more information about the Revolving Credit Facility. We expect to meet our liquidity needs for the next 12 months with a combination of cash and cash equivalents, cash flows from operations, strategic dispositions of non-core or underutilized assets and, if needed, borrowings under the Revolving Credit Facility.
We expect to meet our liquidity needs for the next 12 months with a combination of cash and cash equivalents, cash flows from operations, strategic dispositions of non-core or underutilized assets, proceeds from borrowings under the Revolving Equipment Notes and, if needed, borrowings under the Revolving Credit Facility with respect to Delta’s $100.0 million commitment.
On November 15, 2023 (the “Final Closing Date”), the Company entered into Amendment No. 1 to Credit Agreement (the “Credit Agreement Amendment” and together with the Original Credit Agreement, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, each of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP, Whitebox GT Fund, LP and Kore Fund Ltd (collectively, the “Incremental Term Lenders” and together with the Initial Lenders, the “Lenders”), and the Agent, pursuant to which, among other things, the Incremental Term Lenders joined the Credit Agreement and provided an additional term loan facility (the “Incremental Term Loan” and together with the Initial Term Loan, the “Term Loan”) in the aggregate original principal amount of $40.0 million, the net proceeds of which were received on the Final Closing Date.
On November 15, 2023 (the “Final Credit Agreement Closing Date”), the Company entered into Amendment No. 1 to Credit Agreement (the “First Credit Agreement Amendment” and, collectively with the Original Credit Agreement and Amendment No. 2 to Credit Agreement, dated November 13, 2024, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, and certain other lenders named therein (collectively, the “Incremental Term Lenders” and, collectively with the Initial Lenders, the “Lenders”), and the Agent, pursuant to which, among other things, the Incremental Term Lenders joined the Credit Agreement and provided an additional term loan facility (the “Incremental Term Loan” and, together with the Initial Term Loan, the “Term Loan” and, together with the Revolving Credit Facility, the “Credit Facility”) in the aggregate original principal amount of $40.0 million.
Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), pursuant to which (i) the Initial Lenders provided a $350.0 million term loan facility (the “Initial Term Loan”), the net proceeds of which were received by the Company on the First Closing Date, and (ii) Delta provided commitments for a $100.0 million revolving loan facility (the “Revolving Credit Facility” and collectively with the Term Loan (as defined below), the “Credit Facility”).
Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for 69 the secured parties (the “Agent”), pursuant to which (i) the Initial Lenders provided a term loan facility (the “Initial Term Loan”) in the aggregate original principal amount of $350.0 million and (ii) Delta provided a commitment for a revolving loan facility (the “Revolving Credit Facility”) in the aggregate original principal amount of $100.0 million.
See “ Liquidity and 51 Capital Resources—Long-Term Debt—Term Loan and Revolving Credit Facility ” below for additional information about the Credit Facility.
See “ Sources and Uses of Liquidity—Long-Term Debt—Term Loan and Revolving Credit Facility ” below for more information about the Revolving Credit Facility.
Membership revenue is comprised of a one-time initiation fee paid at the commencement of membership and recurring annual dues. In the first year of membership, a portion of the initiation fee is applied to annual dues.
Membership revenue is comprised of a one-time initiation fee paid at the commencement of a membership and recurring annual fees. Historically, a portion of the initiation fee was applied to annual dues; however, we discontinued initiation fees starting in July 2024.
If there are services included in the transaction price for which the standalone selling price is not directly observable, then we would first apply the standalone selling price for those services that are known, such as the flight hourly rate, and then allocate the total consideration proportionately to the other performance obligations in the contract.
If there are services included in the transaction price for which the standalone selling price is not directly observable, then we would first apply the standalone selling price for those services that are known, such as the flight hourly rate, and then allocate the total consideration proportionately to the other performance obligations in the contract. 72 Revenue is recognized when control of the promised service is transferred to our member or the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
As of December 31, 2023, we had $263.9 million of cash and cash equivalents and $28.9 million of restricted cash, and our long-term debt obligations consisted primarily of approximately $214.9 million aggregate principal amount outstanding of Equipment Notes (as defined below) and the Term Loan in the aggregate principal amount of $400.5 million (including capitalized paid-in-kind interest).
As of December 31, 2024, we had $216.4 million of Cash and cash equivalents and $30.0 million of Restricted cash, and our long-term debt obligations consisted primarily of approximately $317.5 million aggregate principal amount outstanding of Revolving Equipment Notes, the Term Loan (as defined below) in the aggregate principal amount of approximately $443.9 million (including capitalized paid-in-kind interest) and the Credit Support Premium (as defined below) portion of the Revolving Credit Facility (as defined below) in the aggregate principal amount of $1.1 million.
Accrued interest on each loan is payable in kind as compounded interest and capitalized to the principal amount of the applicable loan on the last day of each of March, June, September and December and the applicable maturity date.
Accrued interest on each loan is payable-in-kind as compounded interest and capitalized to the principal amount of the applicable Loan on the last day of each of March, June, September and December and the applicable maturity date. The Credit Agreement also contains certain covenants and events of default, in each case customary for transactions of this type.
We have also taken action to more effectively manage the indirect impacts of inflation through adjustments to our member programs, as well as increasing the resources devoted to delivering charter solutions, which generally utilize dynamic market rates. We will continue to review and adjust our practices as necessary to manage adverse impacts from inflation.
We have also taken action to more effectively manage the indirect impacts of inflation through adjustments to our member programs, the implementation of enhanced dynamic pricing models for certain service offerings, and increasing the resources devoted to delivering charter solutions, which generally utilize dynamic market rates.
Our digital and revenue management teams collectively use data and technology to manage our dynamic pricing and drive operational efficiencies. Economic Conditions & Inflation The private aviation industry is volatile and affected by economic cycles and trends. On-demand flying is typically discretionary for members and customers, and may be affected by negative trends in the economy.
Economic Conditions & Inflation The private aviation industry is volatile and affected by economic cycles and trends. On-demand flying is typically discretionary for members and customers, and may be affected by negative trends in the economy.
Recent Accounting Pronouncements For further information on recent accounting pronouncements, see Note 2, Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included herein. 72
Recent Accounting Pronouncements For further information on recent accounting pronouncements, see Note 2 , Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in this Annual Report.
We review long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified and measured.
We review long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified and measured. If the carrying amount of a long-lived asset or asset group is determined not to be recoverable, an impairment loss is recognized and a write-down to fair value is recorded.
For the year ended December 31, 2022, includes restructuring charges for employee separation programs following strategic business decisions. (3) Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations, primarily including redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees.
(4) Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations, which primarily includes redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees.
The decrease in Flight revenue was primarily driven by a 19% decrease in Live Flight Legs year-over-year, reflecting a slowdown in the industry and our focus on more profitable flying , which resulted in a $204.5 million reduction to revenue year-over-year, partially offset by a 2% increase in Flight Revenue per Live Flight Leg that contributed $15.5 million to revenue year-over-year.
The decrease in Flight revenue was primarily driven by a 22% decrease in Live Flight Legs year-over-year, which resulted in a $197.0 million reduction to Flight revenue, and an 8% decrease in Flight Revenue per Live Flight Leg, which resulted in a $53.2 million reduction to Flight revenue primarily as a result of our focus on more profitable flying.
Total Private Jet Transaction Value & Total Flight Transaction Value We calculate Total Private Jet Flight Transaction Value as the sum of total gross spend by members and customers on all private jet flight services, which excludes all group charter flights with 15 or more passengers and cargo flight services.
Private Jet Gross Bookings & Total Gross Bookings We define Private Jet Gross Bookings as the total gross spend by our members and customers on all private jet flight services under our member programs and charter offerings (excluding all group charter flights, which are charter flights with 15 or more passengers (“Group Charter Flights”), and cargo flight services (“Cargo Services”)).
We use Active Users to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the market in which we operate and our growth in revenue. 58 Live Flight Legs We define Live Flight Legs as the number of completed one-way revenue generating flight legs in a given period.
We use Active Users to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the market in which we operate and our ability to generate revenue.
The Equipment Notes issued with respect to each aircraft are cross collateralized by the other aircraft for which Equipment Notes were issued under the Indentures. During the year ended December 31, 2023, the Company redeemed in-full the Equipment Notes for 12 aircraft, which reduced the aggregate principal amount outstanding under the Equipment Notes by $28.9 million.
During the year ended December 31, 2024, the Company redeemed in-full the Revolving Equipment Notes for five aircraft, which reduced the aggregate principal amount outstanding under the Revolving Equipment Notes by $13.9 million.
The following table reconciles Adjusted Contribution to gross profit (loss), which is the most directly comparable GAAP measure (in thousands, except percentages): Year Ended December 31, 2023 2022 Revenue $ 1,253,317 $ 1,579,760 Less: Cost of revenue 1,232,506 1,540,325 Less: Depreciation and amortization 58,533 65,936 Gross profit (loss) $ (37,722) $ (26,501) Gross margin (3.0) % (1.7) % Add back: Depreciation and amortization $ 58,533 $ 65,936 Equity-based compensation expense in cost of revenue 3,927 14,456 Acquisition and integration expense in cost of revenue (1) — 3,060 Restructuring expense in cost of revenue (2) 1,075 34 Atlanta Member Operations Center set-up expense in cost of revenue (3) 24,704 — Certificate consolidation expense in cost of revenue (4) 8,044 — Other (5) 3,975 961 Adjusted Contribution $ 62,536 $ 57,946 Adjusted Contribution Margin 5.0 % 3.7 % ___________________ (1) Consists of expenses incurred associated with acquisitions, as well as integration-related charges incurred within one year of acquisition date.
The following table reconciles Adjusted Contribution to Gross profit (loss), which is the most directly comparable GAAP measure (in thousands, except percentages): Year Ended December 31, 2024 2023 Revenue $ 792,104 $ 1,253,317 Less: Cost of revenue 733,075 1,232,506 Less: Depreciation and amortization 56,546 58,533 Gross profit (loss) $ 2,483 $ (37,722) Gross margin 0.3 % (3.0) % Add back: Depreciation and amortization $ 56,546 $ 58,533 Equity-based compensation expense in cost of revenue 2,228 3,927 Restructuring expense in cost of revenue (1) 3,984 1,075 Fleet modernization expense in cost of revenue (2) 10,033 — Atlanta Member Operations Center set-up expense in cost of revenue (3) 1,860 24,704 Certificate consolidation expense in cost of revenue (4) 5,297 8,044 Other (5) 3,256 3,975 Adjusted Contribution $ 85,687 $ 62,536 Adjusted Contribution Margin 10.8 % 5.0 % ___________________ (1) For the year ended December 31, 2024, primarily consists of charges for employee separation programs as part of our ongoing cost reduction and strategic business initiatives.
The metric excludes empty repositioning legs and owner legs related to aircraft under management. We believe Live Flight Legs are a useful metric to measure the scale and usage of our platform, and our growth in Flight revenue.
We believe Live Flight Legs is a useful metric to measure the scale and usage of our platform and our ability to generate Flight revenue.
As of December 31, 2023, approximately $214.9 million aggregate principal amount of Equipment Notes were outstanding and the carrying value of the 122 aircraft that were subject to first-priority liens under the Equipment Notes was $283.6 million.
As of December 31, 2024, approximately $317.5 million aggregate principal amount of Revolving Equipment Notes were outstanding, approximately $14.5 million was available to be borrowed under the Revolving Equipment Notes Facility to fund future aircraft acquisitions and the carrying value of the 96 aircraft that were subject to first-priority liens under the Revolving Equipment Notes was $297.2 million.
We sold our non-core aircraft management business to an unrelated third-party effective September 30, 2023 and do not expect to realize any significant revenue or expenses associated with aircraft management activities in future periods. 59 Other revenue includes sales of whole aircraft, group charter revenue, cargo revenue, revenue sponsorships and partnership fees, safety and security revenue and special missions including government, defense, emergency and medical transport.
We sold our aircraft management business to an unrelated third-party effective September 30, 2023. We do not expect to realize any significant revenue or expenses associated with aircraft management activities in future periods.
The Credit Agreement also contains customary events of default, including a cross-default provision among the Equipment Notes and other Material Indebtedness (as defined in the Credit Agreement). The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding certain assets), and a junior lien on the Equipment Note Collateral.
The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding any segregated account exclusively holding customer deposits and certain other assets, in each case as specified in the Credit Agreement) and a junior lien on the Revolving Equipment Note Collateral.
Liquidity and Capital Resources Overview Our principal sources of liquidity have historically consisted of financing activities, including proceeds from the Business Combination and debt financing transactions, and operating activities, primarily from deferred revenue associated with the sale of Prepaid Blocks.
Net Loss As a result of the factors described above, Net loss improved by $147.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. 67 Liquidity and Capital Resources Overview Our principal sources of liquidity have historically consisted of financing activities, including proceeds from debt financing transactions, and operating activities, primarily from deferred revenue associated with the sale of Prepaid Blocks.
Performance Award Agreement, dated March 3, 2024, between the Company and Todd Smith, our Chief Financial Officer. Equity-based compensation awards are measured at the date of grant based on the estimated fair value of the respective award and the resulting compensation expense is recognized over the requisite service period of the respective award.
Equity-Based Compensation Equity-based compensation awards are measured on the date of grant based on the estimated fair value of the respective award and the resulting compensation expense is recognized over the requisite service period of the respective award. We account for forfeitures of awards as they occur.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, all of the Company’s long-term debt obligations, which comprised primarily of the Equipment Notes and Term Loan, had fixed interest rates, and none of the Company’s variable lease obligations utilized market interest rates as the basis for determining payments.
Biggest changeAs of December 31, 2024, approximately $443.9 million of the Company’s long-term debt was at fixed interest rates, including, among others, the Term Loan, and none of the Company’s variable lease obligations utilized market interest rates as the basis for determining payments. In addition, any future borrowings under the Revolving Credit Facility accrue interest at a fixed interest rate.
Our direct exposure to fluctuations in aircraft fuel prices for such arrangements is limited. Foreign Currency Exchange We are subject to foreign currency exchange risk primarily through Air Partner’s international operations, which involve revenue and expenses denominated in foreign currencies.
Our direct exposure to fluctuations in aircraft fuel prices for such arrangements is limited. Foreign Currency Exchange We are subject to foreign currency exchange risk primarily through our international operations, which involve revenue and expenses denominated in foreign currencies.
Under our agreements with our members, we bill members a fuel price surcharge based on the cost of Jet A fuel for programmatic flights, which limits our direct exposure to volatility in Jet A fuel prices to the extent the fuel surcharge applies.
Under our agreements with our members, we bill members a fuel price surcharge based on the cost of Jet A fuel for flights under our member programs, which limits our direct exposure to volatility in Jet A fuel prices to the extent the fuel surcharge applies.
Based on our 2023 fuel consumption, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased fuel expense by approximately $17.3 million for the year ended December 31, 2023. We do not purchase or hold any derivative instruments to protect against the effects of changes in fuel.
Based on our 2024 fuel consumption, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased fuel expense by approximately $11.2 million for the year ended December 31, 2024. We do not purchase or hold any derivative instruments to protect against the effects of changes in fuel.
See the caption “ Fuel ” set forth in Part I, Item 1 — “ Business ” in this Annual Report for further information regarding the details of the fuel surcharge. Fuel costs for charter flights on third-party aircraft are generally paid by the charter customer as part of the total cost of the flight.
See the caption 75 “ Fuel ” set forth in Part I, Item 1 “Business” in this Annual Report for more information regarding the details of the fuel surcharge. Fuel costs for charter flights on third-party operated aircraft are generally paid by the charter customer as part of the total cost of the flight.
Our principal market risks have related to interest rates, aircraft fuel and foreign currency exchange. Interest Rates Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates. We are subject to market risk associated with changes in interest rates.
Our principal market risks have related to interest rates, aircraft fuel and foreign currency exchange. Interest Rates Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates.
In addition, borrowings under the Revolving Credit Facility, if any, accrue interest at a fixed interest rate. Changes in interest rates may impact payments under any variable leases that we may enter into from time to time, our ability to refinance the Equipment Notes or Credit Facility, or obtain additional financing on attractive terms or at all.
Changes in interest rates may also impact payments under any additional variable-rate debt arrangements or leases that we may enter into from time to time, as well as our ability to refinance the Revolving Equipment Notes or Credit Facility or to obtain additional financing on attractive terms or at all.
Aircraft Fuel We are subject to market risk associated with changes in the price and availability of aircraft fuel. Aircraft fuel expense for the year ended December 31, 2023 represented 14% of our total cost of revenue and includes the recharge of fuel costs to our aircraft management customers.
Aircraft Fuel We are subject to market risk associated with changes in the price and availability of aircraft fuel. Aircraft fuel expense for the year ended December 31, 2024 represented 15% of our total cost of revenue.
Changes in interest rates could lead to significant fluctuations in the fair value of our indebtedness, including the Equipment Notes and Credit Facility, or our cash equivalents, which are primarily in the form of money market funds, U.S. treasury bills and time deposits.
We are subject to market risk associated with changes in interest rates, which could lead to significant fluctuations in the required cash payments of interest or related accruals with respect to variable-rate debt, and the fair value of our indebtedness, including the Revolving Equipment Notes and Credit Facility, or our cash equivalents, which are primarily in the form of money market funds or U.S. treasury bills.
Removed
As of December 31, 2023, we held an inconsequential amount of such forward contracts to protect against the risk of foreign currency fluctuations. 73
Added
The remaining $317.5 million of the Company’s long-term debt was at variable interest rates based on SOFR that are adjusted at scheduled principal and interest payment dates, subject to a floor.
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An increase of 1% in average annual interest rates would have decreased the estimated fair value of our fixed rate debt by approximately $10.0 million as of December 31, 2024 and would have increased the interest expense on our variable rate debt by approximately $0.5 million.
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Conversely, a decrease of 1% in average annual interest rates would have increased the estimated fair value of our fixed rate debt by approximately $10.4 million as of December 31, 2024 and would have decreased the interest expense on our variable rate debt by approximately $0.5 million.
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From time to time, we may enter into interest rate swaps or other derivative instruments that are not for speculative purposes in order to manage our exposure to changes in interest rates, subject to certain limitations under our debt agreements. As of December 31, 2024, there were no such contracts outstanding.
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As of December 31, 2024, we did not hold any such option or forward contracts. 76

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