Wheels Up Experience Inc. — FY 2023 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2023; it is not a standalone fourth-quarter report. Wheels Up provides private aviation through membership programs, charter services, and related offerings, using owned and leased aircraft alongside third-party operators. Its Delta partnership supports both private and premium commercial travel. The company reports one segment: private aviation services.
Key financial results
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Revenue | $1,253.3 million | $1,579.8 million | Down 20.7% |
| GAAP gross profit (loss) / margin | ($37.7) million / (3.0)% | ($26.5) million / (1.7)% | Margin weakened |
| Net loss | ($487.4) million | ($555.5) million | Loss narrowed 12.3% |
| Adjusted EBITDA loss | ($145.9) million | ($185.3) million | Loss narrowed |
| Adjusted Contribution Margin | 5.0% | 3.7% | Improved 1.3 percentage points |
| Net cash used in operating activities | ($665.3) million | ($230.7) million | Cash use increased |
Revenue declines reflected lower flight activity and a smaller member base, the sale of the aircraft management business, and reduced whole-aircraft sales. Flight revenue fell 17.6% to $884.1 million; membership revenue fell 8.1% to $82.9 million. Active Members declined 21% to 9,947, and Live Flight Legs declined 19% to 64,481. Management attributed improved Adjusted Contribution Margin to efficiency initiatives; this non-GAAP measure includes specified adjustments and should be assessed alongside GAAP gross margin.
Liquidity, debt, and capital structure
At year-end, cash and cash equivalents were $263.9 million, with a further $28.9 million of restricted cash. Working capital was negative $471.9 million. Operating cash outflow rose to $665.3 million, driven in part by a $348.4 million reduction in deferred revenue. Prepaid Block sales fell to $482.1 million from $1,004.5 million in 2022.
Debt principal totaled approximately $615.3 million, including $214.9 million of Equipment Notes bearing 12% interest and a $400.5 million Term Loan balance, including capitalized paid-in-kind interest, bearing 10%. The Term Loan is scheduled to mature in September 2028. Delta committed a $100 million revolving facility; none was drawn at year-end. The Equipment Notes include a minimum-liquidity covenant of $75 million, and the debt agreements impose other operating and financing restrictions. The balance sheet reports current debt maturities of $24.0 million and long-term debt, net, of $235.1 million; the net carrying amount reflects substantial debt discount and issuance costs.
In 2023, lenders provided the $390 million Term Loan and received 671.2 million shares in aggregate, representing approximately 95% of fully diluted shares as of September 15, 2023. This substantially changed ownership and governance; certain lenders have board-designation and consent rights. The company had 697.1 million common shares outstanding at December 31, 2023.
Material changes, outlook, and risks
- Restructuring and operations: The company reduced headcount outside key operational groups, centralized functions at its Atlanta Member Operations Center, pursued FAA certificate consolidation, and focused on fleet and cost optimization. It expects these actions and the June 2023 member-program changes to improve efficiency, but noted transition-related variability and no assurance the anticipated benefits will be achieved.
- Divestiture and impairment: The aircraft management business was sold on September 30, 2023, for maximum stated consideration of $19.1 million, including contingent and other receivables. Wheels Up recognized a $3.0 million loss on divestiture and $126.2 million of non-cash goodwill impairment charges in 2023.
- Going concern and outlook: Adverse conditions had previously raised substantial doubt about the company’s ability to continue as a going concern. Management concluded that financing, covenant amendments, the divestiture, and cost actions alleviated those conditions based on its current operating plan and available financing. The filing provides no clear numerical revenue, cash-flow, or profit guidance. Management refers to a previously announced goal of achieving positive Adjusted EBITDA, but this text does not specify a target date.
- Key risks: Continued operating losses and cash burn, lower prepaid bookings, liquidity and covenant requirements, high interest debt, limited access to financing, demand and pilot availability, aircraft maintenance and third-party operator dependence, and execution of cost and fleet initiatives. Delta’s commercial agreements may be terminable in specified circumstances.
- Legal and tax matters: Wheels Up is pursuing a claim against flyExclusive concerning termination of a guaranteed-revenue agreement and recovery of deposits; it cannot reasonably estimate the outcome or recovery. The company accrued an estimated $10.5 million potential sales-and-use-tax exposure.
- Controls and audit: Management concluded disclosure controls were not effective at year-end, citing the late filing of an 8-K about the divestiture; remediation is ongoing. Management concluded internal control over financial reporting was effective and that previously identified material weaknesses were remediated. The auditor gave an unqualified opinion on the financial statements but did not opine on internal-control effectiveness.
Important facts for investors to verify
- Whether operating cash burn declines, liquidity remains above covenant thresholds, and the company can meet debt, lease, and customer-service obligations.
- Whether Prepaid Block sales, deferred revenue, member retention, and flight activity stabilize after the program changes.
- Progress and costs of restructuring, certificate consolidation, fleet optimization, and the path to positive Adjusted EBITDA.
- Debt terms, collateral and covenant headroom, revolver availability, and the effect of paid-in-kind interest and future maturities.
- Ownership, lender voting and board rights, potential further dilution, and registration or resale of lender shares.
- Remediation of disclosure controls, the flyExclusive litigation and deposit recovery, and the sales-and-use-tax exposure.