Wheels Up CEO: ‘Demand is at unprecedented levels'

Wheels Up CEO Kenny Dichter speaks with Yahoo Finance about the company's earnings and the outlook for private aviation.

Video transcript

BRAD SMITH: Welcome back, everyone. Wheels Up fourth quarter results reached new altitude, reporting a record $345 million in revenue for the period while active members grew 31% year over year to 12,040 in total. Joining us now with more detail on the results and the outlook, we've got Kenny Dichter, who is the CEO of Wheels Up.

Kenny, great to speak with you here today on the results. Most notably here, I think many want to know, can you sustain these types of levels that you saw over the most recent quarter considering it was a record quarter for the fourth quarter that just came in?

KENNY DICHTER: Hello. Yeah, demand is at unprecedented levels in our space in our industry. And we have a unique model where we are able to get member money up front and advance the services rendered. We had a record $540 million come in in the fourth quarter, which gives us tremendous revenue visibility into 2022. All indications are that our industry and our space are going to have another record year. And we feel like the demand is going to be there for a long time into the future.

Our opportunity is to become the Uber, Airbnb, Amazon of the space, which has really developed the first global marketplace, and make this a lot more affordable, accessible, and simpler to go get your private jet.

EMILY MCCORMICK: Kenny, this is Emily here. As Brad was breaking down, fourth quarter results were better than expected on the top and bottom lines. Your stock was down almost 9% today. What do you think investors were responding to?

KENNY DICHTER: Well, I think, look. You have to have a long term view on Wheels Up if you want to be a good investor. We're finding our investor base here. We came out as a SPAC in July of this year. We raised $650 plus in that SPAC offering. And I think we're in great position. We exit the year with $750 million plus of cash. We have an ability to back lever a couple of hundred million worth of our aircraft. So we see an incredible opportunity for investors to join our ride.

We just did a great deal in Europe with Air Partner, took them off the London Stock Exchange, hoping that that deal will close in the next few weeks. So we're going after this in a global way.

RACHELLE AKUFFO: And speaking of what we're seeing globally, obviously what we're seeing with oil prices also affecting jet fuel prices that have been hovering at a 13 year high. How were you adapting to those changes and headwinds? Is it a case of having to up prices, or perhaps trying to find ways not to pass it onto the consumer?

KENNY DICHTER: Well, our consumer has a lot of elasticity. He or she and the businesses are very, very sophisticated. They watch the price of oil every day. Like other transportation companies, we're passing on a fuel surcharge to help us recover on that. We're putting it in for April 9 of this year. And the initial reaction to it, very positive. Everybody that's in our membership and in our community understands that we need to be able to recover, and if fuel moves the way it has moved, to have levers to pull so that we can deliver them the great service that they're accustomed to.

BRAD SMITH: Kenny, you mentioned the parallel of trying to be looked at as the Uber, or the Lyft of the skies. Of course, for Uber and Lyft, they have their driver community that's looked at as contractors. And it takes a lot of drivers to make that demand be fulfilled. And so with that in mind, for the structure that you're looking at going forward from here, how many pilots is it going to take as you scale up? And what is that compensation like? How do you look at those pilots? Are they contractors? Or are they members of the team and employees of Wheels Up?

KENNY DICHTER: Well, our first party pilots are employees. They're partners. They're the best aviators in the world. And I'm proud to be in business with them. We have the first party business, a second party business where we manage people and businesses airplanes. And we can use their assets when they're not using them. Those pilots are on those folks' payroll, but we're able to access the planes and pay for them on an hourly basis. Then of course, the third party, we're in the most fragmented analog business in the world. And we're bringing digitization and technology.

We just hired a president six months ago Vinayak Hegde who comes from Amazon, Airbnb. And what we're trying to do is create a marketplace where that third party looks at Wheels Up as its demand generator. And we put all this together and actually make the whole business more efficient and get more utilization out there. But the pilots are key. The Wheels Up first party pilots that make up our fleet, our second party managed pilots, they're all in the family.

EMILY MCCORMICK: Have you been able to find enough pilots and crew to meet demand? Or what have those supplies looked like? Because we have been hearing from some major airlines at least in recent months that some of those supply side labor side constraints have been an issue.

KENNY DICHTER: We put the pedal to the metal on hiring pilots. We on our November call said we were going to go out and get pilots. We hired over 150, effective this earnings call from last. And we did an acquisition called Alante, 12 airplanes out of Arizona, 40 pilots come there. You've got to be aggressive. We are a premium player in the space. Our pilots are the only pilots that have equity based compensation because we're a public company, the first public company in our space on the New York Exchange.

So our pilots are our partners. I think we have a very attractive package to offer pilots around the world to come join Wheels Up.

RACHELLE AKUFFO: All right. [INAUDIBLE] thank you for your time this afternoon. Kenny Dichter, the Wheels Up CEO. Thank you for your time.