Private jet charter company Wheels Up announced on Tuesday that it had received a rescue package of $500 million from Delta Air Lines and investment firms Certares Management and Knighthead Capital Management. In return, the company will give up 95% of its common stock.
Wheels Up, which offers private flights “on demand,” has struggled to remain in business amid financial losses caused by slumping demand for their services. The company attempted several measures in order to improve its financial position, including management changes and job cuts.
After previous measures didn’t give positive results, Wheels Up announced earlier this week that it is considering several other options, including filing for bankruptcy. But now that scenario will be avoided thanks to the $400 million term loan provided by Delta and two investment firms. The non-binding deal will also consist out of a $100 million liquidity facility provided by Delta.
“The partnership will create new opportunities for Wheels Up to drive strategic, operational, and financial improvements for its customers in the months and years ahead,” said Delta Airlines’ CEO Ed Bastian. “Delta’s unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability, and aircraft maintenance, combined with Certares’ and Knighthead’s experience and global reach, are expected to speed Wheels Up on its path to profitability.”
After the news came out, Wheels Up’s stock surged from Monday’s close price of $1.40 per share to $2.03 at one point on Tuesday.