About two months after announcing company layoffs, Wheels Up founder Kenny Dichter has stepped down from his role as CEO and will remain with the company as a member of the board of directors, the private aviation company announced Tuesday just prior to its first-quarter earnings call.
Wheels Up CFO Todd Smith will serve as interim CEO during a replacement search and reports to board member Ravi Thakran, who is now executive chairman.
Dichter founded Wheels Up in 2013 and took the company public in 2021. Smith joined the company in 2022 after a 25-year career at General Electric.
Smith shared during the call that Wheels Up chairman of operations Dave Holtz, a 30-year Delta Air Lines veteran, will take on expanded leadership responsibilities in the company's fleet operation, and he helped develop and launch Wheels Up's forthcoming member operations center.
Further, Kristen Lauria on May 15 will join the company as chief customer and marketing officer, where she will oversee the company's brand and creative efforts as well as customer acquisition and customer experience, according to Wheels Up. She has been a management consultant to the company since January, and previously was the EVP and global CMO of Cigna Corp.
In March, the company named former Air Partner CEO Mark Briffa as EVP and chief commercial officer.
Redesigned Member Program
Wheels Up also announced that on June 26 it will deploy a redesigned member program. The company will offer two primary service areas: one east of the Mississippi River with parts of Texas, and one focused on the western region of the United States, which will include Arizona, California, Colorado, Nevada and Utah, as well as specific destinations including Bozeman, Mont., Sun Valley, Idaho, and Jackson Hole, Wyo.
"These changes allow us to focus our efforts on the specific regions where we have a density advantage," Smith said on the call. "Those areas account for approximately 80 percent of our customer flight revenue and our highest spending members."
For the east region, the company will offer guaranteed availability and capped hourly rates for flights on the King Air 350i as well as light, midsize and super-mid jets, according to an earnings presentation. The west region flights will be available with capped hourly rates on light, midsize and super-mid jets. Availability will be subject to "sold-out" rules. The King Air 350i is not available for booking in this region. For both regions, flights on large-cabin aircraft will be as-available and dynamically priced.
For service outside those primary areas by leveraging its Air Partner subsidiary and its partner network. Those flights will be priced dynamically at current market rates, according to Wheels Up.
"Our focus on leveraging our network density should effectively add capacity through more efficient and increased utilization of our asset base," Smith said.
Delta Air Lines Partnership
Wheels Up also is enhancing its "corporate go-to-market initiatives" through a new program with Delta Air Lines in which Delta's business customers will receive volume-based preferential rates on Wheels Up charters and memberships, Smith said.
"This multimillion-dollar two-year program reflects confidence that the expanded partnership will enable unmatched travel experiences on private and commercial travel for our mutual customers," he added. "Delta will continue to provide Wheels Up customers unique access and exclusive benefits, such as earning SkyMiles, SkyBonus points and Medallion status."
The enhanced arrangement is in line with the company's goal of expanding its own corporate business, Smith said.
Q1 Metrics
Wheels Up reported first-quarter revenue of nearly $352 million, a first-quarter record, representing an increase of 8 percent year over year. This was primarily driven by aircraft sales and the acquisition of Air Partner, according to the company. Wheels Up's net loss increased to $101 million from $89 million in Q1 2022.
Active members decreased 1 percent from a year prior to 12,285. Active users increased 6 percent to nearly 13,340. Live flight legs decreased 13 percent year over year to nearly 15,400. Flight revenue per live flight leg increased 12 percent to $15,060 as a result of 2022 program changes, which included higher pricing and the introduction of a fuel surcharge in the second quarter, according to the company.
Wheels Up in April received a delisting notice from the New York Stock Exchange because its share price had fallen to below $1. After the executive-change announcement and its earnings call Tuesday morning, the company's stock lost 23 percent in value and was worth $0.38 per share at the close of the trading day.
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