Welcome to Wheels Up's Third Quarter 2024 Earnings Conference Webcast. It is my pleasure to introduce Keith Ferguson. Mr. Ferguson, you may begin the conference..

Thank you. This morning, we announced our third quarter results. The earnings release with its supporting tables as well as a copy of today's presentation can be found on our Investor Relations website at wheelsup.com/investors. Please refer to the slide with our disclaimer.

Today's presentation contains forward-looking statements based on our current forecasts and expectations of future events. These statements should be considered estimates only, and actual results may differ materially. During today's webcast, we will refer to non-GAAP financial measures as outlined by SEC guidelines.

Unless otherwise noted, all income statement-related financial measures will be non-GAAP other than revenue. Reconciliations of GAAP to non-GAAP financial measures and definitions of non-GAAP financial measures and key operating metrics can be found in the financial tables of our earnings release and appendix of today's presentation.

And with that, I'd like to turn it over to Wheels Up's Chief Executive Officer, George Mattson..

Matthew Knopf, our Chief Legal Officer; Meaghan Wells as EVP of Enterprise Planning and Strategy; and Michael Henny as SVP, Customer Experience.

Until he joined Wheels Up, Matthew served as Senior Vice President and Deputy General Counsel at Delta Airlines from 2015, where he played a pivotal leadership role in the completion of Delta's many significant transactions and key joint venture restructurings. His deep knowledge of the industry and our company has already been invaluable.

Meaghan joins us following her tenure as Chief Investment Officer at Vista Global and her dynamic background, deep private aviation experience and focus on driving strategic growth will be integral in the development of our long-term growth strategy.

Michael joined us just this week in the role of SVP, Customer Experience, following his tenure at Delta. He will be leading our efforts to drive a consistently excellent experience at all of the customer touch points across our enterprise. Before I turn things over to Eric, I also wanted to provide a brief update on our search for our permanent CFO.

The industry has taken notice of the progress we're making as a company, the team we are building and the path we're on for the future. As a result, we have seen strong interest in the role from several great candidates and are working our way through the selection process, which we expect to conclude by the end of the year.

In the meantime, I want to extend my deepest appreciation to Eric for his partnership and the great job he's been doing while we continue our search. And with that, let me turn it over to Eric to run through the details..

one, a review of our third quarter results, including the continued momentum in our business; two, the positive impact we believe our fleet modernization will have on our business; three, the Bank of America transaction and how that is expected to refinance our existing aircraft debt, finance the GrandView transaction and add liquidity to our balance sheet; and four, our confidence in our journey to build the best-run private aviation company.

Starting with a review of the third quarter results. Revenue was $194 million in Q3, roughly flat sequentially, highlighting the stability of our business starting in the first quarter of this year.

As we have mentioned previously, the year-over-year comparison was impacted by the simplification of our operations, including the exit of our aircraft management and our aircraft sales businesses and last year's program changes that allowed us to exit unprofitable flight revenue.

Going forward, we believe our current commercial offering and fleet modernization plans set us up to resume growth in 2025. The decline in membership revenue and members is due to our streamlined product portfolio that gives our customers the option to join up as a member with special benefits, or Fly Up using our more accessible charter offering.

Private jet gross bookings, which captures the full value of our private jet flying was down 20% year-over-year, but only 6% sequentially, reflecting relative stability of our business.

We had previously referred to these metrics as flight transaction value versus gross bookings, but revised the title to align with similar metrics reported by other companies, such as Uber and Lyft.

Private jet gross bookings per live flight leg was $15,990, up 4% year-over-year and reflects the underlying stability of our business and what customers are spending to fly with us on each flight.

Total gross bookings, which represent gross bookings for private jet, group charter and cargo, were down 16% year-over-year, but only 4% sequentially in the third quarter, outperforming private jet gross bookings due to strong group charter revenue from the travel ahead of the presidential elections.

We expect both private jet and total gross bookings will be up sequentially in the fourth quarter. In addition, in June, we streamlined our product portfolio to make it easier for customers to fly with us using our leading charter capabilities.

We expect to introduce additional customer metrics in the future that we believe will provide additional transparency on important drivers of our business today.

Our adjusted contribution margin was 14.8% in the quarter, up significantly sequentially from 7.8% in Q2 and 1% in Q1, and as George mentioned, the highest level since we have been a public company.

That improvement was driven in part by a 26% year-over-year increase in asset utilization and is a reflection of the tough choices we made over the past year that we believe have made us a stronger company today. Adjusted EBITDA loss was $20 million for the quarter, improving by $17 million sequentially.

That reflects the higher adjusted contribution margin that highlights the structural changes we have made to our business as operating costs were flat sequentially. GAAP net loss was $58 million for the quarter, improving by 40% sequentially. Prepaid blocks were $147 million for the quarter, up 86%, nearly double the level a year ago.

We are pleased with our increased traction with corporate customers with corporate block sales up over 50% year-over-year. The strength in prepaid block sales mirrors improved service metrics, the continued strength of our Delta relationship and highlight how our customers are increasingly committing to us.

We believe the fleet modernization plan that George articulated will position us for continued success. We have continued to make great progress in reducing our cash burn with operating cash flow improving 44% sequentially and 94% year-over-year from a cash outflow of $250 million a year ago to $15 million in the current quarter.

That result is a combination of the strength in block sales, benefits from the structural changes we have made as well as improved cash management and continued stability in our deferred revenue balance. Turning to our customer performance metrics.

A year ago, we started on the path to provide transparency to our customers, committing to provide our customer metrics each quarter. For the third quarter, our completion rate was in line with our target of 98%.

However, our on-time performance, which we define as a percent of flights departing within 60 minutes of scheduled time, was 82% and below our target for the quarter, partially driven by summer weather, air traffic control delays and certificate conformity activity. Brand Days, which measure days in the quarter with zero cancellations, were 19.

While that is down sequentially, it was our third best quarter since we started tracking this metric nearly 3 years ago. Our team is working hard every day to improve operational reliability, and we look forward to further benefits as we migrate to our newer fleet.

As George indicated, we expect the addition of the Phenom and Challenger aircraft into our fleet will significantly lower our operating costs for several reasons. First is that maintenance availability is anticipated to be 25% to 50% higher than the aircraft they are replacing. That drives higher asset utilization and lower hourly costs.

Second, we expect improved reliability will lead to greater schedule integrity, which lowers recovery costs and makes crew scheduling much more efficient.

Lastly, the consolidation of our fleet down to 3 fleet types, including our turboprops, will greatly simplify our operations versus managing the 5 aircraft models we have today, which all require specific crews, scheduling and maintenance processes.

When you put it all together, our fleet modernization plan is expected to allow us to deliver an elevated level of financial performance and drive the next stage of our growth, starting now and over the next several years. Turning to liquidity.

We ended the quarter with total liquidity plus reserve deposits of $236 million, which includes cash and cash equivalents, the undrawn revolver from Delta and the $20 million EETC reserve deposit. Looking ahead to Q4, we are working to close a new up to $332 million revolving credit facility with Bank of America.

With the Delta credit support, that facility is expected to be used to fund the $105 million acquisition of GrandView's fleet and refinance our existing EETC aircraft debt.

That anticipated financing, in combination with proceeds from current aircraft sales under contract, is expected to add up to $115 million of cash and liquidity to our balance sheet. In addition, we expect to save over 500 basis points of cash interest compared with today's interest rates.

The 5-year facility has a revolver feature for the first 3 years that gives us added flexibility to sell our existing aircraft and finance newer aircraft purchases as we pay down debt. We expect our fleet modernization plans will be funded with this facility in conjunction with third-party operating leases.

The Citation X sale and lease transaction touched on earlier is expected to contribute to our cash position while providing us important flexibility to execute on our strategy to exit Citation Xs and swap leases for newer Challenger aircraft. This deal enables an orderly transition from Citation X to Challengers over the next 3 years.

With expected proceeds from the Bank of America facility, the pending sale of our Citation X fleet, seasonally higher prepaid block sales and the acquisition of the GrandView fleet, we expect our year-end cash and liquidity position to improve from the end of the third quarter.

You may recall this slide, which we introduced last quarter to highlight the different phases of Wheels Up. After over a year of hard work and structural changes, I'm pleased to report that we are nearing the end of our transition stage. Wheels Up today is a much stronger company with a clear path forward.

As you heard today, we are at the dawn of a new era for Wheels Up and turning our sights to offense as we look to refresh our fleet with newer aircraft and look forward to a resumption of growth in our business. And by that, I mean sustainable and profitable growth.

Our goal remains to be the best-run private aviation company globally, leveraging the strength of our network platform, capitalizing on our competitive advantages and delivering a great experience for our customers. With that, let me now turn it back to George for his concluding remarks..

Thanks, Eric. I'm incredibly proud of the progress we've made over the last year and in particular, over the last quarter here at Wheels Up.

I look forward to the next phase of our customer experience journey, linked to our financial journey, as we complete our fleet transition and continue to standardize an elevated customer experience across our fleet.

To that end, we are hard at work and in discussions with Bombardier, Embraer and other third-party providers on other elements of our product offering that create an elevated, consistent customer experience worth repeating, including standardized delivery and interiors. And we expect to have more to share with you in the coming months.

As always, I want to take this opportunity to thank our best-in-class team here at Wheels Up for their dedication to our culture of continued excellence and the hard work that has enabled all of the existing progress we've shared with you today. It has been an incredibly busy few months.

None of this would be possible without the dedication and commitment of our amazing team.

To our strategic partners, Delta Airlines, I want to extend my appreciation for their continued confidence in the progress we've made and the future we're creating together as evident not only by their support of our prospective financing, but of the recent commitment from Delta, CK Wheels, Cox, Whitebox and Kore Capital to extend their lockup in support of our long-term plan.

And most importantly, thank you once again to our members and customers for their continued loyalty. We take great pride and satisfaction in your feedback that our hard work has paid off, and we are delivering you a more consistently excellent experience.

We are thrilled to be introducing two of the most popular aircraft in private aviation into our offerings in service of executing our vision to deliver the most customer-centric and valuable aviation solutions in the industry. Thank you for your interest..

This concludes today's conference. Thank you all very much for joining..

End of Q&A:.