Wheels Up Experience Inc. [UP] Filings

10-Q 1 up-20240630.htm 10-Q up-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

________________

[Mark One]


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-39541

WHEELS UP EXPERIENCE INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)						98-1617611 (I.R.S. Employer Identification No.)

2135 American Way, Chamblee, Georgia (Address of Principal Executive Offices)						30341 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 257-5252

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated Filer

Smaller reporting company

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of August 5, 2024, 697,663,854 shares of Class A common stock, $0.0001 par value per share, were outstanding.

TABLE OF CONTENTS


		Page
PART I.	Financial Information
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 202 4 and December 31, 2 0 2 3	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 202 4 and 20 23	3
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 202 4 and 2 023	4
	Condensed Consolidated Statements of Equity for the three and six months ended June 30, 202 4 and 2 023	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 202 4 and 202 3	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	58

PART II.	Other Information
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
	Signatures	63

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) of Wheels Up Experience Inc. (“Wheels Up”, or “we”, “us”, “our” or the “Company”), contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of the control of Wheels Up that could cause actual results to differ materially from the results discussed in the forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding: (i) the impact of Wheels Up’s cost reduction efforts and measures intended to increase Wheels Up’s operational efficiency on its business and results of operations, including the timing and magnitude of such expected actions and any associated expenses in relation to liquidity levels and working capital needs; (ii) the degree of market acceptance and adoption of Wheels Up’s products and services, including the changes to our member programs and charter offerings announced in June 2024 and any additional new or revised products introduced by Wheels Up; (iii) the size, demands, competition in and growth potential of the markets for Wheels Up’s products and services and Wheels Up’s ability to serve and compete in those markets; (iv) Wheels Up’s liquidity, future cash flows and certain restrictions related to its debt obligations; (v) Wheels Up’s ability to achieve positive Adjusted EBITDA (as defined herein) pursuant to the schedule that it has announced; (vi) Wheels Up’s ability to perform under its contractual and indebtedness obligations; (vii) the expected impact or benefits of any potential strategic actions involving Wheels Up or its subsidiaries or affiliates, including asset sales, acquisitions, new debt or equity financings, or refinancings of existing indebtedness; and (viii) the impacts of general economic and geopolitical conditions on Wheels Up’s business and the aviation industry, including due to fluctuations in interest rates, inflation, foreign currencies, consumer and business spending decisions, and general levels of economic activity. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that statement is not forward-looking. We have identified certain known material risk factors applicable to Wheels Up in our Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”) under Part I, Item 1A — “Risk Factors,” in this Quarterly Report under Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Part II, Item 1A — “Risk Factors,” and elsewhere in this Quarterly Report. Moreover, it is not always possible for us to predict how new risks and uncertainties that arise from time to time may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share data)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	141,493	$	263,909
Accounts receivable, net	34,005		38,237

Parts and supplies inventories, net	21,242		20,400

Aircraft held for sale	36,900		30,496
Prepaid expenses	33,608		55,715
Other current assets	21,558		25,277
Total current assets	288,806		434,034
Property and equipment, net	287,395		337,714
Operating lease right-of-use assets	60,059		68,910
Goodwill	217,656		218,208
Intangible assets, net	107,269		117,766

Other non-current assets	125,104		139,428
Total assets	$	1,086,289	$	1,316,060

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	21,152	$	23,998
Accounts payable	41,934		32,973
Accrued expenses	88,124		102,475
Deferred revenue, current	702,174		723,246


Other current liabilities	20,722		24,810
Total current liabilities	874,106		907,502
Long-term debt, net	218,612		235,074

Operating lease liabilities, non-current	49,887		54,956


Other non-current liabilities	14,743		18,655
Total liabilities	1,157,348		1,216,187

Commitments and contingencies (Note 13)

Mezzanine equity:
Contingent performance awards	1,093		2,476
Total mezzanine equity	1,093		2,476
Equity:
Common Stock, $0.0001 par value; 1,500,000,000 authorized; 698,057,072 and 697,131,838 shares issued and 697,663,854 and 696,856,131 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	70		70


Additional paid-in capital	1,905,871		1,879,009
Accumulated deficit	(1,957,626)		(1,763,260)
Accumulated other comprehensive loss	(12,344)		(10,704)
Treasury stock, at cost, 393,218 and 275,707 shares, respectively	(8,123)		(7,718)
Total Wheels Up Experience Inc. stockholders’ equity	(72,152)		97,397
Non-controlling interests	—		—
Total equity	(72,152)		97,397
Total liabilities and equity	$	1,086,289	$	1,316,060

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	196,285	$	335,062	$	393,386	$	686,874

Costs and expenses:
Cost of revenue (exclusive of items shown separately below)	191,690		327,903		389,950		681,694
Technology and development	10,529		14,430		21,610		30,303
Sales and marketing	21,480		23,149		42,917		48,952
General and administrative	35,949		40,065		72,186		79,481
Depreciation and amortization	15,593		15,123		30,988		29,568
(Gain) loss on sale of aircraft held for sale	234		(2,621)		(2,490)		(3,487)
Impairment of goodwill	—		70,000		—		70,000
Total costs and expenses	275,475		488,049		555,161		936,511

Loss from operations	(79,190)		(152,987)		(161,775)		(249,637)

Other income (expense)
Gain (loss) on disposal of assets, net	136		(1,538)		1,576		(1,538)
Loss on extinguishment of debt	(805)		(870)		(2,511)		(870)
Change in fair value of warrant liability	(70)		621		(98)		746
Interest income	285		1,865		341		5,686
Interest expense	(16,667)		(7,658)		(31,222)		(15,777)
Other income (expense), net	(221)		(42)		(350)		103
Total other income (expense)	(17,342)		(7,622)		(32,264)		(11,650)

Loss before income taxes	(96,532)		(160,609)		(194,039)		(261,287)

Income tax benefit (expense)	(441)		16		(327)		(172)

Net loss	(96,973)		(160,593)		(194,366)		(261,459)
Less: Net loss attributable to non-controlling interests	—		—		—		—
Net loss attributable to Wheels Up Experience Inc.	$	(96,973)	$	(160,593)	$	(194,366)	$	(261,459)

Net loss per share of Common Stock (Note 18)
Basic and diluted	$	(0.14)	$	(6.28)	$	(0.28)	$	(10.27)


Weighted-average shares of Common Stock outstanding:
Basic and diluted	697,458,966		25,570,200		697,403,388		25,446,199

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(96,973)	$	(160,593)	$	(194,366)	$	(261,459)
Other comprehensive income (loss):
Foreign currency translation adjustments	(98)		3,296		(1,640)		4,219
Comprehensive loss	(97,071)		(157,297)		(196,006)		(257,240)
Less: Comprehensive loss attributable to non-controlling interests	—		—		—		—
Comprehensive loss attributable to Wheels Up Experience Inc.	$	(97,071)	$	(157,297)	$	(196,006)	$	(257,240)

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands, except share data)


	Common Stock									Treasury stock
	Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2023	697,131,838	$	70	$	1,879,009	$	(1,763,260)	$	(10,704)	275.707	$	(7,718)	$	—	$	97,397
Equity-based compensation	—	—		2,812		—		—		—	—		—		2,812

Shares withheld for employee taxes on vested equity awards	—	—		—		—		—		92.764	(338)		—		(338)
Issuance of Common Stock upon settlement of restricted stock units	558,125	—		—		—		—		—	—		—		—
Net loss	—	—		—		(97,393)		—		—	—		—		(97,393)
Other comprehensive income (loss)	—	—		—		—		(1,542)		—	—		—		(1,542)
Balance as of March 31, 2024	697,689,963	$	70	$	1,881,821	$	(1,860,653)	$	(12,246)	368,471	$	(8,056)	$	—	$	936
Equity-based compensation	—	—		5,332		—		—		—	—		—		5,332


Reclassification of equity awards	—	—		18,718		—		—		—	—		—		18,718
Shares withheld for employee taxes on vested equity awards	—	—		—		—		—		24,747	(67)		—		(67)
Issuance of Common Stock upon settlement of restricted stock units	367,109	—		—		—		—		—	—		—		—
Net loss	—	—		—		(96,973)		—		—	—		—		(96,973)
Other comprehensive income (loss)	—	—		—		—		(98)		—	—		—		(98)
Balance as of June 30, 2024	698,057,072	$	70	$	1,905,871	$	(1,957,626)	$	(12,344)	393,218	$	(8,123)	$	—	$	(72,152)

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands, except share data)


	Common Stock									Treasury stock
	Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2022	25,198,298	$	3	$	1,545,530	$	(1,275,873)	$	(10,053)	264,441	$	(7,687)	$	—	$	251,920
Equity-based compensation	—	—		9,951		—		—		—	—		1,259		11,210
Change in non-controlling interests allocation	—	—		1,259		—		—		—	—		(1,259)		—

Issuance of Common Stock upon settlement of restricted stock units	227,513	—		—		—		—		—	—		—		—
Net loss	—	—		—		(100,866)		—		—	—		—		(100,866)
Other comprehensive income (loss)	—	—		—		—		923		—	—				923
Balance as of March 31, 2023	25,425,811	$	3	$	1,556,740	$	(1,376,739)	$	(9,130)	264,441	$	(7,687)	$	—	$	163,187
Equity-based compensation	—	—		6,592		—		—		—	—		12		6,604
Change in non-controlling interests allocation	—	—		12		—		—		—	—		(12)		—
Reclassification of equity awards	—	—		328		—		—		—	—		—		328

Issuance of Common Stock upon settlement of restricted stock units	196,685	—		—		—		—		—	—		—		—
Reverse stock split fractional shares	—	—		—		—		—		859	(3)		—		(3)
Net loss	—	—		—		(160,593)		—		—	—		—		(160,593)
Other comprehensive income (loss)	—	—		—		—		3,296		—	—		—		3,296
Balance as of June 30, 2023	25,622,496	$	3	$	1,563,672	$	(1,537,332)	$	(5,834)	265,300	$	(7,690)	$	—	$	12,819

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(194,366)	$	(261,459)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	30,988		29,568
Equity-based compensation	25,479		18,142
Payment in kind interest	20,501		—
Amortization (accretion) of deferred financing costs and debt discount	(1,328)		1,124
Change in fair value of warrant liability	98		(746)

Gain on sale of aircraft held for sale	(5,208)		(3,487)
Loss on extinguishment of debt	2,511		870
Impairment of goodwill	—		70,000
Other	4,653		1,519
Changes in assets and liabilities:
Accounts receivable	1,502		27,698

Parts and supplies inventories	2,635		5,637
Aircraft inventory	1,673		(2,008)
Prepaid expenses	20,204		(14,499)

Other non-current assets	17,473		(16,420)

Accounts payable	9,287		9,166
Accrued expenses	(14,232)		(32,393)

Deferred revenue	(21,378)		(248,358)
Other assets and liabilities	(1,275)		3,976
Net cash used in operating activities	(100,783)		(411,670)

Cash flows from investing activities
Purchases of property and equipment	(9,633)		(12,201)
Purchases of aircraft held for sale	(2,313)		(961)
Proceeds from sale of aircraft held for sale, net	37,856		24,981
Proceeds from sale of divested business, net	5,903		—

Capitalized software development costs	(7,825)		(12,924)
Other	105		194
Net cash provided (used in) by investing activities	24,093		(911)

Cash flows from financing activities
Purchase shares for treasury	(404)		—
Purchase of fractional shares	—		(3)





Repayments of long-term debt	(40,992)		(18,680)

Net cash used in financing activities	(41,396)		(18,683)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,175)		(540)

Net decrease in cash, cash equivalents and restricted cash	(119,261)		(431,804)
Cash, cash equivalents and restricted cash, beginning of period	292,825		620,153
Cash, cash equivalents and restricted cash, end of period	$	173,564	$	188,349

Supplemental disclosure of cash flow information:
Cash paid for interest	$	12,814	$	16,097

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Wheels Up Experience Inc. (“Wheels Up”, or “we”, “us”, “our” or the “Company”) is a leading provider of on-demand private aviation in the United States (“U.S.”) and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by an uncompromising commitment to safety and service. Our offering is delivered through a mix of our member programs and charter solutions that strategically utilize our owned and leased aircraft fleet and an “asset-light” charter model to deliver a greater range of global travel alternatives. In addition, our unique partnership with Delta Air Lines, Inc. (“Delta”) allows Wheels Up to offer a wide variety of aviation solutions across both private and premium commercial travel.

Basis of Presentation

The condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the financial information and footnotes required by GAAP for annual financial statements. As a result, this Quarterly Report on Form 10-Q (this “Quarterly Report”) should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on March 7, 2024. In the opinion of the Company’s management, the condensed consolidated financial statements in this Quarterly Report include all adjustments necessary for the fair presentation of the Company’s balance sheet as of June 30, 2024, and its results of operations, including its comprehensive loss and stockholders' equity for the three and six months ended June 30, 2024 and 2023. All adjustments are of a normal recurring nature. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for any subsequent period or for the fiscal year ending December 31, 2024.

Immediately after the close of trading on the New York Stock Exchange (the “NYSE”) on June 7, 2023, the Company effected a reverse stock split of Wheels Up’s outstanding shares of Class A common stock, $0.0001 par value per share (“Common Stock”), at a reverse stock split ratio of 1-for-10 (the “Reverse Stock Split”). Accordingly, the presentation of all periods covered by the condensed consolidated financial statements contained herein have been adjusted to give retroactive effect to the Reverse Stock Split, as applicable, including adjustments to per share net loss and other per share of Common Stock amounts.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. We consolidate Wheels Up MIP LLC (“MIP LLC”) and record the profits interests held in MIP LLC that Wheels Up does not own as non-controlling interests (see Note 12). All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Preparing the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates due to risks and uncertainties. The most significant estimates include, but are not limited to, the useful lives and residual values of purchased aircraft, the fair value of financial assets and liabilities, acquired intangible assets, goodwill, contingent consideration and other assets and liabilities, sales and use tax, the estimated life of member relationships, the

determination of the allowance for credit losses, impairment assessments, the determination of the valuation allowance for deferred tax assets and the incremental borrowing rate for leases.

Foreign Currency Translation Adjustments

Assets and liabilities of foreign subsidiaries, where the functional currency is not the U.S. dollar, have been translated at period-end exchange rates and profit and loss accounts have been translated using weighted-average exchange rates. Adjustments resulting from currency translation have been recorded in the equity section of the condensed consolidated balance sheets and the condensed consolidated statements of other comprehensive loss as a cumulative translation adjustment.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” or ASU 2023-07. The amendments in ASU 2023-07 aim to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 will be effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” or ASU 2023-09. The amendments in ASU 2023-09 aim to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 will be effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2025, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements.

2.REVENUE RECOGNITION

Disaggregation of Revenue

The following table disaggregates Revenue by service type and the timing of when these services are provided to the member or customer (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Services transferred at a point in time:
Flights, net of discounts and incentives	$	163,684	$	235,284	$	314,613	$	467,046
Aircraft management(1)	2,905		46,073		6,030		107,315
Other	13,257		28,138		38,916		59,945

Services transferred over time:
Memberships	16,046		21,478		32,900		43,158
Aircraft management(1)	52		2,429		120		4,881
Other	341		1,660		807		4,529
Total Revenue	$	196,285	$	335,062	$	393,386	$	686,874

(1) On September 30, 2023, we completed the sale of the aircraft management business. See Note 4.

Contract Balances

Accounts receivable, net consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Gross receivables from members and customers	$	41,266	$	43,970
Undeposited funds	1,181		2,131
Less: Allowance for credit losses	(8,442)		(7,864)
Accounts receivable, net	$	34,005	$	38,237

Deferred revenue consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Flights - Prepaid Blocks	$	673,052	$	686,413
Memberships - annual dues	27,576		33,890
Memberships - initiation fees	1,249		2,377
Flights - credits	751		1,366
Other	10		183
Deferred revenue - total	702,638		724,229

Less: Deferred revenue - current	(702,174)		(723,246)
Deferred revenue - non-current	$	464	$	983

Deferred revenue, non-current is presented within Other non-current liabilities on the condensed consolidated balance sheets.

Changes in Deferred revenue for the six months ended June 30, 2024 were as follows (in thousands):


Deferred revenue as of December 31, 2023	$	724,229
Amounts deferred during the period	368,602
Revenue recognized from amounts included in the deferred revenue beginning balance	(270,740)
Revenue from current period sales	(119,453)
Deferred revenue as of June 30, 2024	$	702,638

Revenue expected to be recognized in future periods for performance obligations that are unsatisfied, or partially unsatisfied, as of June 30, 2024 were as follows (in thousands):


Remainder of 2024	$	232,988
2025	310,552
2026	79,564
2027	79,534
Total Deferred revenue	$	702,638

Costs to Obtain a Contract

Capitalized costs related to sales commissions and referral fees were $1.9 million and $3.9 million for the three and six months ended June 30, 2024, respectively, and $2.5 million and $4.1 million for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and December 31, 2023, capitalized sales commissions and referral fees of $4.9 million and $4.8 million, respectively, were included in Other current assets, and $0.3 million and $0.4 million, respectively,

were included in Other non-current assets on the condensed consolidated balance sheets. Amortization expense related to capitalized sales commissions and referral fees included in sales and marketing expense in the condensed consolidated statements of operations was $2.1 million and $4.2 million for the three and six months ended June 30, 2024, respectively, and $3.1 million and $6.8 million for the three and six months ended June 30, 2023, respectively.

3.PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Aircraft	$	411,326	$	475,058
Software development costs	85,079		81,075
Leasehold improvements	24,089		22,899
Computer equipment	3,342		3,515
Buildings and improvements	1,424		1,424
Furniture and fixtures	4,570		4,618
Tooling	3,660		3,898
Vehicles	2,172		2,166
Total Property and equipment	535,662		594,653
Less: Accumulated depreciation and amortization	(248,267)		(256,939)
Total Property and equipment, net	$	287,395	$	337,714

Depreciation and amortization expense, excluding amortization expense related to software development costs, was $4.5 million and $10.8 million for the three and six months ended June 30, 2024, respectively, and $5.7 million and $11.9 million for the three and six months ended June 30, 2023, respectively.

Amortization expense related to software development costs, included as part of Depreciation and amortization expense associated with property and equipment, was $6.3 million and $10.6 million for the three and six months ended June 30, 2024, and $4.0 million and $6.8 million for the three and six months ended June 30, 2023.

4.DIVESTITURE

Divestiture of Aircraft Management Business

On September 30, 2023 (the “Divestiture Closing Date”), Wheels Up Partners Holdings LLC, our direct subsidiary (“WUP”), pursuant to an equity purchase agreement (the “Purchase Agreement”) with Executive AirShare LLC, completed the sale of 100% of the issued and outstanding equity interests of Circadian Aviation LLC, our indirect subsidiary (“Circadian”). The Divestiture Closing Date fair value of the aggregate consideration transferred was $19.1 million and the Company recognized a loss on the sale of $3.0 million. The $19.1 million was comprised of $13.2 million of cash received on the Divestiture Closing Date, contingent consideration with a fair value of $4.8 million, an escrow receivable of $0.6 million and a non-contingent consideration receivable of $0.5 million. The fair value of the contingent consideration was deemed to be the approximate contract value as of the Divestiture Closing Date.

Circadian was released from all guarantor obligations with respect to the Equipment Notes (as defined below) on the Divestiture Closing Date pursuant to certain debt release letters entered into concurrently with the Purchase Agreement.

Concurrently with entering into the Purchase Agreement: (i) WUP entered into a transition services agreement with Circadian, pursuant to which WUP will provide Circadian certain specified services on a temporary basis; (ii) Wheels Up Partners LLC, our indirect subsidiary (“WUP LLC”), entered into a master operating agreement with Circadian, pursuant to which Circadian will conduct certain on-demand charter operations for certain of WUP LLC’s owned aircraft after the Divestiture Closing Date while such aircraft are transitioned from a U.S. Federal Aviation Administration (“FAA”) operating certificate held by Circadian to the Company’s subsidiaries, and WUP LLC will provide certain maintenance, pilots services, management and other related services for WUP LLC’s owned aircraft during the transition period; and (iii) certain of the Company’s subsidiaries entered into fleet management agreements with Circadian, pursuant to which Circadian will provide certain maintenance, pilots services, management and other related services for managed aircraft after the Divestiture Closing Date while they are transitioned from a FAA operating certificate held by the applicable Company subsidiary to Circadian.

During the six months ended June 30, 2024, we received $3.4 million upon finalization of the working capital adjustment under the Purchase Agreement, recognized within gain on sale of assets, net in the condensed consolidated statement of operations.

5.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents Goodwill carrying values and the change in balance, by reporting unit, during the six months ended June 30, 2024 (in thousands):


	WUP Legacy(1)		Air Partner		Total
Balance as of December 31, 2023(2)	$	136,098	$	82,110	$	218,208
Foreign currency translation adjustment	—		(552)		(552)
Balance as of June 30, 2024	$	136,098	$	81,558	$	217,656

(1) As of June 30, 2024, the legacy Wheels Up reporting unit (“WUP Legacy”) had negative net assets (stockholders’ equity).

(2) Net of accumulated impairment losses of $306.2 million, all of which was recognized on the goodwill attributable to WUP Legacy.

Intangible Assets

The gross carrying value, accumulated amortization and net carrying value of Intangible assets consisted of the following (in thousands):


	June 30, 2024
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Status	$	80,000	$	34,367	$	45,633
Customer relationships	89,121		40,310		48,811

Trade name	11,939		5,951		5,988
Developed technology	20,556		13,819		6,737
Leasehold interest - favorable	600		113		487

Foreign currency translation adjustment	(677)		(290)		(387)
Total	$	201,539	$	94,270	$	107,269


	December 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Status	$	80,000	$	31,325	$	48,675
Customer relationships	89,121		34,920		54,201
Trade name	11,939		5,402		6,537
Developed technology	20,556		12,329		8,227
Leasehold interest - favorable	600		102		498
Foreign currency translation adjustment	(589)		(217)		(372)
Total	$	201,627	$	83,861	$	117,766

Amortization expense of intangible assets was $5.2 million and $10.4 million for the three and six months ended June 30, 2024, respectively, and $5.9 million and $11.8 million for the three and six months ended June 30, 2023, respectively.

Intangible Liabilities

Associated with our acquisition of Delta Private Jets on January 17, 2020, we recognized intangible liabilities for the fair value of complimentary Wheels Up Connect Memberships provided to existing Delta SkyMiles 360® customers as of the acquisition date, as required under the Commercial Cooperation Agreement, dated as of January 17, 2020, by and among WUP, WUP LLC and Delta (as amended, the “Original CCA”). The gross carrying value, accumulated amortization and net carrying value of Intangible liabilities consisted of the following (in thousands):


	June 30, 2024
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	8,561	$	11,439


	December 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	7,798	$	12,202

Amortization of Intangible liabilities, which reduces amortization expense, was $0.4 million and $0.8 million for the three and six months ended June 30, 2024, respectively, and $0.5 million and $1.0 million for the three and six months ended June 30, 2023, respectively.

The current portion of Intangible liabilities is presented within Other current liabilities on the condensed consolidated balance sheets. Future amortization expense of Intangible assets and Intangible liabilities held as of June 30, 2024, were as follows (in thousands):


	Intangible Assets		Intangible Liabilities
Remainder of 2024	$	10,302	$	763
2025	20,307		1,525
2026	19,441		1,525
2027	14,885		1,525
2028	14,235		1,525
2029 and Thereafter	28,099		4,576
Total	$	107,269	$	11,439

6.CASH EQUIVALENTS AND RESTRICTED CASH

A reconciliation of Cash and cash equivalents and Restricted cash from the condensed consolidated balance sheets to the condensed consolidated statements of cash flows is as follows (in thousands):


	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	141,493	$	263,909
Restricted cash	32,071		28,916
Total	$	173,564	$	292,825

Cash Equivalents

As of each of June 30, 2024 and December 31, 2023, cash equivalents on the condensed consolidated balance sheets were $0.1 million.

Restricted Cash

As of June 30, 2024 and December 31, 2023, Restricted cash included $6.2 million (as of each such date) held by financial institutions to establish standby letters of credit required by the lessors of certain corporate office space that we leased as of such dates, and $5.0 million and $3.4 million, respectively, held by financial institutions to collateralize against our credit card programs. The standby letters of credit expire on December 31, 2033 and June 30, 2034. The Restricted cash balances as of June 30, 2024 and December 31, 2023 also included $19.4 million and $17.9 million, respectively, related to funds held but unavailable for immediate use due to contractual restrictions. Restricted cash is presented within Other non-current assets on the condensed consolidated balance sheets.

7.LONG-TERM DEBT

The following table presents the components of Long-term debt, net (in thousands):


	Weighted Average Interest Rate		June 30, 2024		December 31, 2023
Equipment Notes	12.0	%	$	176,398	$	214,878
Term Loan	10.0	%	420,954		400,453
Total debt			597,352		615,331
Less: Total unamortized deferred financing costs and debt discount			357,588		356,259
Less: Current maturities of long-term debt			21,152		23,998
Long-term debt, net			$	218,612	$	235,074

Maturities of principal debt payments for the next five years are as follows (in thousands):


	Maturities
Remainder of 2024	$	10,576
2025	37,051
2026	33,074
2027	27,602
2028	489,049
Total	$	597,352

2022-1 Equipment Notes

On October 14, 2022, WUP LLC issued $270.0 million aggregate principal amount of 12% fixed rate equipment notes (collectively, the “Equipment Notes”) using an EETC (enhanced equipment trust certificate) loan structure. The Equipment Notes were issued for net proceeds (before transaction-related expense) of $259.2 million. The stated final expected distribution date of the Equipment Notes varies from July 15, 2025 to October 15, 2029 depending on the type of aircraft, subject to certain prepayment requirements under the Omnibus Amendment (as defined below) and WUP LLC’s ability to redeem Equipment Notes prior to maturity. The Equipment Notes bear interest at the rate of 12% per annum with annual amortization of the principal amount equal to 10% per annum and balloon payments due at each maturity date. The Equipment Notes were initially secured by first-priority liens on 134 of the Company’s owned aircraft fleet and by liens on certain intellectual property assets of the Company and certain of its subsidiaries (collectively, the “Equipment Note Collateral”). WUP LLC’s obligations under the Equipment Notes are guaranteed by the Company and certain of its subsidiaries.

The Equipment Notes were sold pursuant to a Note Purchase Agreement, dated as of October 14, 2022 (the “Note Purchase Agreement”), and issued under separate Trust Indentures and Mortgages, dated as of October 14, 2022 (each, an “Indenture” and collectively, the “Indentures”). On September 20, 2023, the Company, WUP LLC, certain other subsidiaries of the Company that guaranteed and/or granted collateral to secure WUP LLC’s obligations under the Equipment Notes, Wilmington Trust, National Association, and the Equipment Note lenders entered into the Omnibus Amendment No. 1 (the “Omnibus Amendment”). The Omnibus Amendment provides for, among other things: (i) reducing the minimum liquidity covenant under the guarantee agreement related to the Equipment Notes (as amended, the “Guarantee”) with respect to the Company and its subsidiaries from $125.0 million of minimum aggregate available cash and Cash Equivalents (as defined in the Note Purchase Agreement) as of the end of each fiscal quarter to $75.0 million on any date, inclusive of $20.0 million held as a deposit for the benefit of the Equipment Note lenders and presented in Other non-current assets on our condensed consolidated balance sheets as of each of June 30, 2024 and December 31, 2023 (the “Equipment Notes Liquidity Covenant”); (ii) permitting the execution of the Credit Agreement (as defined below); (iii) the consent of the

Equipment Note lenders that will allow the Company to effect a sale of certain guarantors under the Guarantee; (iv) that if a prepayment under the Term Loan (as defined below) results in the weighted average life of the Term Loan being shorter than that of the Equipment Notes, a redemption of a portion of the Equipment Notes is required; and (v) that if an Equipment Note has a maturity date on or after the maturity of the Term Loan, all obligations under such Equipment Note will be due 90 days prior to the maturity of the Term Loan.

The Note Purchase Agreement, the Indentures and the Guarantee, as each was amended by the Omnibus Amendment, contain certain covenants, including the Equipment Note Liquidity Covenant, a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the Company, and restrictive covenants that provide limitations under certain circumstances on, among other things: (i) making certain acquisitions, mergers or disposals of its assets; (ii) making certain investments or entering into certain transactions with affiliates; (iii) prepaying, redeeming or repurchasing the Equipment Notes, subject to certain exceptions; and (iv) paying dividends and making certain other specified restricted payments. Each Indenture contains customary events of default for Equipment Notes of this type, including cross-default provisions among the Equipment Notes and the Term Loan and Revolving Credit Facility (as each term is defined below). WUP LLC’s obligations under the Equipment Notes are guaranteed by the Company and certain of its subsidiaries. WUP LLC is also obligated to cause additional subsidiaries and affiliates of WUP LLC to become guarantors under certain circumstances. The Equipment Notes issued with respect to each aircraft are cross-collateralized by the other aircraft for which Equipment Notes were issued under the Indentures. The maturity of the Equipment Notes may be accelerated upon the occurrence of certain events of default under the Note Purchase Agreement and each Indenture and the related guarantees. As of June 30, 2024, we were in compliance with the covenants under the Note Purchase Agreement, each Indenture and the Guarantee.

Interest and principal payments on the Equipment Notes began on January 15, 2023 and are payable quarterly on each January 15, April 15, July 15 and October 15. During the six months ended June 30, 2024, the Company redeemed in-full the Equipment Notes for 14 aircraft, which reduced the aggregate principal amount outstanding under the Equipment Notes by $26.9 million. As of June 30, 2024, the carrying value of the 108 aircraft that were subject to first-priority liens under the Equipment Notes was $259.4 million. Amortization expense for debt discounts and deferred financing costs of $2.2 million and $2.7 million was recorded in interest expense in the condensed consolidated statement of operations for the three and six months ended June 30, 2024, respectively, and $0.9 million and $1.8 million was recorded in interest expense in the condensed consolidated statement of operations for the three and six months ended June 30, 2023, respectively.

Term Loan and Revolving Credit Facility

On September 20, 2023 (the “Credit Agreement Closing Date”), the Company entered into the Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”), and Cox Investment Holdings, Inc. (collectively with Delta and CK Wheels, the “Initial Lenders”), and U.S. Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), pursuant to which (i) the Initial Lenders provided a term loan facility (the “Initial Term Loan”) in the aggregate original principal amount of $350.0 million and (ii) Delta provided commitments for a revolving loan facility (the “Revolving Credit Facility”) in the aggregate original principal amount of $100.0 million. On September 20, 2023, the Company issued the Initial Term Loan of $350.0 million to the Initial Lenders for net proceeds (before transaction-related expense) of $343.0 million.

On November 15, 2023 (the “Final Closing Date”), the Company entered into Amendment No. 1 to Credit Agreement (the “Credit Agreement Amendment” and together with the Original Credit Agreement, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, each of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP, Whitebox GT Fund, LP and Kore Fund Ltd (collectively, the “Incremental Term Lenders” and together with the Initial Lenders, the “Lenders”), and the Agent, pursuant to which, among other things, the Incremental Term Lenders joined the Credit Agreement and provided an additional term loan facility (the “Incremental Term Loan” and together with the Initial Term Loan, the “Term Loan”) in the aggregate original principal amount of $40.0 million. On the Final Closing Date, the Company issued the Incremental Term Loan of

$40.0 million to the Incremental Term Lenders for net proceeds (before transaction-related expense) of $39.2 million. Upon the closing of the Incremental Term Loan, the loans under the Credit Agreement consisted of (i) the Term Loan in the aggregate principal amount of $390.0 million and (ii) the Revolving Credit Facility in the aggregate original principal amount of $100.0 million.

The scheduled maturity date for the Term Loan is September 20, 2028, and the scheduled maturity date for the Revolving Credit Facility is the earlier of September 20, 2028 and the first date after September 20, 2025 on which all amounts owed with respect to borrowings under the Revolving Credit Facility have been repaid, subject in each case to earlier termination upon acceleration or termination of any obligations upon the occurrence and continuation of an event of default. Interest on the Term Loan and any borrowings under the Revolving Credit Facility (each, a “Loan” and collectively, the “Loans”) accrues at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding. Accrued interest on each Loan is payable in kind as compounded interest and capitalized to the principal amount of the applicable Loan on the last day of each of March, June, September and December, and the applicable maturity date. If in the future the Company or its subsidiaries either redeem in full the outstanding Equipment Notes or commence payoff at maturity thereof, the Company may elect to make interest payments (or some portion thereof) on any Loans then outstanding in cash. Also, upon the occurrence and during the continuance of an event of default under the Credit Agreement, (i) interest will accrue on the unpaid principal balance of the Loans at the rate then applicable to such Loans plus 2% and (ii) interest will accrue on all other outstanding liabilities, interest, expenses, fees and other sums under the Credit Agreement, at a rate equal to the Alternate Base Rate (as defined in the Credit Agreement) plus 2% per annum.

The Credit Agreement also contains certain covenants and events of default, in each case customary for transactions of this type. The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding certain accounts, including any segregated account exclusively holding customer deposits, and other assets specified in the Credit Agreement), as well as a junior lien on the Equipment Note Collateral. The Credit Agreement is guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company. In the future, the Company may be required to add any new or after-acquired subsidiaries of the Company that meet certain criteria as guarantors. As of June 30, 2024, we were in compliance with the covenants under the Credit Agreement and related credit documents.

In connection with the funding of the Initial Term Loan, the Company entered into the Investment and Investor Rights Agreement, dated as of the Credit Agreement Closing Date (the “Original Investor Rights Agreement”), by and among the Company and the Initial Lenders. Pursuant to the Original Investor Rights Agreement, the Company issued to the Initial Lenders 141,313,671 shares in the aggregate (the “Initial Shares”) of Common Stock in a private placement (the “Initial Issuance”) on the Credit Agreement Closing Date. In addition, the Company agreed to issue an additional 529,926,270 shares in the aggregate (the “Deferred Shares” and, together with the Initial Shares, the “Investor Shares”) of Common Stock (the “Deferred Issuance” and together with the Initial Issuance, the “Investor Issuances”).

On November 9, 2023, the Company’s stockholders approved, at a special meeting of the Company’s stockholders (the “2023 Special Meeting”), the Amended and Restated Certificate of Incorporation of Wheels Up, filed with the Secretary of State of the State of Delaware on November 15, 2023 (the “Amended and Restated Certificate of Incorporation”), which, among other things, increased the number of shares of Common Stock available for issuance thereunder. In connection with the transactions contemplated by the Credit Agreement Amendment, the Company entered into Amendment No. 1 to Investment and Investor Rights Agreement, dated as of the Final Closing Date (the “Investor Rights Agreement Amendment” and together with the Original Investor Rights Agreement, the “Investor Rights Agreement”), with each Initial Lender, which contained, among others, certain revisions to reflect the issuance of the Deferred Shares. Substantially concurrently with entering into the Investor Rights Agreement Amendment, on the Final Closing Date, the Company and Initial Lenders entered into joinders to the Investor Rights Agreement (collectively, the “Investor Rights Agreement Joinders”) with each Incremental Term Lender (or its applicable affiliate), pursuant to which each Incremental Term Lender (or its applicable affiliate) joined the Investor Rights Agreement and assumed the rights and obligations of an Additional Investor (as defined in the Investor Rights Agreement) thereunder, including the right to receive a pro rata portion of the Investor Shares. The Company issued the Deferred Shares to the Lenders on the Final Closing Date in a private placement. The Investor Shares were issued in private placements such that after the Investor Issuances, each Lender was issued a

number of shares equal to its pro rata portion of the Investor Shares based on its participation in the Term Loan. The Investor Rights Agreement also contains certain other terms and conditions related to the Lenders’ ownership of Common Stock, including, among other things, that the Initial Lenders have the right to designate certain members of the Company’s Board of Directors depending on the level of Common Stock ownership and certain transfer restrictions and liquidity rights.

In accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, the Company determined that the Term Loan, Initial Issuance and Deferred Issuance did not contain any features that would qualify as a derivative or embedded derivative and require bifurcation. In addition, the Company determined the Initial Issuance and Deferred Issuance should be classified as equity. In accordance with ASC 470, Debt, the allocation on a relative fair value basis resulted in gross amounts recorded of $44.9 million for the Initial Term Loan, $64.2 million for the Initial Issuance and $240.9 million for the Deferred Issuance, in each case during the year ended December 31, 2023. In accordance with ASC 815, Derivatives and Hedging, the Company determined the reallocation of the Deferred Issuance between the Lenders in connection with the Credit Agreement Amendment and Investor Rights Agreement Joinders that resulted in a pro rata portion of the Investor Shares being issued to the Incremental Term Lenders on the Final Closing Date represented a modification of a freestanding equity-classified written call option and the modification is to be recognized as if cash had been paid as consideration for the shares of Common Stock issued to the Incremental Term Lenders (collectively, the “Reallocated Shares”). Accordingly, the Reallocated Shares were treated as a debt discount in accordance with the guidance in ASC 835, Interest, and the value of the Incremental Term Loan and the Reallocated Shares was apportioned using a relative fair value allocation. The allocation on a fair value basis resulted in gross amounts recorded of $9.4 million for the Incremental Term Loan and $30.6 million for the Reallocated Shares during the three months ended December 31, 2023.

Aggregate issuance costs of $29.5 million were incurred in connection with the Original Credit Agreement, Credit Agreement Amendment, Original Investor Rights Agreement and Investor Rights Agreement Amendment. The deferred issuance costs were allocated on a relative fair value basis, resulting in an allocation of $4.1 million in the aggregate for the Term Loan and $25.4 million in the aggregate for the Investor Issuances. The initial carrying value of the Term Loan was $41.4 million as of September 20, 2023, which reflected the $3.4 million of unamortized debt issuance costs and $305.2 million of unamortized debt discount. The initial carrying value of the Incremental Term Loan was $8.7 million as of November 15, 2023, which reflected $0.7 million of unamortized debt issuance costs and $30.6 million of unamortized debt discount.

Accretion of debt discounts and deferred issuance costs associated with the Term Loan of $(1.7) million and $(4.1) million were recorded in Interest expense in the condensed consolidated statement of operations for the three and six months ended June 30, 2024, respectively.

8.FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, an exit price, in an orderly transaction between unaffiliated willing market participants on the measurement date under current market conditions. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available and activity in the markets used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.


Level 1 -			Quoted prices, unadjusted, in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2 -			Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 -			Unobservable inputs developed using our own estimates and assumptions, which reflect those that market participants would use in pricing the asset or liability.

Financial instruments that are measured at fair value on a recurring basis and their corresponding placement in the fair value hierarchy consisted of the following (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3		Fair Value
Assets:
Money market funds	$	93	$	—	$	—	93

Total assets	$	93	$	—	$	—	$	93

Liabilities:
Warrant liability - Public Warrants	$	—	$	70	$	—	$	70
Warrant liability - Private Warrants	—		40		—		40
Equipment Notes	—		—		229,635		229,635
Term Loan	$	—	$	—	297,800		$	297,800
Total liabilities	$	—	$	110	$	527,435	$	527,545

	December 31, 2023
	Level 1		Level 2		Level 3		Fair Value
Assets:
Money market funds	$	94	$	—	$	—	$	94
Total assets	$	94	$	—	$	—	$	94

Liabilities:
Warrant liability - Public Warrants	$	7	$	—	$	—	$	7
Warrant liability - Private Warrants	—		5		—		5
Equipment Notes	—		—		256,256		256,256
Term Loan	—		—		297,800		297,800
Total liabilities	$	7	$	5	$	554,056	$	554,068

The carrying amount of Money market funds approximates fair value and is classified within Level 1, because we determined the fair value through quoted market prices.

The Warrants (as defined below) were accounted for as a liability in accordance with ASC 815-40. The Warrant liability was measured at fair value upon assumption and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations. As of each of June 30, 2024 and December 31, 2023, we used Level 2 inputs for the Warrants. We valued the Warrants using a Monte Carlo simulation model to reflect the redemption conditions. See Note 11 for additional information about the Warrants.

The following table presents the changes in the fair value of the warrant liability (in thousands):


	Public Warrants		Private Warrants		Total Warrant Liability
Fair value as of December 31, 2023	$	7	$	5	$	12
Change in fair value of warrant liability	63		35		98
Fair value as of June 30, 2024	$	70	$	40	$	110

The estimated fair value of the Equipment Notes is categorized as a Level 3 valuation. We considered the appraised value of aircraft subject to first-priority liens under the Equipment Notes, as sourced during the third

quarter of 2023 and as required under the Equipment Notes, to determine the fair value of the Equipment Notes as of June 30, 2024.

The estimated fair value of the Term Loan is categorized as a Level 3 valuation. The estimated fair value as of the issuance date was principally based on inputs such as estimated credit risk, recently completed transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. We considered the relatively short time period between the issuance of the Term Loan and the measurement date of June 30, 2024, in order to determine the fair value of the Term Loan as of June 30, 2024.

9.LEASES

Leases primarily pertain to certain controlled aircraft and our operational facilities, including aircraft hangars, our corporate headquarters located in the Atlanta, Georgia area and our corporate office in New York, New York, which are all accounted for as operating leases. We sublease an aircraft hangar at Cincinnati/Northern Kentucky International Airport from Delta. Certain of these operating leases have renewal options to further extend for additional time periods at our discretion.

We have certain variable lease agreements with aircraft owners that contain payment terms based on an hourly lease rate multiplied by the number of flight hours during a month. Variable lease payments are not included in the right-of-use asset and lease liability balances but rather are expensed as incurred.

The components of net lease cost were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease costs	$	7,509	$	9,641	$	15,049	$	21,335
Short-term lease costs	173		2,151		386		4,637
Variable lease costs	5,826		8,666		10,139		14,499
Total lease costs	$	13,508	$	20,458	$	25,574	$	40,471

Sublease income was not material for any of the three and six month periods ended June 30, 2024 and 2023.

Lease costs related to leased aircraft and operational facilities are included in Cost of revenue in the condensed consolidated statements of operations. Lease costs related to our leased corporate headquarters and other office space, including expenses for non-lease components, are allocated within the condensed consolidated statements of operations based on employee headcount. Sublease income is presented in General and administrative expense in the condensed consolidated statements of operations.

Supplemental cash flow information related to operating leases were as follows (in thousands):


	Six Months Ended June 30,
	2024		2023
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows paid for operating leases	$	15,604	$	18,621
Right-of-use assets obtained in exchange for operating lease obligations	$	3,017	$	5,454

Supplemental balance sheet information related to leases were as follows:


	June 30, 2024		December 31, 2023
Weighted-average remaining lease term (in years):
Operating leases	6.9		6.7
Weighted-average discount rate:
Operating leases	9.4	%	9.2	%

Maturities of lease liabilities, as of June 30, 2024, were as follows (in thousands):


Year ending December 31,	Operating Leases
2024 (remaining)	$	14,409
2025	18,573
2026	11,107
2027	8,022
2028	6,803
2029 and Thereafter	36,609
Total lease payments	95,523
Less: Imputed interest	(26,812)
Total lease obligations	$	68,711

10.STOCKHOLDERS’ EQUITY AND EQUITY-BASED COMPENSATION

Stockholders’ Equity

Pursuant to the Amended and Restated Certificate of Incorporation, we are authorized to issue 1,525,000,000 shares, consisting of (i) 1,500,000,000 shares of Common Stock and (ii) 25,000,000 shares of preferred stock. Holders of Common Stock are entitled to one vote per share; provided, that by agreement (i) certain Incremental Term Lenders that are not “citizens of the United States” (as defined in 49 USC § 40102(a)(15)(C)) (collectively, the “Non-Citizen Investors”), may be afforded collective voting rights equal to 1% of all shares of Common Stock entitled to vote at a meeting of the Company’s stockholders; (ii) for so long as such Non-Citizen Investors collectively hold such shares of Common Stock, the shares of Common Stock held by CK Wheels in excess of 23.9% of all shares of Common stock entitled to vote at a meeting of the Company’s stockholders, will not have voting rights (subject to ratable adjustment if the Non-Citizen Investors cease to own (beneficially or of record) a certain number of shares of Common Stock); and (iii) any shares owned by Delta above 29.9% will be neutral shares with respect to voting rights, will be voted in proportion to all other votes cast (“for”, “against” or “abstain”) by stockholders other than Delta at a meeting of the Company’s stockholders.

Equity-Based Compensation

The Company’s outstanding equity-based compensation awards to its directors, executive officers, employees and other eligible personnel have been made pursuant to the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan, as amended and restated effective April 1, 2023 (as amended by the LTIP Amendment (as defined herein), the “Amended and Restated 2021 LTIP”), the Wheels Up Experience Inc. 2022 Inducement Grant Plan, dated June 30, 2022 (the “2022 Inducement Grant Plan”), the Wheels Up Experience Inc. Performance Award Agreement, dated as of November 30, 2023, granted to George Mattson (the “CEO Performance Award”), the Wheels Up Experience Inc. Performance Award Agreement, dated as of March 3, 2024, granted to Todd Smith (the “CFO Performance Award”), the Wheels Up Experience Inc. Performance Award Agreement, dated as of May 20, 2024, granted to David Harvey (the “CCO Performance Award” and, collectively with the CEO Performance Award and CFO Performance Award, the “Executive Performance Awards”), nine equity-based compensation plans that were

approved by the board of directors of WUP (collectively, the “WUP Management Incentive Plan”) prior to the business combination consummated on July 13, 2021 (the “Business Combination Closing Date”) between WUP and Aspirational Consumer Lifestyle Corp. (“Aspirational”), a blank check company (the “Business Combination’), and the Wheels Up Partners Holdings LLC Option Plan (the “WUP Option Plan”), which was approved by the board of directors of WUP prior to the Business Combination. Additional details about these equity-based compensation arrangements are below.

WUP Management Incentive Plan

In March 2014, the WUP Management Incentive Plan was established, which provided for the issuance of WUP profits interests, restricted or unrestricted, to employees, consultants and other qualified persons. Following the consummation of the Business Combination, no new grants can be made under the WUP Management Incentive Plan. As of June 30, 2024, an aggregate of 3.1 million WUP profits interests have been authorized and issued under the WUP Management Incentive Plan. Vested WUP profits interests are eligible to be exchanged into shares of Common Stock before July 13, 2031. Amounts of WUP profits interests reported in the tables below represent the maximum number of WUP profits interests outstanding or that could be realized upon vesting and immediately exchanged for the maximum number of shares of Common Stock. The actual number of shares of Common Stock received upon exchange of such WUP profits interests will depend on the trading price per share of Common Stock at the time of such exchange.

The following table summarizes the WUP profits interests activity under the WUP Management Incentive Plan as of June 30, 2024:


	Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value
	(in thousands)
Outstanding WUP profits interests as of January 1, 2024	2,881	$	4.16
Granted	—	—
Exchanged	—	—
Expired/forfeited	—	—
Outstanding WUP profits interests as of June 30, 2024	2,881	$	4.16

The weighted-average remaining contractual term as of June 30, 2024, for WUP profits interests outstanding was approximately 7.0 years. All WUP profits interests were vested as of December 31, 2023.

WUP Option Plan

In December 2016, the WUP Option Plan was established, which provided for the issuance of stock options to purchase WUP common interests at an exercise price based on the fair market value of the interests on the date of grant. Generally, WUP stock options granted vest over a four-year service period and expire on the tenth anniversary of the grant date. As of June 30, 2024, the number of WUP stock options authorized and issued in the aggregate under the WUP Option Plan was 1.8 million. Each outstanding WUP stock option is exercisable for one share of Common Stock.

The following table summarizes the activity under the WUP Option Plan as of June 30, 2024:


	Number of WUP Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value
	(in thousands)
Outstanding WUP stock options as of January 1, 2024	1,129	$	75.45	$	12.64
Granted	—	—		—
Exercised	—	—		—
Forfeited	(124)	74.58		9.92
Expired	—	—		—
Outstanding WUP stock options as of June 30, 2024	1,005	$	75.56	$	12.97
Exercisable WUP stock options as of June 30, 2024	1,005	$	75.56	$	12.97

The aggregate intrinsic value as of June 30, 2024, for WUP stock options that were outstanding and exercisable was nil. The weighted-average remaining contractual term as of June 30, 2024, for WUP stock options that were outstanding and exercisable was approximately 5.0 years. All WUP stock options were vested as of December 31, 2023.

Amended and Restated 2021 LTIP & 2022 Inducement Grant Plan

In connection with the Business Combination, the Wheels Up Board of Directors (the “Board”) and stockholders of Wheels Up adopted the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “Original 2021 LTIP”), for employees, consultants and other qualified persons. Following approval by the Board, (i) at the 2023 annual meeting of the Company’s stockholders, the Company’s stockholders approved the Amended and Restated 2021 LTIP to increase the aggregate number of shares of Common Stock available for awards made thereunder by 2,415,000 shares and amend certain other plan provisions, and (ii) at the 2024 annual meeting of the Company’s stockholders (the “2024 Annual Meeting”), the Company’s stockholders approved Amendment No. 1 to the Amended and Restated 2021 LTIP (the “LTIP Amendment”), to increase the aggregate number of shares of Common Stock available for awards made under the Amended and Restated 2021 LTIP by 25,000,000 shares and extend the termination date of such plan to April 15, 2034. The Amended and Restated 2021 LTIP provides for the grant of incentive options, nonstatutory options, restricted stock, restricted stock units (“RSUs”), including performance-based RSUs (“PSUs”), rights, other stock-based awards, performance awards, cash awards or any combination of the foregoing. As of June 30, 2024, an aggregate of 30.1 million shares were authorized for issuance under the Amended and Restated 2021 LTIP.

On June 30, 2022, the Board adopted the 2022 Inducement Grant Plan to be used for a one-time employment inducement grant, pursuant to NYSE Rule 303A.08, for Todd Smith, in connection with his appointment as Chief Financial Off

Wheels Up Experience Inc. [UP] Filings
Wheels Up Experience Inc. [WSUPW] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-09]
10-K	[2024-03-07]
10-Q	[2023-11-09]
10-Q	[2023-08-14]
10-Q	[2023-05-09]
10-K	[2023-03-31]
10-Q	[2022-11-09]
10-Q	[2022-08-11]
10-Q	[2022-05-13]
10-K	[2022-03-10]
10-Q	[2021-11-10]
10-Q	[2021-08-19]
S-1	[2021-08-03]
10-Q	[2021-05-24]
10-K	[2021-03-15]
10-Q	[2020-11-16]
S-1	[2020-09-04]

Wheels Up Experience Inc. [UP] Filings

Wheels Up Experience Inc. [WSUPW] Filings