Wheels Up, the private jet company, has announced that its founder and CEO, Kenny Dichter, is stepping down from his post immediately. Board member Ravi Thakran will become executive chairman, while Chief Financial Officer Todd Smith will serve as interim CEO.
The company is currently facing mounting losses and the potential for bankruptcy, leading to executive changes. Despite this, Wheels Up thanked Dichter for his “vision and work” in growing revenue to over $1.5 billion a year and membership to over 12,000 customers.
Wheels Up was once a high-flying startup in the private jet industry, promising to become the Uber or Airbnb of private jets. It aimed to “democratize” private jets and make them more affordable and easier to book.
The company’s flashy marketing campaigns, featuring sports celebrities such as Tom Brady and Serena Williams as brand ambassadors and investors, as well as lavish events, helped the company grow its membership quickly.
However, the company has been dogged by high costs and operating issues, reporting losses of $555 million last year, even as revenue and memberships increased.
While the company said it hoped to be profitable in 2024, in its first-quarter earnings report released Tuesday, Wheels Up reported a loss of $101 million, about $12 million wider than its reported loss a year ago.
The company has been consulting with bankruptcy advisors and attorneys about possible capital raises or a restructuring. In response, Wheels Up is changing its pricing plan and product offering to better serve customers and become more efficient. It is moving away from less profitable markets in the West to focus more on the Northeast and other more active routes.
A traditional individual Wheels Up membership has an initiation fee of $17,500 and annual dues of $8,500, with passengers paying additional hourly costs depending on the type of aircraft.
Industry experts say turning around Wheels Up will be a tough task, given the highly competitive and capital-intensive nature of the private jet industry. The pandemic has also taken a toll on the industry, with many private jet companies facing financial difficulties.
Nevertheless, Wheels Up has a strong brand and a loyal customer base, and the company has been pursuing strategic partnerships and acquisitions to expand its offerings and market share. Last year, Wheels Up acquired Delta Private Jets, a subsidiary of Delta Air Lines, and merged with another private jet company, Gama Aviation Signature.
The company has also launched new products and services, such as a pay-as-you-go membership program and a shared ownership model, to attract a wider range of customers. Wheels Up has also entered the luxury travel market through partnerships with luxury hotel brands, such as The Four Seasons and Montage International.
Despite the challenges facing the private jet industry, some analysts remain optimistic about Wheels Up’s prospects. The company has a strong management team and a solid business model, and the demand for private aviation is expected to rebound as the pandemic subsides and travel restrictions ease.
If the company can successfully navigate its current financial difficulties and adapt to changing market conditions, it could emerge as a major player in the private jet industry for years to come.