Private airline Wheels Up reported record second-quarter earnings, thanks to strong demand and a “strong product market fit across our platforms”, including a “good start” to the company’s recent acquisition of Air Partners, CEO Kenny Dichter said over the weekend. Thursday’s earnings call.
While the company noted continued recreational demand, it’s also seeing a “steady pick-up in business and corporate travel,” said Wheels Up CFO Todd Smith.
“When I look outside and think about what’s out there, travel managers and what people are saying [for] fall, I think we see a lot of enthusiasm about people traveling on business,” Dichter said. “Overall demand remains solid, even as average prices increase and fuel surcharges take effect. Our Core member retention continues to be strong, and our Core members continue to spend an average of over $80,000 per year with us.”
Core membership is one of the tiers of corporate membership. Smith says retention rates are about 80 percent for Core and Business members, and about 90 percent for Core and Business members who buy a prepaid block.
Second-quarter revenue was $425.5 million, up 49 percent year-on-year. Prepaid block sales were “very strong” at over $330 million, up 187 percent over the previous year, and active members grew by nearly 12,700, up 20 percent from Q2 2021, and with a “higher mix of Core and Business members.”
The direct flight leg for the quarter was more than 21,700, an increase of 19 percent year-on-year. However, the company reported a net loss of about $93 million, compared with a loss of $29 million a year earlier.
Despite the quarterly losses, Wheels Up expects to report adjusted earnings before interest, tax, depreciation, and amortization profitability in 2024. For the full year 2022, earnings guidance is in the $1.48 billion to $1.53 billion range, with quarterly earnings The third is expected to grow about 25 percent year over year, Smith said. Anticipated third-quarter adjusted EBITDA is in the negative $42 million to negative $47 million range.
