Private charter provider Wheels Up announced on Thursday that George Mattson is taking over as the company’s new CEO. Mattson succeeds company founder Kenny Dichter, who stepped down from the role last May following reports that Wheels Up posted losses of $555 million in 2022. As previously reported by AVweb, Delta Air Lines agreed to provide $500 million in funding and assumed 95 percent ownership of Wheels Up last month.
“In 10 years, Wheels Up has grown from a startup into a global leader in private aviation, with a strong consumer brand and loyal member community,” said Mattson. “I look forward to leading the Wheels Up team, with the operational, commercial, strategic and financial support of Delta and our other new investors.”
A member of Delta’s board of directors, Mattson has previously held positions as a partner and co-head of the Global Industrials Group in Investment Banking at Goldman Sachs & Co. and lead investor and chairman of Tropic Ocean Airways. Wheels Up noted that he will be based in Atlanta, where the company recently opened its new Member Operations Center. Mattson is expected to officially step into the CEO position in early October.
Interesting that an airline would invest a half a billion in a company that lost over $63,000 an hour, every hour, in 2022. That’s over a grand a minute. And here we’ve been told how impoverished these airlines are. Hopefully the new CEO knows how to turn red to black, so the struggling investor can recoup some dough.
Wheels Up acquired Delta Private Jets (a successful company Delta owned privately) in 2020. So I would say they’re well positioned to take over the charter business once again, especially considering Delta already has a loyal following of business flyers. Not to mention the staff and software to manage flight schedules and their own in-house MRO to handle maintenance.
Wheels Up has a flawed business model. Delta has made a decision that defies common sense. The accounting methodology permits unrestricted use of funds pre-paid by clients. The funds are not in a trust until the service is used and then released. Everything you pay in advance is spent by Wheels Up before you use your first pre-paid hours.
The business model relies on continuous increasing pre paid sales to keep the wolves at bay. The accounting of the yet to be used pre-paid funds is not viewed as a financial liability. Theres no financial reconciliation of the value of flight hours pre paid but still owed to the client. This is a case of Delta tripling down expecting loyal clients to stay loyal and to create a financial environment that will attract new buyers of pre paid flight hours. Clients buying Wheels Up pre paid hours have zero consumer protections for unused ore paid flight hours. I wish Delta the best but expect this will be a money pit for them.