Private lift provider Wheels Up arrives at the 2017 NBAA convention with a massive capital infusion in its pocket. The company announced it has completed an equity raise of $117.5 million led by Fidelity Management & Research Company, funds and accounts advised by T. Rowe Price Associates and existing investor NEA.
“We needed 75 [million dollars] for our growth going forward, we endeavored to raise $100 million, we were oversubscribed by a bunch and we closed at $117 million,” company founder and CEO Kenny Dichter said Monday morning. “If we left it open for another week, we could have been $150 million, but we had to get back to business at some point.”
The equity raise comes on the heels of a $90 million aircraft financing facility with KKR completed this past summer and brings the company’s equity to nearly $700 million, with an enterprise value of more than $1 billion.
According to Dichter, this latest round of financing will be used to fund a number of initiatives that include continued growth of the company’s aircraft fleet, which currently numbers 80 airplanes: 65 new-purchase King Air 350i’s and 15 pre-owned Citation XLS's. The membership-based company still has 45 King Airs remaining on its order book with Textron.
“We see another set of King Airs that we’re going to need to hit what our members are going to need moving forward,” said Dichter, “but I would say the additional funding will allow us to go faster.”
He added that Wheels Up (Booth N504) expects to add another 20 aircraft to its fleet next year, including several pre-owned Citation Xs that are currently being repainted in the Wheels Up livery. Dichter indicated that the company sees the need for as many as eight of the speedy super-midsize twinjets.
Customer retention, one of the key areas of focus for the company, is currently more than 85 percent among its 4,000 customers. “Members that are using our product 25 hours or more, the retention rate is 97 percent,” noted Dichter. "People that are using us a casual 15 hours or more, its 95 percent.” The most erosion is among those that use the company for less than that, and Wheels Up is currently working to craft a program to better meet their needs.
As for expansion into Europe, Dichter agreed that it its definitely in the company’s plans. “Western Europe is a lay-up for us—it’s one-third the geography of the U.S.,“ he said. “We’re waiting for some things to settle there with Brexit. We don’t know exactly where the rules are going to come out, but everything looks favorable to private aviation there and things are not going to necessarily change. But we can afford to wait another six months to a year before that stuff becomes clear.”
