Wheels Up Experience Inc. Q1 FY2023 earnings call

• Leadership Changes: Ravi Thakran is Executive Chairman, Todd Smith is Interim CEO. Focus on improving business, achieving positive adjusted EBITDA in 2024, and member program changes. - Member Program Changes: New program launching end of June with two primary service areas, focusing King Air fleet in East, offering light/mid/super mid options in both regions, expected to improve flight margins and operational efficiency. - Partnership with Delta: New program for Delta's business customers to get preferential rates on charters and memberships. - Operational Improvements: Managing fleets for better performance, overhauling maintenance operations, consolidating operations center in Atlanta, working on FAA certificate consolidation.

Membership revenue was up 5% year-over-year. Flight revenue was down 2% year-over-year, with a 12% year-over-year increase in flight revenue per live leg offset by a decline in live flight legs; without Air Partner, flight revenue per live flight leg was up 17% year-over-year. Aircraft management revenue was $64 million in the quarter, generally consistent. Other revenue was $35 million, up significantly year-over-year due to increased aircraft sales and Air Partner. Adjusted contribution margin was 1.8% for the first quarter, down sequentially and below guidance of 3.5% to 4%.

Suspended 2023 total guidance, focusing on Q2 outlook. Q2 revenue expected $350M-$360M. Q2 adjusted contribution margin 3%-4%. Q2 adjusted EBITDA loss $39M-$44M. GAAP net loss $95M-$105M. Expect OpEx to end year in low teens of revenue. Capital spending for 2023 in mid-single-digit range of revenue.

Short-term financial variability due to pending program changes, macro environment impact on demand, churn during transition of member program changes.

Q: Revenue guidance for 2023, why suspended?

A: Combination of targeted growth, macro slowdown, and program change transition causing variability.

Q: Prepaid blocks down, signal of consumer pullback?

A: Context of high block sales in prior quarters due to supply constraints; now expecting competitive offers to drive blocks.

Q: Non-core asset dispositions?

A: Continuation of focusing on core business, orderly process of disposing non-core assets.

Q: Cost savings and pricing balance?

A: Efficiency improvements, reduced maintenance costs, targeting dense regions to be competitive and profitable.

Q: Active member retention and churn?

A: Strong core retention, some impact on new memberships due to market balance; transition may cause some churn.