Wheels Up To Buy UK-based airline partner expands to Europe, groups and cargo

In its first deal since going public last July, Wheels Up Experience Inc. (NYSE: UP) has reached an agreement to buy UK-based global aviation services group, Air Partner PLC (LSE: AIR). The move expands its footprint into Europe with established jet card memberships and on-demand charter programs. It also brings the New York-based provider into new business areas, including group charter, freight, specialty services, safety, security, emergency planning and incident response, and services. managed. Air Partner operates at 18 locations and on four continents, including the United States

Under the terms of the all-cash transaction, Wheels Up will acquire the entire issued and to be issued share capital of Air Partner for 125 GBX per share, which equates to an enterprise value of approximately $107 million. The acquisition is expected to be completed later in the first quarter, subject to shareholder and regulatory clearances in the UK and Italy.

“This acquisition will allow us to offer existing and future customers even more attractive and seamless options for private travel, expand our market reach in key markets around the world, and add significant operational capabilities to our network,” said Wheels Up president and director. CEO Kenny Dichter.

He added, “Air Partner has considerable heritage, leadership expertise and unique capabilities that will enable us to accelerate our global strategy and credibly expand our offerings significantly.

In its latest annual financial statements ending January 2021, Air Partner reported £274.8 million ($370) in revenue and £44.9 million ($60.5) in gross profit. Wheels Up posted $849 million in revenue for the nine months of 2021, but it posted a loss of $120 million during the period.

Air Partner is based at Gatwick Airport near London, was founded in 1961 and has 450 employees.

On December 17, he reaffirmed that he was still “significantly ahead of current market expectations”. He highlighted “exceptional cargo bookings, including vaccine transport (and) strong levels of commerce (jet cards and on-demand charters) in the US and UK”.

Then, on January 7, Air Partner issued a surprise update saying, “Due to continued strong customer demand throughout December, the Air Partner Board of Directors now expects that underlying profit before tax for the 12 months to January 31, 2022 is materially ahead of market expectations at the time of the December 2021 business update.”

According to this morning’s statement, “Air Partner brings a strong financial profile with profitable operations, strong free cash flow and no significant debt. Wheels Up expects the integration of the historically profitable business of Air Partner be accretive to Wheels Up’s contribution margin and adjusted EBITDA in the first year of acquisition.

Commenting on the deal, Air Partner CEO Mark Briffa said: “The board believes this combination will give our customers, colleagues and stakeholders the additional resources of one of Air Partners’ largest airlines. private aviation in the world, allowing us to significantly improve our technology, our customers offering and supplying international aircraft.

The companies said the acquisition’s footprint in Europe and globally would provide experienced direction to accelerate Wheels Up’s international expansion.

Wheels Up said the deal will allow it “to offer customers an expanded international travel solution, including transatlantic and European travel options.”

Air Partner offers a fixed-rate jet card subscription with guaranteed availability and one-way pricing within the continental United States, like Wheels Up. However, Air Partner has a more extensive program to the Caribbean and Mexico and offers guaranteed fare flights between the United States and Europe and within Europe and to the Middle East.

Global competitors

The move shifts Wheels Up from a domestic-only customer base and follows the expansion of Directional Aviation, parent company of Flexjet and Sentient Jet, into Europe. Flexjet bought PrivateFly, a British jet card and charter broker, and launched a fractional share program there in 2020.

In recent years, Dubai-based Vista Global Holding, which is rooted in Europe, has expanded its VistaJet unit into the United States. Last year it added Apollo Jets, a New York-based on-demand charter broker with $250 million in revenue and a stake in charter operator and management company Talon Air. his participation. They include the 2018 acquisition of XOJet, which was spun off into operator XOJet Aviation and brokerage XO Global. Last year it expanded the US-based XO to Europe, including XO-branded midsize jets. In 2019, it acquired digital broker JetSmarter, merging it with XO and shifting the business into jet sharing and seat-based private jet solutions, an area where it competes directly with Wheels Up.

All are suing Berkshire Hathaway’s NetJets, Inc., the world’s largest private jet operator with a fleet of more than 850 jets. In presentations to analysts ahead of its IPO, Wheels Up executives said international expansion would be at the forefront.

And after? In a written statement, Wheels Up said: “Air Partner’s existing asset-light structure, with no owned aircraft or operating certificates, provides the flexibility needed to expand Wheels Up’s international footprint faster and with greater limited capital investment.”

Still, acquiring a carrier may not be out of the question. Over the past three years, Wheels Up has acquired four of the top 10 US carriers, including Gama Aviation Signature, Delta Private Jets, Mountain Air and TMC Jets. Its latest fleet update reported about 350 owned, leased and managed private jets, including its signature fleet of King Air 350is and more than 50 Citation X super-midsize jets.

Demand for private jets in the United States remains at record highs. Yesterday Vista Global President Thomas Flohr said he expects this trend to continue through 2023. , Wheels Up leases jets from other operators for long periods of time to meet the needs of its more than 10,000 members. Air Partner has relationships with operators in Europe where it could enter into similar agreements.

Wheels Up is expected to release its fourth quarter financial results in the coming weeks. Despite record third-quarter earnings, mounting losses took its stock price from a 52-week high of $15 to a low of $3.27. It closed yesterday at $3.62. Air Partner closed yesterday at 81 GBX, straddling its 52-week high of 104 GBX and its low of 62.2 GBX.

Mary I. Bruner