UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

________________

[Mark One]


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-04321

WHEELS UP EXPERIENCE INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)						98-1617611 (I.R.S. Employer Identification No.)

601 West 26th Street, Suite 900, New York, New York (Address of Principal Executive Offices)						10001 (Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 257-5252

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

New York Stock Exchange

Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50

UP WS

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐þ

Non-accelerated Filer

þ☐

Smaller reporting company

þ☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of ~~August 9, 2022, 244,472,138~~May 8, 2023, 251,613,698 shares of Class A common stock, $0.0001 par value per share, were ~~issued and~~ outstanding.

TABLE OF CONTENTS


		Page
PART I.	Financial Information
Item 1.	~~Item 1.~~Financial Statements	~~Financial Statements (unaudited)~~1
	Condensed Consolidated Balance Sheets as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	1
	Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~	23
	Condensed Consolidated Statements of Comprehensive Loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~	3
	~~Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021~~	4
	Condensed Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~	67
	Notes to the Condensed Consolidated Financial Statements	68
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4442
Item 4.	Controls and Procedures	4543

PART II.	Other Information
Item 1.	Legal Proceedings	4645
Item 1A.	Risk Factors	4645
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4746
Item 3.	Defaults Upon Senior Securities	4746
Item 4.	Mine Safety Disclosures	4746
Item 5.	Other Information	4746
Item 6.	Exhibits	4847
	Signatures	4948

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of the control of Wheels Up Experience Inc. (“Wheels Up”, or “we”, “us”, or “our”), that could cause actual results to differ materially from the results discussed in the forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding the expectations, hopes, beliefs, intentions or strategies of Wheels Up regarding the future, including, without limitation, statements regarding: (i) the size, demands and growth potential of the markets for Wheels Up’s products and services and Wheels Up’s ability to serve those ~~markets,~~markets; (ii) the degree of market acceptance and adoption of Wheels Up’s products and services including member program changes; (iii) Wheels Up’s ability to develop innovative products and services and compete with other companies engaged in the private aviation ~~industry,~~industry; (iv) Wheels Up’s ability to attract and retain ~~customers,~~customers; (v) the impact of Wheels Up’s operational efficiency and ~~(v)~~cost reduction efforts on its business and results of operations, including the timing and magnitude of such expected reductions and any associated expenses and impact of the new member operations center; (vi) Wheels Up’s ability to maintain cost discipline and achieve positive Adjusted EBITDA (as defined herein) pursuant to the schedule that it has announced; (vii) Wheels Up’s liquidity, future cash flows, acquisition activities, measures intended to increase Wheels Up’s operational efficiency and certain restrictions related to our debt obligations; and (viii) general economic and geopolitical conditions, including due to fluctuations in interest rates, inflation, foreign currencies, consumer and business spending decisions, and general levels of economic activity. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that statement is not forward-looking. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual events and results to differ materially from those contained in such forward-looking statements, including those described in ~~the “Risk Factors” described under Part I, Item 1A in~~ our ~~most recent~~ Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022 under Part I, Item 1A — “Risk Factors,” in this Quarterly Report under Part I, Item 2 — “Management’s Discussion and Analysis of Operations” and Part II, Item 1A ~~of this Quarterly Report,~~— “Risk Factors,” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Wheels Up undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report or to conform these statements to actual results or revised expectations.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


		June 30, 2022 (Unaudited)		December 31, 2021			March 31, 2023 (Unaudited)		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	426,984	$	784,574	Cash and cash equivalents	$	363,177	$	585,881
Accounts receivable, net	Accounts receivable, net	114,024		79,403		Accounts receivable, net	107,659		112,383
Other receivables		12,111		8,061

Parts and supplies inventories, net	Parts and supplies inventories, net	12,355		9,410		Parts and supplies inventories, net	39,326		29,000
Aircraft inventory	Aircraft inventory	30,464		—		Aircraft inventory	10,368		24,826
Aircraft held for sale		37,375		18,101

Prepaid expenses	Prepaid expenses	40,481		21,789		Prepaid expenses	47,356		39,715
Other current assets	Other current assets	18,144		11,736		Other current assets	35,243		27,814
Total current assets	Total current assets	691,938		933,074		Total current assets	603,129		819,619
Property and equipment, net	Property and equipment, net	389,395		317,836		Property and equipment, net	398,710		394,559
Operating lease right-of-use assets	Operating lease right-of-use assets	113,291		108,582		Operating lease right-of-use assets	99,036		106,735
Goodwill	Goodwill	528,327		437,398		Goodwill	350,233		348,118
Intangible assets, net	Intangible assets, net	154,666		146,959		Intangible assets, net	136,189		141,765
Restricted cash		27,432		2,148

Other non-current assets	Other non-current assets	63,998		35,067		Other non-current assets	123,166		112,429
Total assets	Total assets	$	1,969,047	$	1,981,064	Total assets	$	1,710,463	$	1,923,225

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of long-term debt						Current maturities of long-term debt	$	27,006	$	27,006
Accounts payable	Accounts payable	$	61,957	$	43,672	Accounts payable	42,225		43,166
Accrued expenses	Accrued expenses	124,073		107,153		Accrued expenses	137,718		148,947
Deferred revenue, current	Deferred revenue, current	1,039,279		933,527		Deferred revenue, current	975,735		1,075,133
Operating lease liabilities, current		28,378		31,617
Intangible liabilities, current		2,000		2,000

Other current liabilities	Other current liabilities	16,678		17,068		Other current liabilities	48,964		49,968
Total current liabilities	Total current liabilities	1,272,365		1,135,037		Total current liabilities	1,231,648		1,344,220
Deferred revenue, non-current		1,793		1,957
Long-term debt, net						Long-term debt, net	220,397		226,234

Operating lease liabilities, non-current	Operating lease liabilities, non-current	90,801		83,461		Operating lease liabilities, non-current	77,138		82,755
Warrant liability		4,508		10,268
Intangible liabilities, non-current		13,083		14,083

Other non-current liabilities	Other non-current liabilities	3,741		30		Other non-current liabilities	18,093		18,096
Total liabilities	Total liabilities	1,386,291		1,244,836		Total liabilities	1,547,276		1,671,305
Commitments and contingencies (Note 11)		0		0

Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)

Equity:	Equity:					Equity:
Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 246,187,546 shares issued and 244,274,300 shares outstanding as of June 30, 2022; and 245,834,569 shares issued and outstanding as of December 31, 2021		25		25
Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 254,258,113 and 251,982,984 shares issued and 251,613,698 and 249,338,569 common shares outstanding as of as of March 31, 2023 and December 31, 2022, respectively						Class A common stock, $0.0001 par value; 2,500,000,000 authorized; 254,258,113 and 251,982,984 shares issued and 251,613,698 and 249,338,569 common shares outstanding as of as of March 31, 2023 and December 31, 2022, respectively	25		25
Additional paid-in capital	Additional paid-in capital	1,499,864		1,450,839		Additional paid-in capital	1,556,718		1,545,508
Accumulated deficit	Accumulated deficit	(902,126)		(720,713)		Accumulated deficit	(1,376,739)		(1,275,873)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,318)		—		Accumulated other comprehensive loss	(9,130)		(10,053)
Treasury stock, at cost, 1,913,246 and 0 shares, respectively		(6,689)		—
Total Wheels Up Experience Inc. stockholders’ equity		582,756		730,151
Non-controlling interests		—		6,077
Total equity		582,756		736,228
Total liabilities and equity		$	1,969,047	$	1,981,064


Treasury stock, at cost, 2,644,415 and 2,644,415 shares, respectively	(7,687)		(7,687)
Total Wheels Up Experience Inc. stockholders’ equity	163,187		251,920
Non-controlling interests	—		—
Total equity	163,187		251,920
Total liabilities and equity	$	1,710,463	$	1,923,225

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenue $ 425,512 $ 285,580 $ 751,147 $ 547,237
Costs and expenses:
Cost of revenue 408,898 255,188 741,656 489,695
Technology and development 14,606 8,025 25,797 15,049
Sales and marketing 33,688 17,895 56,931 33,689
General and administrative 46,973 15,786 85,877 33,955
Depreciation and amortization 16,134 13,482 30,362 27,313
Gain on sale of aircraft held for sale (663) — (2,634) —
Total costs and expenses 519,636 310,376 937,989 599,701
Loss from operations (94,124) (24,796) (186,842) (52,464)
Other income (expense):
Change in fair value of warrant liability 2,129 — 5,760 —
Interest income 405 6 482 18
Interest expense — (4,164) — (8,721)
Other expense, net (850) — (880) —
Total other income (expense) 1,684 (4,158) 5,362 (8,703)
Loss before income taxes (92,440) (28,954) (181,480) (61,167)
Income tax expense (320) — (320) —
Net loss (92,760) (28,954) (181,800) (61,167)
Less: Net loss attributable to non-controlling interests — (2,798) (387) (5,602)
Net loss attributable to Wheels Up Experience Inc. $ (92,760) $ (26,156) $ (181,413) $ (55,565)
Net loss per share of Class A common stock:
Basic $ (0.38) $ (0.15) $ (0.74) $ (0.33)
Diluted $ (0.38) $ (0.15) $ (0.74) $ (0.33)
Weighted-average shares of Class A common stock outstanding:
Basic 244,086,036 169,023,943 244,347,439 168,935,745
Diluted 244,086,036 169,023,943 244,347,439 168,935,745

~~The accompanying notes are an integral part of these condensed consolidated financial statements~~

~~WHEELS UP EXPERIENCE INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

~~(Unaudited, in thousands)~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net loss $ (92,760) $ (28,954) $ (181,800) $ (61,167)
Other comprehensive loss:
Foreign currency translation adjustments (8,318) — (8,318) —
Comprehensive loss (101,078) (28,954) (190,118) (61,167)
Less: Comprehensive loss attributable to non-controlling interests — (2,798) (387) (5,602)
Comprehensive loss attributable to Wheels Up Experience Inc. $ (101,078) $ (26,156) $ (189,731) $ (55,565)


	Three Months Ended March 31,
	2023		2022
Revenue	$	351,812	$	325,635

Costs and expenses:
Cost of revenue	353,791		332,758
Technology and development	15,873		11,191
Sales and marketing	25,803		23,243
General and administrative	39,416		38,904
Depreciation and amortization	14,445		14,228
Gain on sale of aircraft held for sale	(866)		(1,971)
Total costs and expenses	448,462		418,353

Loss from operations	(96,650)		(92,718)

Other income (expense):
Change in fair value of warrant liability	125		3,631
Interest income	3,821		77
Interest expense	(8,119)		—
Other expense, net	145		(30)
Total other income (expense)	(4,028)		3,678

Loss before income taxes	(100,678)		(89,040)

Income tax expense	(188)		—

Net loss	(100,866)		(89,040)
Less: Net loss attributable to non-controlling interests	—		(387)
Net loss attributable to Wheels Up Experience Inc.	$	(100,866)	$	(88,653)

Net loss per share of Class A common stock:
Basic and diluted	$	(0.40)	$	(0.36)


Weighted-average shares of Class A common stock outstanding:
Basic and diluted	253,345,272		244,609,635

The accompanying notes are an integral part of these condensed consolidated financial statements

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)


	Three Months Ended March 31,
	2023		2022
Net loss	$	(100,866)	$	(89,040)
Other comprehensive loss:
Foreign currency translation adjustments	923		—
Comprehensive loss	(99,943)		(89,040)
Less: Comprehensive loss attributable to non-controlling interests	—		—
Comprehensive loss attributable to Wheels Up Experience Inc.	$	(99,943)	$	(89,040)

The accompanying notes are an integral part of these condensed consolidated financial statements

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands, except share data)


		Class A common stock									Treasury stock								Class A common stock									Treasury stock
		Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total			Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2021		245,834,569	$	25	$	1,450,839	$	(720,713)	—		—	$	—	$	6,077	$	736,228
Balance as of December 31, 2022																		Balance as of December 31, 2022	251,982,984	$	25	$	1,545,508	$	(1,275,873)	$	(10,053)	2,644.415	$	(7,687)	$	—	$	251,920
Equity-based compensation	Equity-based compensation	—	—		13,659		—		—		—	—		8,895		22,554		Equity-based compensation	—	—		9,951		—		—		—	—		1,259		11,210
Change in non-controlling interests allocation	Change in non-controlling interests allocation	—	—		11,743		—		—		—	—		(11,743)		—		Change in non-controlling interests allocation	—	—		1,259		—		—		—	—		(1,259)		—
Shares withheld for employee taxes on vested equity awards		—	—		—		—		—		1,682,380	(6,107)		—		(6,107)

Issuance of Class A common stock upon settlement of restricted stock units	Issuance of Class A common stock upon settlement of restricted stock units	76,732	—		—		—		—		—	—		—		—		Issuance of Class A common stock upon settlement of restricted stock units	2,275,129	—		—		—		—		—	—		—		—
Net loss	Net loss	—	—		—		(88,653)		—		—	—		(387)		(89,040)		Net loss	—	—		—		(100,866)		—		—	—		—		(100,866)
Balance as of March 31, 2022		245,911,301	$	25	$	1,476,241	$	(809,366)	$	—	1,682,380	$	(6,107)	$	2,842	$	663,635
Equity-based compensation		—	—		12,328		—		—		—	—		8,453		20,781
Change in non-controlling interests allocation		—	—		11,295		—		—		—	—		(11,295)		—
Shares withheld for employee taxes on vested equity awards		—	—		—		—		—		230,866	(582)		—		(582)
Issuance of Class A common stock upon settlement of restricted stock units		276,245	—		—		—		—		—	—		—		—
Net loss		—	—		—		(92,760)		—		—	—		—		(92,760)
Foreign currency translation adjustments		—	—		—		—		(8,318)		—	—		—		(8,318)
Balance as of June 30, 2022		246,187,546	$	25	$	1,499,864	$	(902,126)	$	(8,318)	1,913,246	$	(6,689)	$	—	$	582,756
Other comprehensive loss																		Other comprehensive loss	—	—		—		—		923		—	—		—		923
Balance as of March 31, 2023																		Balance as of March 31, 2023	254,258,113	$	25	$	1,556,718	$	(1,376,739)	$	(9,130)	2,644,415	$	(7,687)	$	—	$	163,187

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, in thousands, except share data)


		Class A common stock												Class A common stock							Treasury stock
		Shares	Amount		Additional paid-in capital		Accumulated deficit		Non-controlling interests		Total			Shares	Amount		Additional paid-in capital		Accumulated deficit		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2020		169,717,147	$	17	$	798,478	$	(530,693)	$	26,025	$	293,827
Consideration issued for business combination		3,968,900	—		30,172		—		—		30,172
Balance as of December 31, 2021													Balance as of December 31, 2021	245,834,569	$	25	$	1,450,839	$	(720,713)	—	$	—	$	6,077	$	736,228
Equity-based compensation	Equity-based compensation	—	—		1,160		—		254		1,414		Equity-based compensation	—	—		13,659		—		—	—		8,895		22,554
Change in non-controlling interests allocation	Change in non-controlling interests allocation	—	—		(2,620)		—		2,620		—		Change in non-controlling interests allocation	—	—		11,743		—		—	—		(11,743)		—
Shares withheld for employee taxes on vested equity awards													Shares withheld for employee taxes on vested equity awards	—	—		—		—		1,682,380	(6,107)		—		(6,107)
Issuance of Class A common stock upon settlement of restricted stock units													Issuance of Class A common stock upon settlement of restricted stock units	76,732	—		—		—		—	—		—		—
Net loss	Net loss	—	—		—		(29,409)		(2,804)		(32,213)		Net loss	—	—		—		(88,653)		—	—		(387)		(89,040)
Balance as of March 31, 2021		173,686,047	$	17	$	827,190	$	(560,102)	$	26,095	$	293,200
Equity-based compensation		—	—		1,117		—		231		1,348
Change in non-controlling interests allocation		—	—		(3,106)		—		3,106		—
Net loss		—	—		—		(26,156)		(2,798)		(28,954)
Balance as of June 30, 2021		173,686,047	$	17	$	825,201	$	(586,258)	$	26,634	$	265,594
Balance as of March 31, 2022													Balance as of March 31, 2022	245,911,301	$	25	$	1,476,241	$	(809,366)	1,682,380	$	(6,107)	$	2,842	$	663,635

The accompanying notes are an integral part of these condensed consolidated financial statements.

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
OPERATING ACTIVITIES:
Cash flows from operating activities						Cash flows from operating activities
Net loss	Net loss	$	(181,800)	$	(61,167)	Net loss	$	(100,866)	$	(89,040)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	30,362		27,313		Depreciation and amortization	14,445		14,228
Equity-based compensation						Equity-based compensation	11,538		22,554
Amortization of deferred financing costs and debt discount	Amortization of deferred financing costs and debt discount	—		618		Amortization of deferred financing costs and debt discount	915		—
Equity-based compensation		43,335		2,762
Change in fair value of warrant liability	Change in fair value of warrant liability	(5,760)		—		Change in fair value of warrant liability	(125)		(3,631)
Provision for expected credit losses		200		498

Gain on sale of aircraft held for sale	Gain on sale of aircraft held for sale	(2,634)		—		Gain on sale of aircraft held for sale	(866)		(1,971)
Changes in operating assets and liabilities, net of effects from acquisitions:
Other						Other	(146)		(384)

Changes in assets and liabilities:						Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(17,394)		(1,461)		Accounts receivable	4,118		3,088
Other receivables		(4,050)		(2,091)

Parts and supplies inventories	Parts and supplies inventories	(2,754)		(2,114)		Parts and supplies inventories	(10,323)		(277)
Aircraft inventory	Aircraft inventory	(30,464)		—		Aircraft inventory	4,878		—
Prepaid expenses	Prepaid expenses	(9,442)		413		Prepaid expenses	(8,540)		(8,747)
Other current assets		(520)		(678)

Other non-current assets	Other non-current assets	(27,496)		(49)		Other non-current assets	(8,363)		(25,688)
Operating lease liabilities, net		(563)		(504)

Accounts payable	Accounts payable	9,345		14,158		Accounts payable	(812)		7,599
Accrued expenses	Accrued expenses	(6,979)		(7,275)		Accrued expenses	(10,276)		(6,648)
Other current liabilities		(655)		(508)
Other non-current liabilities		(297)		132

Deferred revenue	Deferred revenue	67,391		(88,958)		Deferred revenue	(99,760)		(30,406)
Other assets and liabilities						Other assets and liabilities	1,701		(1,893)
Net cash used in operating activities	Net cash used in operating activities	(140,175)		(118,911)		Net cash used in operating activities	(202,482)		(121,216)

INVESTING ACTIVITIES:
Cash flows from investing activities						Cash flows from investing activities
Purchases of property and equipment	Purchases of property and equipment	(76,464)		(4,780)		Purchases of property and equipment	(8,750)		(66,343)
Purchases of aircraft held for sale	Purchases of aircraft held for sale	(43,774)		—		Purchases of aircraft held for sale	(98)		(51,073)
Proceeds from sale of aircraft held for sale, net	Proceeds from sale of aircraft held for sale, net	27,135		—		Proceeds from sale of aircraft held for sale, net	5,697		14,942
Acquisitions of businesses, net of cash acquired	Acquisitions of businesses, net of cash acquired	(75,093)		7,844		Acquisitions of businesses, net of cash acquired	—		(11,530)
Capitalized software development costs	Capitalized software development costs	(12,901)		(5,732)		Capitalized software development costs	(7,984)		(5,548)
Other						Other	100		—
Net cash used in investing activities	Net cash used in investing activities	(181,097)		(2,668)		Net cash used in investing activities	(11,035)		(119,552)

FINANCING ACTIVITIES:
Purchases of shares for treasury		(6,689)		—
Cash flows from financing activities						Cash flows from financing activities

Purchase of Shares for Treasury						Purchase of Shares for Treasury	—		(6,107)

Repayments of long-term debt	Repayments of long-term debt	—		(29,250)		Repayments of long-term debt	(6,752)		—
Payments of deferred offering costs		—		(1,426)
Repayment of loan to employee		—		102

Net cash used in financing activities	Net cash used in financing activities	(6,689)		(30,574)		Net cash used in financing activities	(6,752)		(6,107)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4,345)		—		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(86)		—

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(332,306)		(152,153)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD		786,722		324,876
CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD		$	454,416	$	172,723
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash consideration issued for business acquisition of Mountain Aviation, LLC		—		$	30,172
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(220,355)		(246,875)
Cash, cash equivalents and restricted cash, beginning of period						Cash, cash equivalents and restricted cash, beginning of period	620,153		786,722
Cash, cash equivalents and restricted, cash end of period						Cash, cash equivalents and restricted, cash end of period	$	399,798	$	539,847

Supplemental disclosure of cash flow information:						Supplemental disclosure of cash flow information:
Cash paid for interest						Cash paid for interest	$	8,100	$	—

The accompanying notes are an integral part of these condensed consolidated financial ~~statements.~~

statement

WHEELS UP EXPERIENCE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.~~ORGANIZATION~~SUMMARY OF BUSINESS AND ~~OPERATIONS~~SIGNIFICANT ACCOUNTING POLICIES

Wheels Up Experience Inc. (together with its consolidated subsidiaries, “Wheels Up”, the “Company”, ~~“our”,~~ “we”, ~~and~~ “us”, or “our”) is a leading ~~brand in~~provider of on-demand private aviation ~~that strives to deliver a total~~in the U.S. and one of the largest private aviation ~~solution.~~companies in the world. Wheels Up offers a complete global aviation solution with a large, modern and diverse fleet, backed by an uncompromising commitment to safety and service. Customers can access membership programs, charter, aircraft management services and whole aircraft sales, as well as unique commercial travel benefits through a strategic partnership with Delta Air Lines, Inc. (“Delta”). Wheels Up also offers freight, safety and security solutions and managed services to individuals, industry, government and civil organizations.

~~On July 13, 2021 (the “Closing Date”), we consummated the transactions contemplated~~Wheels Up is guided by the ~~Agreement~~mission to connect private flyers to aircraft, and ~~Plan~~one another, through an open platform that seamlessly enables life’s most important experiences. Powered by a global private aviation marketplace connecting its base of ~~Merger (as amended, the “Merger Agreement”), dated as~~over 12,000 members and customers to a network of ~~February 1, 2021, as amended on May 6, 2021, by~~more than 1,500 safety-vetted and ~~among Aspirational Consumer Lifestyle Corp., a blank check company originally incorporated as a Cayman Islands exempted company (“Aspirational”),~~verified private aircraft, Wheels Up ~~Partners Holdings LLC, a Delaware limited liability company (“WUP”), Kittyhawk Merger Sub LLC., a Delaware limited liability company and a direct wholly owned subsidiary~~is widening the aperture of ~~Aspirational (“Merger Sub”),~~private travel for millions of consumers globally. With the Wheels Up ~~Blocker Sub LLC, a Delaware limited liability company~~mobile app and ~~a direct wholly owned subsidiary of Aspirational (“Blocker Sub”),~~website, members and customers have the ~~Blocker Merger Subs (as defined in the Merger Agreement)~~digital convenience to search, book and the Blockers (as defined in the Merger Agreement). In connection with the closing of the Merger Agreement, Aspirational filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which Aspirational was domesticated and continues as a Delaware corporation, changing its name to “Wheels Up Experience Inc.” (the “Domestication”).fly.

On the Closing Date, (i) the Blockers simultaneously merged with and into the respective Blocker Merger Subs, with the Blockers surviving each merger as wholly owned subsidiaries of Wheels Up (the “First Step Blocker Mergers”), (ii) thereafter, the surviving Blockers simultaneously merged with and into Blocker Sub, with Blocker Sub surviving each merger (the “Second Step Blocker Mergers”), and (iii) thereafter, Merger Sub merged with and into WUP, with WUP surviving the merger, with Wheels Up as its managing member (the “Company Merger” and collectively with the First Step Blocker Mergers and the Second Step Blocker Mergers, the “Mergers” and, together with the Domestication, the “Business Combination”) (See Note 3).

2.~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Principles of Consolidation and~~ Basis of Presentation

The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of March 31, 2023, and its results of operations, including its comprehensive loss, stockholders' equity and its cash flows for the three months ended March 31, 2023 and 2022. All adjustments are of a normal recurring nature. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending December 31, ~~2021, has been derived from~~2023.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements ~~at that date, but certain~~and related notes ~~or other information that are normally required by U.S. GAAP have been omitted if they substantially duplicate~~included in the ~~disclosures contained in our annual audited consolidated financial statements.~~ Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of ~~Wheels Up Experience Inc.~~the Company and its wholly-owned subsidiaries. We consolidate Wheels Up Partners MIP LLC (“MIP LLC”) and record the profits interests held in MIP LLC that Wheels Up does not own as non-controlling interests (see Note ~~14)~~12). All intercompany transactions and balances have been eliminated in consolidation.

Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, which are normal and recurring, necessary for a fair presentation of the consolidated statement of operations, financial position, and cash flows. Interim results should not be regarded as indicative of results that may be expected for any other period or the entire year. The unaudited interim condensed consolidated financial statements should be read in conjunction with

~~the audited consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2021.~~

Use of Estimates

Preparing the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates due to risks and ~~uncertainties, including uncertainty in the current economic environment due to the coronavirus pandemic, and any evolutions thereof (“COVID-19”).~~uncertainties. The most significant estimates include, but are not limited to, the useful lives and residual values of purchased aircraft, the fair value of financial assets and liabilities, acquired intangible assets, goodwill, contingent consideration and other assets and liabilities, sales and use tax, the estimated life of member relationships, the

determination of the allowance for credit losses, impairment assessments, the determination of the valuation allowance for deferred tax assets and the incremental borrowing rate for leases.

Foreign Currency Translation Adjustments

Assets and liabilities of foreign subsidiaries, where the functional currency is not the United States (“U.S.”) dollar, have been translated at period-end exchange rates and profit and loss accounts have been translated using weighted-average exchange rates. Adjustments resulting from currency translation have been recorded in the equity section of the condensed consolidated balance sheets and the condensed consolidated statements of other comprehensive loss as a cumulative translation adjustment.

~~Interim Impairment Test~~Adopted Accounting Pronouncements and Accounting Pronouncements Note Yet Effective

During the second quarter of 2022, we determined that because of a sustained decrease in the quoted market price of our Class A common stock from the Closing Date, combined with a further decline in our operating margins, there was an indication that a triggering event occurred and the carrying value of our long-lived assets and goodwill may not be recoverable. As a result, we performed an undiscounted cash flow analysis of our long-lived assets for potential impairment as of June 1, 2022, and based on the analysis, it was determined that there was no impairment to our long-lived assets. In addition, we performed an interim quantitative impairment assessment of goodwill on June 1, 2022, using a discounted cash flow approach, which did not result in impairment to goodwill.

~~Reclassifications~~

~~Certain reclassifications~~There have been ~~made~~no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the three months ended March 31, 2023 that are of significance or potential significance to ~~the prior years condensed consolidated financial statements to conform to the current year presentation.~~

~~Adopted Accounting Pronouncements~~

~~In October 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-08,~~ ~~Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~ (ASC 805). This standard simplifies the measurement and recognition of contract assets and contract liabilities from contracts with customers acquired in a business combination. This guidance will generally result in the recognition of contract assets and contract liabilities consistent with those reported by the acquiree immediately before the acquisition date. We adopted ASU 2021-08 on January 1, 2022. This adoption did not have a material impact on our consolidated financial statements.us.

3.~~BUSINESS COMBINATION~~

The Business Combination was accounted for as a reverse recapitalization, where Aspirational was treated as the acquired company for financial reporting purposes. This accounting treatment is the equivalent of Wheels Up issuing stock for the net assets of Aspirational, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Accordingly, WUP is deemed the accounting predecessor of the combined business, and Wheels Up, as the parent company of the combined business, is the successor SEC registrant, meaning that all

~~historical financial information presented in the condensed consolidated financial statements prior to the closing of the Business Combination represents the accounts of WUP.~~

Upon closing of the Business Combination, all outstanding WUP common interests and WUP preferred interests (including WUP restricted interests), as well as shares underlying WUP options, were converted into 190.0 million shares of Class A common stock and rolled over into the combined business. In addition, there were 29.0 million outstanding WUP profits interests recapitalized in connection with the Business Combination that can be exchanged on a value-for-value basis for Class A common stock subject to vesting.

~~Upon closing of the Business Combination, Aspirational and Aspirational’s public shareholders held 6.0 million and 10.6 million shares, respectively, of Class A common stock.~~

All references to numbers of common shares and per common share data prior to the Business Combination in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization. The reported share and per share amounts, have been converted by applying the exchange ratio established in the Merger Agreement of 0.4604, which was based on the Wheels Up implied price per share prior to the Business Combination (the “Exchange Ratio”). On the Closing Date, we received approximately $656.3 million in gross proceeds. In connection with the Business Combination, we incurred $70.4 million of transaction costs, consisting of advisory, legal, share registration and other professional fees, which are recorded within additional paid-in capital as a reduction of proceeds.

~~PIPE Investment~~

In connection with the Business Combination, Aspirational entered into subscription agreements with certain investors (the “PIPE Investors”), whereby Aspirational issued 55,000,000 shares of common stock at a price of $10.00 per share (the “PIPE Shares”) for an aggregate purchase price of $550 million (the “PIPE Investment”), which closed simultaneously with the consummation of the Business Combination. On the Closing Date, the PIPE Shares were automatically converted into shares of Class A common stock on a 1-for-one basis.

~~Earnout Shares~~

Further, as part of the Business Combination, existing holders of WUP equity, including holders of profits interests and restricted interests, but excluding holders of stock options, have the right to receive up to an aggregate of 9,000,000 additional shares of Class A common stock in 3 equal tranches, which are issuable upon the achievement of Class A common stock share price thresholds of $12.50, $15.00, and $17.50 for any 20 trading days within a period of 30 consecutive trading days within five years of the Closing Date, respectively (the “Earnout Shares”).

~~Public Warrants and Private Warrants~~

The warrants assumed in the Business Combination include (i) 7,991,544 redeemable warrants sold by Aspirational as part of its initial public offering (the “Public Warrants”) of 23,974,362 units, consisting of 1 share of Class A common stock and one-third of one warrant exercisable for Class A common stock and (ii) 4,529,950 warrants privately sold by Aspirational at a price of $1.50 per warrant (the “Private Warrants”) to Aspirational Consumer Lifestyle Sponsor LLC (the “Sponsor”) simultaneously with the closing of the Aspirational initial public offering exercisable for Class A common stock.

~~4. PROPERTY AND EQUIPMENT~~

~~Property and equipment consist of the following (in thousands):~~

June 30,
2022 December 31, 2021
Aircraft $ 557,525 $ 482,848
Software development costs 49,520 35,818
Leasehold improvements 9,023 12,584
Computer equipment 2,441 2,147
Buildings and improvements 1,425 1,424
Furniture and fixtures 2,767 1,960
Tooling 3,507 3,129
Vehicles 1,514 1,142
627,722 541,052
Less: Accumulated depreciation and amortization (238,327) (223,216)
Total $ 389,395 $ 317,836

Depreciation and amortization expense of property and equipment was $10.1 million and $19.6 million for the three and six months ended June 30, 2022, respectively, and $8.6 million and $17.6 million for the three and six months ended June 30, 2021, respectively.

Capitalized costs related to the internal development of software was $7.4 million and $12.9 million for the three and six months ended June 30, 2022, respectively, and $3.1 million and $5.7 million for the three and six months ended June 30, 2021, respectively.

Amortization expense related to software development costs, included as part of depreciation and amortization expense of property and equipment, was $3.1 million and $5.3 million for the three and six months ended June 30, 2022, respectively, and $1.5 million and $3.0 million for the three and six months ended June 30, 2021, respectively.

5.2. REVENUE RECOGNITION

Disaggregation of Revenue

The following table disaggregates revenue by service type and the timing of when these services are provided to the member or customer (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Services transferred at a point in time:	Services transferred at a point in time:									Services transferred at a point in time:
Flights, net of discounts and incentives	Flights, net of discounts and incentives	$	284,071	$	212,660	$	520,434	$	403,134	Flights, net of discounts and incentives	$	231,762	$	236,363
Aircraft management	Aircraft management	58,307		47,594		116,356		96,017		Aircraft management	61,242		58,049
Other	Other	55,789		5,450		62,967		9,739		Other	31,807		7,178

Services transferred over time:	Services transferred over time:									Services transferred over time:
Memberships	Memberships	24,020		16,188		44,667		31,162		Memberships	21,680		20,647
Aircraft management	Aircraft management	2,411		2,361		4,868		4,818		Aircraft management	2,452		2,457
Other	Other	914		1,327		1,855		2,367		Other	2,869		941
Total	Total	$	425,512	$	285,580	$	751,147	$	547,237	Total	$	351,812	$	325,635

Revenue in the condensed consolidated statements of operations is presented net of discounts and incentives of ~~$3.5 million and $6.7~~$1.6 million for the three ~~and six~~ months ended ~~June 30, 2022, respectively,~~March 31, 2023, and ~~$4.3~~$3.2 million ~~and $7.5 million, respectively,~~ for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.

Other revenue included within services transferred at a point in time is primarily related to whole aircraft sales of $10.7 million, group charter of $6.4 million and safety and security of $5.9 million for the three months ended March 31, 2023, and whole aircraft sales of $1.1 million for the three months ended March 31, 2022.

Contract Balances

~~Receivables from member and customer contracts are included within accounts~~Accounts receivable, net onconsists of the condensed consolidated balance sheets. As of June 30, 2022 and December 31, 2021, gross receivables from members and customers were $106.3 million and $71.8 million, respectively. As of June 30, 2022 and December 31, 2021, undeposited funds, included within accounts receivable, net, were $12.5 million and $13.5 million, respectively. As of June 30, 2022 and December 31, 2021, the allowance for expected credit losses was $4.8 million and $5.9 million, respectively.following (in thousands):


	March 31, 2023		December 31, 2022
Gross receivables from members and customers	$	108,890	$	112,243
Undeposited funds	6,404		10,122
Less: Allowance for credit losses	(7,635)		(9,982)
Accounts receivable, net	$	107,659	$	112,383

Deferred revenue consists of the following (in thousands):

June 30, 2022 December 31, 2021
Flights - Prepaid Blocks and jet cards $ 989,019 $ 876,750
Memberships - annual dues 42,886 47,069
Memberships - initiation fees 3,785 4,072
Flights - credits 5,190 6,633
Other 192 960
Deferred revenue - total 1,041,072 935,484
Less: Deferred revenue - current (1,039,279) (933,527)
Deferred revenue - non-current $ 1,793 $ 1,957


	March 31, 2023		December 31, 2022
Flights - Prepaid Blocks	$	927,607	$	1,023,985
Memberships - annual dues	41,624		43,970
Memberships - initiation fees	3,677		3,899
Flights - credits	2,423		4,246
Other	2,096		775
Deferred revenue - total	977,427		1,076,875

Less: Deferred revenue - current	(975,735)		(1,075,133)
Deferred revenue - non-current	$	1,692	$	1,742

Changes in deferred revenue for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 were as follows (in thousands):


Deferred revenue ~~- beginning balance~~as of December 31, 2022	$	~~935,484~~1,076,875
Amounts deferred during the period	~~702,882~~173,226
Revenue recognized from amounts included in the deferred revenue beginning balance	~~(378,699)~~(219,462)
Revenue from current period sales	~~(218,595)~~(53,212)
Deferred revenue ~~- ending balance~~as of March 31, 2023	$	~~1,041,072~~977,427

Revenue expected to be recognized in future periods for performance obligations that are unsatisfied, or partially unsatisfied, as of ~~June 30, 2022 approximates $338.0 million for the remaining two quarters of 2022 and $452.1 million, $125.7 million and $125.3 million for~~March 31, 2023 ~~2024 and 2025, respectively.~~were as follows (in thousands):


Remainder of 2023	$	478,252
2024	323,290
2025	88,253
2026	87,632
Total	$	977,427

Costs to Obtain a Contract

Capitalized costs related to sales commissions and referral fees were ~~$5.0 million and $9.3~~$1.6 million for the three ~~and six~~ months ended ~~June 30, 2022, respectively,~~March 31, 2023, and ~~$2.3 million and $4.0~~$4.3 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, capitalized sales commissions and referral fees of ~~$10.2~~$6.7 million and ~~$8.6~~$8.7 million, respectively, ~~are~~were included in ~~other~~Other current assets and ~~$1.6~~$1.1 million and ~~$1.4~~$1.3 million, respectively, ~~are~~were included in ~~other~~Other non-current assets on the condensed consolidated balance sheets. Amortization expense related to capitalized sales commissions and referral fees included in sales and marketing expense in the condensed consolidated statements of operations was ~~$4.2 million and $7.7~~$3.7 million for the three ~~and six~~ months ended ~~June 30, 2022, respectively, and $1.9 million~~March 31, 2023, and $3.5 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022.

6.3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):


	March 31, 2023		December 31, 2022
Aircraft	$	563,934	$	566,338
Software development costs	73,098		65,303
Leasehold improvements	15,769		11,930
Computer equipment	3,719		3,014
Buildings and improvements	1,424		1,424
Furniture and fixtures	3,110		3,208
Tooling	3,998		3,835
Vehicles	1,834		1,538
	666,886		656,590

Less: Accumulated depreciation and amortization	(268,176)		(262,031)
Total	$	398,710	$	394,559

Depreciation and amortization expense of property and equipment was $9.0 million for the three months ended March 31, 2023 and $9.5 million for the three months ended March 31, 2022.

Amortization expense related to software development costs, included as part of depreciation and amortization expense of property and equipment, was $2.8 million for the three months ended March 31, 2023, and $2.3 million for the three months ended March 31, 2022.

4. ACQUISITIONS

Alante Air Charter, LLC Acquisition

On February 3, 2022, we acquired all of the outstanding equity of Alante Air Charter, LLC (“Alante Air”) for a total purchase price of $15.5 million in cash. Alante Air added 12 Light jets to our controlled fleet and expands our presence in the Western U.S. Acquisition-related costs for Alante Air of $0.5 million were included in general and administrative expense in the condensed consolidated statements of operations for the ~~six~~three months ended ~~June 30,~~March 31, 2022. The acquisition of Alante Air was determined to be a business combination.

We have allocated the purchase price for Alante Air to its individual assets and liabilities assumed. ~~While the purchase price allocation is substantially complete, it is still preliminary and subject to change.~~ As of the date of acquisition, the total ~~preliminary~~ purchase price allocated to the Alante Air assets acquired and liabilities assumed according to their estimated fair values were as follows (in thousands):


Current assets	$	4,452
Goodwill	13,069
Other assets	22,048
Total assets acquired	39,569
Total liabilities assumed	(24,101)
Net assets acquired	$	15,468

Current assets of Alante Air included $3.0 million of cash and $1.4 million of accounts receivable, including $15 thousand owed from Wheels Up that was eliminated in consolidation upon acquisition.

Goodwill represents the excess of the purchase price over the fair values of the acquired net tangible assets. The allocated value of goodwill primarily relates to anticipated synergies and economies of scale by combining the use

of Alante Air’s aircraft and existing business processes with our other acquisitions. The acquired goodwill is deductible for tax purposes.

The results of Alante Air were included in the condensed consolidated statement of operations from the date of acquisition. Revenue for Alante Air was $2.6 million, net of intercompany eliminations, and loss from operations was $13.7 million from the date of acquisition through June 30, 2022.

Air Partner plc Acquisition

On April 1, 2022, we acquired all of the outstanding equity of Air Partner plc (“Air Partner”) for a total purchase price of $108.2 million in cash. Air Partner is a United Kingdom-based international aviation services group that provides us with operations in 18 locations across 4four continents. Acquisition-related costs for Air Partner ~~of $2.9 million were~~ included in general and administrative expense in the condensed consolidated statements of operations for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2022 were immaterial. The acquisition of Air Partner was determined to be a business combination.

As of the date of acquisition, the total ~~preliminary~~ purchase price allocated to the Air Partner assets acquired and liabilities assumed according to their estimated fair values were as follows (in thousands):


Current assets	$	~~51,723~~49,617
Property and equipment, net	2,012
Operating lease right-of-use assets	~~2,960~~2,780
Goodwill	~~83,399~~83,910
Intangible assets	~~20,919~~20,921
Restricted cash	27,507
Other assets	~~1,536~~1,686
Total assets acquired	~~190,056~~188,433
Total liabilities assumed	~~(81,865)~~(80,239)
Net assets acquired	$	~~108,191~~108,194

Current assets of Air Partner included $18.0 million of cash and ~~$17.4~~$16.6 million of accounts receivable.

The above initial fair value estimates of the assets acquired and liabilities assumed are provisional. We are still evaluating the fair value of intangible assets, and income taxes, in addition to ensuring all other assets, liabilities and contingencies have been identified and recorded. We have estimated the preliminary fair value of assets acquired and liabilities assumed based on information currently available and will continue to adjust those estimates as additional information pertaining to events or circumstances present at the acquisition date becomes available during the measurement period.

The allocated value of goodwill primarily relates to anticipated synergies and economies of scale by combining the use of Air Partner’s existing business processes with our platform to expand on an international basis. The acquired goodwill is not deductible for tax purposes.

The amounts allocated to acquired intangible assets and their associated weighted-average amortization periods, which were determined based on the period the assets are expected to contribute directly or indirectly to our cash flows, consist of the following:


		Amount (In thousands)		Weighted-Average Amortization Period (Years)		Amount (In thousands)		Weighted-Average Amortization Period (Years)
Customer relationships	Customer relationships	$	16,521	5.7	Customer relationships	$	16,521	5.7
Backlog	Backlog	1,457		1.5	Backlog	1,458		1.5
Trade name	Trade name	1,930		1.9	Trade name	1,931		1.9
Developed technology	Developed technology	1,011		5.8	Developed technology	1,011		5.8
Total acquired intangible assets	Total acquired intangible assets	$	20,919	5.1	Total acquired intangible assets	$	20,921	5.1

The intangible asset fair value measurements are primarily based on significant inputs that are not observable in the market which represent a Level 3 measurement (see Note 9)8). The valuation method used for the Air Partner intangible assets was the income approach.

The results of Air Partner were included in the condensed consolidated statement of operations from the date of acquisition. Revenue for Air Partner was $34.8 million, net of intercompany eliminations, and income from operations was $4.9 million from the date of acquisition through June 30, 2022.

Unaudited Pro Forma Summary of Operations

The accompanying unaudited pro forma summary represents the consolidated results of operations as if the ~~2021 acquisition of Mountain Aviation, LLC had been completed as of January 1, 2021 and the~~ 2022 acquisitions of Alante Air and Air Partner had been completed as of January 1, ~~2021.~~2022. The unaudited pro forma financial results for 2022 reflect the results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, as well as the effects of pro forma adjustments for the transactions in 2022. The unaudited pro forma financial information includes the accounting effects of the acquisitions, including adjustments to the amortization of intangible assets and professional fees associated with the transactions. The pro forma results were based on estimates and assumptions, which we believe are reasonable but remain subject to adjustment. The unaudited pro forma summary does not necessarily reflect the actual results that would have been achieved had the companies been combined during the periods presented, nor is it necessarily indicative of future consolidated results (in thousands, except per share data).

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net revenue $ 425,512 $ 316,908 $ 788,966 $ 605,114
Net loss $ (91,443) $ (27,450) $ (179,132) $ (61,477)
Net loss attributable to Wheels Up Experience Inc. $ (91,443) $ (24,798) $ (178,756) $ (55,846)
Net loss per share $ (0.37) $ (0.15) $ (0.73) $ (0.33)


	Three Months Ended March 31,
	2022
Net revenue	$	363,454
Net loss	$	(87,689)
Net loss attributable to Wheels Up Experience Inc.	$	(87,313)
Net loss per share	$	(0.36)

7.5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents goodwill carrying value and the change in balance, by reporting unit, during the ~~carrying value of goodwill for the six~~three months ended ~~June 30, 2022, was as follows~~March 31, 2023 (in thousands):


~~Balance as of December 31, 2021~~	$	~~437,398~~
~~Acquisition of Alante Air~~	~~13,069~~
~~Acquisition of Air Partner~~	~~83,399~~
~~Foreign currency translation adjustments~~	~~(5,539)~~
~~Balance as of June 30, 2022~~	$	~~528,327~~


	WUP Legacy		Air Partner		Total
Balance as of December 31, 2022(1)	$	270,467	$	77,651	$	348,118
Acquisitions(2)	—		350		350
Foreign currency translation adjustment	—		1,765		1,765
Balance as of March 31, 2023	$	270,467	$	79,766	$	350,233

(1) Net of accumulated impairment losses of $180 million, all of which was recognized on the goodwill attributable to the WUP Legacy reporting unit during the year ended December 31, 2022.

(2) Reflects the current period impact of measurement period adjustments (See Note 4).

Intangible Assets

The gross carrying value, accumulated amortization and net carrying value of intangible assets consisted of the following (in thousands):


		June 30, 2022							March 31, 2023
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value			Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Status	Status	$	80,000	$	19,644	$	60,356	Status	$	80,000	$	25,645	$	54,355
Customer relationships	Customer relationships	89,880		19,081		70,799		Customer relationships	91,121		27,349		63,772
Non-competition agreement	Non-competition agreement	210		210		—		Non-competition agreement	210		210		—
Trade name	Trade name	16,015		6,761		9,254		Trade name	16,161		8,636		7,525
Developed technology	Developed technology	20,480		7,831		12,649		Developed technology	20,556		10,082		10,474
Leasehold interest - favorable	Leasehold interest - favorable	600		69		531		Leasehold interest - favorable	600		85		515
Backlog	Backlog	1,348		271		1,077		Backlog	1,458		1,024		434
Foreign currency translation adjustment								Foreign currency translation adjustment	(1,219)		(333)		(886)
Total	Total	$	208,533	$	53,867	$	154,666	Total	$	208,887	$	72,698	$	136,189


		December 31, 2021							December 31, 2022
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value			Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Status	Status	$	80,000	$	15,644	$	64,356	Status	$	80,000	$	23,644	$	56,356
Customer relationships	Customer relationships	74,600		14,443		60,157		Customer relationships	91,121		24,613		66,508
Non-competition agreement	Non-competition agreement	210		209		1		Non-competition agreement	210		210		—
Trade name	Trade name	14,230		5,493		8,737		Trade name	16,161		8,294		7,867
Developed technology	Developed technology	19,545		6,380		13,165		Developed technology	20,556		9,332		11,224
Leasehold interest - favorable	Leasehold interest - favorable	600		57		543		Leasehold interest - favorable	600		80		520
Backlog								Backlog	1,458		880		578
Foreign currency translation adjustment								Foreign currency translation adjustment	(1,662)		(374)		(1,288)
Total	Total	$	189,185	$	42,226	$	146,959	Total	$	208,444	$	66,679	$	141,765

Amortization expense of intangible assets was ~~$6.5 million and $11.7~~$5.9 million for the three ~~and six~~ months ended ~~June 30, 2022, respectively,~~March 31, 2023, and ~~$5.3 million and $10.6~~$5.2 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~

March 31, 2022.

Intangible Liabilities

The gross carrying value, accumulated amortization and net carrying value of intangible liabilities consisted of the following (in thousands):

June 30, 2022
Gross Carrying
Value Accumulated Amortization Net Carrying
Value
Intangible liabilities $ 20,000 $ 4,917 $ 15,083


	March 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	6,417	$	13,583

December 31, 2021
Gross Carrying
Value Accumulated Amortization Net Carrying
Value
Intangible liabilities $ 20,000 $ 3,917 $ 16,083


	December 31, 2022
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	5,917	$	14,083

Amortization of intangible liabilities, which reduces amortization expense, was $0.5 million ~~and $1.0 million~~ for each of the three ~~and six~~ months ended ~~June 30,~~March 31, 2023, and 2022, ~~respectively, and $0.5 million and $1.0 million for the three and six months ended June 30, 2021,~~ respectively.

Future amortization expense of intangible assets and intangible liabilities held as of ~~June 30, 2022, are~~March 31, 2023, were as follows (in thousands):


Year ending December 31,		Intangible Assets		Intangible Liabilities
2022		$	12,832	$	1,000
2023		23,608		2,000
							Intangible Assets		Intangible Liabilities
Remainder of 2023						Remainder of 2023	$	17,757	$	1,500
2024	2024	22,910		2,000		2024	22,969		2,000
2025	2025	22,497		2,000		2025	22,555		2,000
2026	2026	21,638		2,000		2026	21,694		2,000
Thereafter		51,181		6,083
2027						2027	17,193		2,000
2028 and Thereafter						2028 and Thereafter	34,021		4,083
Total	Total	$	154,666	$	15,083	Total	$	136,189	$	13,583

~~8. CASH,~~6. CASH EQUIVALENTS AND RESTRICTED CASH

Cash Equivalents

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, cash equivalents on the condensed consolidated balance sheets were ~~$330.8~~$269.0 million and ~~$408.1~~$430.3 million, respectively, and generally consisted of investments in money market funds, U.S. treasury bills and time deposits.

Interest income from cash equivalents of $0.4 million and $0.5 million were recorded in interest income in the condensed consolidated statements of operations for the three and six months ended June 30, 2022, respectively, and $6 thousand and $18 thousand for the three and six months ended June 30, 2021, respectively.

Restricted Cash

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, restricted cash, which is presented within Other assets on the condensed consolidated balance sheets, ~~represents amounts~~included $7.7 million held by financial institutions to establish a standby ~~letter~~letters of credit required by the ~~lessor~~lessors of certain corporate office ~~space. In addition,~~space that we leased as of such dates. The standby letters of credit expire on December 31, 2033 and June 30, 2034. The balances as of March 31, 2023 and December 31, 2022 ~~restricted cash~~ also included ~~$25.3~~$28.2 million and $26.3 million, respectively, related to ~~cash received from customers~~funds held but unavailable for Air Partner jet cards. Air Partner jet cards do not have an expiration date and are refundable upon demand by the customer. As such, we are contractually and legally restricted from using Air Partner jet card deposits.

immediate use due to contractual restrictions.

A reconciliation of cash and cash equivalents and restricted cash from the condensed consolidated balance sheets to the condensed consolidated statements of cash flows ~~was~~is as follows (in thousands):


		June 30, 2022		June 30, 2021			March 31, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	426,984	$	160,646	Cash and cash equivalents	$	363,177	$	585,881
Restricted cash	Restricted cash	27,432		12,077		Restricted cash	36,621		34,272
Total	Total	$	454,416	$	172,723	Total	$	399,798	$	620,153

7. LONG-TERM DEBT

The following table presents the components of long-term debt on our condensed consolidated balance sheets (in thousands):


	Weighted Average Interest Rate		March 31, 2023		December 31, 2022
Equipment Notes	12.0	%	$	263,249	$	270,000
Total debt			263,249		270,000
Less: Total unamortized deferred financing costs and debt discount			15,845		16,760
Less: Current maturities of long-term debt			27,006		27,006
Long-term debt			$	220,397	$	226,234

Maturities of our debt for the next five years are as follows (in thousands):


	Maturities
Remainder of 2023	$	20,255
2024	45,767
2025	40,760
2026	35,111
2027	23,211
2028 and Thereafter	98,145
Total	$	263,249

2022-1 Equipment Note Financing

On October 14, 2022, Wheels Up Partners LLC, our indirect subsidiary (“WUP LLC”), issued $270.0 million aggregate principal amount of 12% fixed rate equipment notes (collectively, the “Equipment Notes”) using an EETC (enhanced equipment trust certificate) loan structure. The Equipment Notes were issued for net proceeds (before transaction-related expense) of $259.2 million. The final expected distribution date of the Equipment Notes varies from July 15, 2025 to October 15, 2029, unless redeemed earlier by WUP LLC. The Equipment Notes bear interest at the rate of 12% per annum with annual amortization of principal amount equal to 10% per annum and balloon payments due at each maturity date. The Equipment Notes are secured by first-priority liens on 134 of the Company’s owned aircraft fleet and by liens on certain intellectual property assets of the Company and certain of its subsidiaries.

The Equipment Notes were sold pursuant to a Note Purchase Agreement, dated as of October 14, 2022 (the “Note Purchase Agreement”), and issued under separate Trust Indentures and Mortgages, dated as of October 14, 2022 (each, an “Indenture” and collectively, the “Indentures”). The Note Purchase Agreement and the Indentures and related guarantees contain certain covenants, including a liquidity covenant that requires the Company to maintain minimum liquidity of $125 million, a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the Company, and restrictive covenants that provide limitations under certain circumstances on, among other things: (i) certain acquisitions, mergers or disposals of its assets; (ii) making certain investments or entering into certain transactions with affiliates; (iii) prepaying, redeeming or repurchasing the Equipment Notes, subject to certain exceptions; and (iv) paying dividends and making certain other specified restricted payments. Each Indenture contains customary events of default for Equipment Notes of this type, including cross-default provisions among the Equipment Notes. WUP LLC’s obligations under the Equipment Notes are guaranteed by the Company and certain of its subsidiaries. WUP LLC is also obligated to cause additional subsidiaries and affiliates of WUP LLC to become guarantors under certain circumstances. The Equipment Notes issued with respect to each aircraft are cross-collateralized by the other aircraft for which Equipment Notes were

issued under the Indentures. The maturity of the Equipment Notes may be accelerated upon the occurrence of certain events of default under the Note Purchase Agreement and each Indenture and the related guarantees. As of March 31, 2023, we were in compliance with the covenants under the Note Purchase Agreement and each Indenture and the related guarantees.

As of March 31, 2023, the carrying value of the aircraft that are subject to first-priority liens under the Equipment Notes was $323.4 million.

Interest and principal payments on the Equipment Notes are payable quarterly on each January 15, April 15, July 15 and October 15, which began on January 15, 2023. Amortization expense for debt discounts and deferred financing costs of $0.9 million was recorded in interest expense in the condensed consolidated statement of operations for the three months ended March 31, 2023.

9.8. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, an exit price, in an orderly transaction between unaffiliated willing market participants on the measurement date under current market conditions. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available and activity in the markets used to measure fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.


Level 1 -			Quoted prices, unadjusted, in active markets for identical assets or liabilities that can be accessed at the measurement date.

Level 2 -			Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 -			Unobservable inputs developed using our own estimates and assumptions, which reflect those that market participants would use in pricing the asset or liability.

Financial instruments that are measured at fair value on a recurring basis and their corresponding placement in the fair value hierarchy consisted of the following (in thousands):

June 30, 2022
Level 1 Level 2 Level 3 Fair Value
Assets:
Cash equivalents $ 330,782 $ — $ — $ 330,782
Liabilities:
Warrant liability - Public Warrants 2,877 — — 2,877
Warrant liability - Private Warrants — 1,631 — 1,631
Total liabilities $ 2,877 $ 1,631 $ — $ 4,508
December 31, 2021
Level 1 Level 2 Level 3 Fair Value
Assets:
Cash equivalents $ 408,082 $ — $ — $ 408,082
Liabilities:
Warrant liability - Public Warrants 6,553 — — 6,553
Warrant liability - Private Warrants — 3,715 — 3,715
Total liabilities $ 6,553 $ 3,715 $ — $ 10,268


	March 31, 2023
	Level 1		Level 2		Level 3		Fair Value
Assets:
Money market funds	$	268,940	$	—	$	—	268,940

Total assets	$	268,940	$	—	$	—	$	268,940

Liabilities:
Warrant liability - Public Warrants	$	400	$	—	$	—	$	400
Warrant liability - Private Warrants	—		226		—		226
Equipment Notes	—		—		263,249		263,249
Total liabilities	$	400	$	226	$	263,249	$	263,875

	December 31, 2022
	Level 1		Level 2		Level 3		Fair Value
Assets:
Money market funds	$	230,626	$	—	$	—	$	230,626
Treasury bills	199,700		—		—		199,700
Total assets	$	430,326	$	—	$	—	$	430,326

Liabilities:
Warrant liability - Public Warrants	$	479	$	—	$	—	$	479
Warrant liability - Private Warrants	—		272		—		272
Equipment Notes	—		270,000		—		270,000
Total liabilities	$	479	$	270,272	$	—	$	270,751

The carrying amount of cash equivalents approximates fair value and is classified within Level 1, because we determined the fair value through quoted market prices.

The estimated fair value of the Equipment Notes is categorized as a Level 3 valuation. We considered the relatively short time period between the issuance of the Equipment Notes and the measurement date of March 31, 2023, as well as the estimated fair value of aircraft subject to first priority liens under the Equipment Notes to determine the fair value of the Equipment Notes as of March 31, 2023.

The warrants were accounted for as a liability in accordance with ~~ASC~~Accounting Standards Codification 815-40 (see Note ~~18)~~11). The warrant liability was measured at fair value upon assumption and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we used Level 1 inputs for the Public Warrants (as defined below) and Level 2 inputs for the Private Warrants (as defined below). We valued the ~~warrants~~Private Warrants by applying the valuation technique of a Monte Carlo simulation model to reflect the redemption conditions. ~~We used Level 1 inputs for the Public Warrants and Level 2 inputs for the Private Warrants.~~ The Private Warrants are substantially similar to the Public Warrants, but are not directly traded or quoted on an active trading market.

The following table presents the changes in the fair value of the warrant liability (in thousands):

Public Warrants Private Warrants Total
Warrant Liability
Fair value as of December 31, 2021 $ 6,553 $ 3,715 $ 10,268
Change in fair value of warrant liability (3,676) (2,084) (5,760)
Fair value as of June 30, 2022 $ 2,877 $ 1,631 $ 4,508


	Public Warrants		Private Warrants		Total Warrant Liability
Fair value as of December 31, 2022	$	479	$	272	$	751
Change in fair value of warrant liability	(80)		(45)		(125)
Fair value as of March 31, 2023	$	399	$	227	$	626

~~10. LONG-TERM DEBT~~

On July 21, 2021, in connection with proceeds received from the Business Combination, we repaid substantially all of the outstanding principal of our long-term debt, together with all accrued and unpaid interest in the amount of $175.5 million.

Amortization expense for debt discounts and deferred financing costs was $0 for each of the three and six months ended June 30, 2022 and $0.3 million and $0.6 million for the three and six months ended June 30, 2021, respectively, which was recorded in interest expense in the condensed consolidated statements of operations.

~~Debt Covenants~~

~~Our credit facilities contained certain restrictive covenants. We satisfied these covenants for all periods presented during which we were subject to such covenants.~~

~~11. COMMITMENTS AND CONTINGENCIES~~

~~Legal Proceedings~~

We are party to various legal actions arising in the normal course of business. While we do not expect that the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial position, or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which we believe to be immaterial as of June 30, 2022, does not become material in the future.

~~Sales and Use Tax Liability~~

We regularly provide services to members in various states within the continental U.S., which may create sales and use tax nexus via temporary presence, potentially requiring the payment of these taxes. We determined that there is uncertainty as to what constitutes nexus in respective states for a state to levy taxes, fees and surcharges relating to our activity. As of June 30, 2022 and December 31, 2021, we estimate the potential exposure to such tax liability to be $9.5 million and $8.5 million, respectively, the expense for which is included in accrued expenses on the condensed consolidated balance sheets and cost of revenue in the condensed consolidated statements of operations as of and for the applicable periods presented.

~~12.~~9. LEASES

Leases primarily pertain to certain controlled aircraft, corporate headquarters and operational facilities, including aircraft hangars, which are ~~primarily~~all accounted for as operating leases. We sublease ~~the corporate headquarters and~~an aircraft hangar at Cincinnati/Northern Kentucky International Airport from ~~Delta Air Lines, Inc. (“Delta”).~~Delta. Certain of these operating leases have renewal options to further extend for additional time periods at our discretion.

Our leases do not contain residual value guarantees, covenants or other associated restrictions. We have certain variable lease agreements with aircraft owners that contain payment terms based on an hourly lease rate multiplied by the number of flight hours during a month. Variable lease payments ~~were $4.6 million~~are not included in the right-of-use asset and ~~$9.0 million for the three and six months ended June 30, 2022, respectively, and $4.3 million and $8.9 million for the three and six months ended June 30, 2021, respectively.~~lease liability balances but rather are expensed as incurred.

The components of net lease cost were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Operating lease costs	Operating lease costs	$	9,723	$	9,703	$	18,825	$	17,257	Operating lease costs	$	11,694	$	9,102
Short-term lease costs	Short-term lease costs	9,221		5,760		14,514		12,808		Short-term lease costs	2,486		5,293
Variable lease costs										Variable lease costs	5,833		4,362
Total lease costs	Total lease costs	$	18,944	$	15,463	$	33,339	$	30,065	Total lease costs	$	20,013	$	18,757

~~Costs~~Lease costs related to leased aircraft and operational facilities were $15.8 million and $28.3 million for the three and six months ended June 30, 2022, respectively, and $13.7 million and $26.8 million for the three and six months ended June 30, 2021, respectively, and are included in cost of revenue in the ~~condensed~~ consolidated statements of operations. ~~Costs~~Lease costs related to leased corporate headquarters and other office space including expenses for non-lease components were $3.1 million and $5.1 million for the three and six months ended June 30, 2022, respectively, and $1.6 million and $3.2 million for the three and six months ended June 30, 2021, respectively, and are included in general and administrative expense in the ~~condensed~~ consolidated statements of operations.

Sublease income is presented in general and administrative expenses in the consolidated statements of operations. Sublease income was not material for either of the three month periods ended March 31, 2023 and 2022.

Supplemental cash flow information related to leases were as follows (in thousands):


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities:	Cash paid for amounts included in the measurement of operating lease liabilities:					Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows paid for operating leases	Operating cash flows paid for operating leases	$	18,962	$	17,711	Operating cash flows paid for operating leases	$	10,102	$	9,119
Right-of-use assets obtained in exchange for operating lease obligations	Right-of-use assets obtained in exchange for operating lease obligations	$	42,087	$	64,518	Right-of-use assets obtained in exchange for operating lease obligations	$	5,420	$	37,180

Supplemental balance sheet information related to leases are as follows:

June 30, 2022 December 31, 2021
Weighted-average remaining lease term (in years):
Operating leases 6.0 6.4
Weighted-average discount rate:
Operating leases 9.1 % 9.5 %


	March 31, 2023		December 31, 2022
Weighted-average remaining lease term (in years):
Operating leases	6.1		5.9
Weighted-average discount rate:
Operating leases	9.1	%	9.0	%

Maturities of lease liabilities, as of ~~June 30, 2022,~~March 31, 2023, were as follows (in thousands):


Year ending December 31,	Year ending December 31,	Operating Leases		Year ending December 31,	Operating Leases
2022		$	19,301
2023		36,663
2023 (remaining)				2023 (remaining)	$	27,104
2024	2024	31,271		2024	33,849
2025	2025	18,041		2025	19,937
2026	2026	11,249		2026	12,293
Thereafter		42,484
2027				2027	8,168
2028 and Thereafter				2028 and Thereafter	43,054
Total lease payments	Total lease payments	159,009		Total lease payments	144,405
Less: Imputed interest	Less: Imputed interest	(39,830)		Less: Imputed interest	(37,723)
Total lease obligations	Total lease obligations	$	119,179	Total lease obligations	$	106,682

~~13.~~10. STOCKHOLDERS’ EQUITY AND EQUITY-BASED COMPENSATION

Pursuant to the Wheels Up Experience Inc. certificate of incorporation, we are authorized to issue 2,500,000,000 shares of Class A common stock, par value of $0.0001 per share, and 25,000,000 shares of preferred stock, par value $0.0001 per share. Holders of Class A common stock are entitled to 1one vote per share.

As of ~~June 30, 2022,~~March 31, 2023, we have ~~the following 9~~nine equity-based compensation plans that were approved by the board of directors of WUP prior to the Business Combination: Wheels Up Partners Holdings LLC Equity Incentive Plan (“MIP Plan”); Wheels Up Partners Holdings LLC Equity Incentive Plan II (“MIP Plan II”); Wheels Up Partners Holdings LLC Equity Incentive Plan III (“MIP Plan III”); Wheels Up Partners Holdings LLC Equity Incentive Plan IV (“MIP Plan IV”); Wheels Up Partners Holdings LLC Equity Incentive Plan V (“MIP Plan V”); Wheels Up Partners Holdings LLC Equity Incentive Plan VI (“MIP Plan VI”); Wheels Up Partners Holdings LLC Equity Incentive Plan VII (“MIP Plan VII”); and Wheels Up Partners Holdings LLC Equity Incentive Plan VIII (“MIP Plan VIII”);Combination (as defined below), which collectively constitute the ~~management incentive plan~~“WUP Management Incentive Plan”, and the Wheels Up Partners Holdings LLC Option Plan, which is the ~~WUP stock option plan. As~~“WUP Option Plan.” Following the consummation of ~~June 30, 2022,~~the Business Combination (as defined below), no new grants can be made under the WUP ~~management incentive plan~~Management Incentive Plan or ~~the~~ WUP ~~stock option plan.~~Option Plan.

In connection with the Business Combination (as defined below), the board of directors (the “Board”) and stockholders of Wheels Up adopted the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “2021 LTIP”), for employees, consultants and other qualified persons.

On June 30, 2022, the Board adopted the Wheels Up Experience Inc. 2022 Inducement Grant Plan (the “2022 Inducement Plan”) to be used for a one-time employment inducement grant for our ~~new~~ Chief Financial Officer, Todd Smith, pursuant to New York Stock Exchange Rule 303A.08. The maximum number of awards that could be granted under the 2022 Inducement Plan were 2,051,282 shares of Class A common stock, which were all granted in the form of ~~RSUs~~restricted stock units to Mr. Smith on July 1, ~~2022 (see Note 19). The RSUs~~2022. Restricted stock unit awards granted under the 2022 Inducement Grant Plan ~~are subject to time-based vesting and will vest ratably on~~contain generally the same terms as other restricted stock unit awards granted under the 2021 LTIP during the fiscal year ended December ~~30, 2022, December 30, 2023 and December 30, 2024, respectively, in each case subject to Mr. Smith’s continued employment with Wheels Up through the vesting date.~~31, 2022.

WUP Management Incentive Plan

WUP Profits Interests

As of ~~June 30, 2022,~~March 31, 2023, an aggregate of 31.3 million WUP profits interests have been authorized and issued under the WUP ~~management incentive plan.~~Management Incentive Plan. Vested WUP profits interests are eligible to be exchanged into shares

of Class A common stock. Amounts of WUP profits interests reported in the tables below represent the maximum number of WUP profits interests outstanding or that could be realized upon vesting and immediately exchanged for the maximum number of shares of Class A common stock. The actual number of shares of Class A common stock received upon exchange of such WUP profits interests will depend on the trading price per share of Class A common stock at the time of such exchange.

The following table summarizes the WUP profits interests activity under the WUP management incentive plan as of ~~June 30, 2022:~~March 31, 2023:


		Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value			Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value
		(in thousands)				(in thousands)
Outstanding WUP profits interests as of January 1, 2022		28,819	$	0.42
Outstanding WUP profits interests as of January 1, 2023					Outstanding WUP profits interests as of January 1, 2023	28,813	$	0.42
Granted	Granted	—	—		Granted	—	—
Exchanged	Exchanged	—	—		Exchanged	—	—
Expired/forfeited	Expired/forfeited	(6)	0.24		Expired/forfeited	—	—
Outstanding WUP profits interests as of June 30, 2022		28,813	$	0.42
Outstanding WUP profits interests as of March 31, 2023					Outstanding WUP profits interests as of March 31, 2023	28,813	$	0.42

The weighted-average remaining contractual term as of ~~June 30, 2022,~~March 31, 2023, for WUP profits interests outstanding was approximately ~~9.0~~8.3 years.

The following table summarizes the status of non-vested WUP profits interests as of ~~June 30, 2022:~~March 31, 2023:


		Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value			Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value
		(in thousands)				(in thousands)
Non-vested WUP profits interests as of January 1, 2022		4,733	$	0.35
Non-vested WUP profits interests as of January 1, 2023					Non-vested WUP profits interests as of January 1, 2023	1,697	$	0.42
Granted	Granted	—	—		Granted	—	—
Vested	Vested	(2,362)	0.34		Vested	(1,430)	0.45
Forfeited	Forfeited	(6)	0.24		Forfeited	—	—
Non-vested WUP profits interests as of June 30, 2022		2,365	$	0.37
Non-vested WUP profits interests as of March 31, 2023					Non-vested WUP profits interests as of March 31, 2023	267	$	0.24

The total unrecognized compensation cost related to non-vested WUP profits interests was ~~$0.5 million~~nominal as of ~~June 30, 2022~~March 31, 2023 and is expected to be recognized over a weighted-average period of ~~0.7~~0.4 years. The total fair value for WUP profits interests that vested was ~~approximated $0.8~~approximately $0.6 million for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

WUP ~~Restricted Interests~~

~~As of June 30, 2022, under MIP Plan VII, 4.7 million WUP restricted interests have been authorized and issued to certain current and former Wheels Up employees.~~

~~The following table summarizes the restricted interests activity under the WUP management incentive plan as of June 30, 2022:~~

Number of WUP Restricted Interests Weighted-Average Grant Date Fair Value
(in thousands)
Non-vested WUP restricted interests as of January 1, 2022 4,662 $ 3.98
Granted — —
Vested (3,899) 4.00
Forfeited — —
Non-vested WUP restricted interests as of June 30, 2022 763 $ 3.91

~~The weighted-average remaining contractual term as of June 30, 2022, for WUP restricted interests outstanding was approximately 7.5 years.~~

The total unrecognized compensation cost related to non-vested WUP restricted interests was $0.1 million as of June 30, 2022 and is expected to be recognized over a weighted-average period of 0.2 years. WUP restricted interests are time and performance-based awards that vest with a change in control or initial public offering. As a result, we started recording compensation cost for WUP restricted interests on the Closing Date. The total fair value for WUP restricted interests that vested was approximated $15.6 million for the six months ended June 30, 2022.

The WUP restricted interests granted vest when both of the following conditions exist: (i) ratably over a four-year service period and (ii) upon the first to occur of (A) a change of control and (B) the later to occur of (1) six months after an initial public offering and (2) 30 days after the expiration of any applicable lock-up period in connection with an initial public offering. The WUP restricted interests lock-up period expired on February 8, 2022. As of such date, the holders of WUP restricted interests met the vesting conditions for the portion of their awards that did not require further service.

~~WUP Stock~~ Option Plan

As of ~~June 30, 2022,~~March 31, 2023, the number of WUP stock options authorized and issued in aggregate under the WUP ~~stock option plan~~Option Plan was 17.5 million. Each outstanding stock option is exercisable for 1one share of Class A common stock.

The following table summarizes the activity under the WUP ~~stock option plan~~Option Plan as of ~~June 30, 2022:~~March 31, 2023:


		Number of WUP Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value			Number of WUP Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value
		(in thousands)						(in thousands)
Outstanding WUP stock options as of January 1, 2022		15,713	$	7.52	$	1.19
Outstanding WUP stock options as of January 1, 2023							Outstanding WUP stock options as of January 1, 2023	12,984	$	7.51	$	1.20
Granted	Granted	—	—		—		Granted	—	—		—
Exercised	Exercised	—	—		—		Exercised	—	—		—
Forfeited	Forfeited	(691)	7.55		1.12		Forfeited	(86)	7.27		0.73
Expired	Expired	—	—		—		Expired	—	—		—
Outstanding WUP stock options as of June 30, 2022		15,022	$	7.52	$	1.19
Exercisable WUP stock options as of June 30, 2022		12,289	$	7.42	$	1.07
Outstanding WUP stock options as of March 31, 2023							Outstanding WUP stock options as of March 31, 2023	12,898	$	7.51	$	1.20
Exercisable WUP stock options as of March 31, 2023							Exercisable WUP stock options as of March 31, 2023	11,974	$	7.46	$	1.13

The aggregate intrinsic value as of ~~June 30, 2022,~~March 31, 2023, for WUP stock options that were outstanding and exercisable was ~~$0.~~ nil, respectively.

The weighted-average remaining contractual term as of ~~June 30, 2022,~~March 31, 2023, for WUP stock options that were outstanding and exercisable was approximately ~~7.3~~6.4 years and ~~7.2~~ 6.3 years, respectively.

The following table summarizes the status of non-vested WUP stock options as of ~~June 30, 2022:~~March 31, 2023:


		Number of WUP Stock Options	Weighted-Average Grant Date Fair Value			Number of WUP Stock Options	Weighted-Average Grant Date Fair Value
		(in thousands)				(in thousands)
Non-vested WUP stock options as of January 1, 2022		3,971	$	1.63
Non-vested WUP stock options as of January 1, 2023					Non-vested WUP stock options as of January 1, 2023	1,044	$	2.00
Granted	Granted	—	—		Granted	—	—
Vested	Vested	(990)	1.34		Vested	(115)	1.13
Expired	Expired	—	—		Expired	—	—
Forfeited	Forfeited	(248)	1.64		Forfeited	(6)	1.60
Non-vested WUP stock options as of June 30, 2022		2,733	$	1.73
Non-vested WUP stock options as of March 31, 2023					Non-vested WUP stock options as of March 31, 2023	923	$	2.11

The total unrecognized compensation cost related to non-vested WUP stock options was ~~$2.8~~ $0.7 million as of ~~June 30, 2022~~March 31, 2023 and is expected to be recognized over a weighted-average period of ~~1.1~~0.4 years. The total fair value for WUP stock options that vested was ~~approximated $1.3~~ $0.1 million for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

2021 LTIP

As of ~~June 30, 2022,~~March 31, 2023, an aggregate of 27.3 million shares were authorized for issuance under the 2021 LTIP.

Restricted Stock Units (“RSUs”)

The following table summarizes the activity under the 2021 LTIP related to ~~RSUs~~RSUs as of ~~June 30, 2022:~~March 31, 2023:

Number of RSUs Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested RSUs as of January 1, 2022 8,411 $ 7.32
Granted(1)
13,637 3.38
Vested (512) 6.35
Forfeited (1,923) 6.23
Non-vested RSUs as of June 30, 2022 19,613 $ 4.42


	Number of RSUs(1)	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested RSUs as of January 1, 2023	16,162	$	3.46
Granted(2)	15,136	0.63
Vested	(2,142)	3.92
Forfeited	(1,334)	3.75
Non-vested RSUs as of March 31, 2023	27,822	$	1.87

(1) ~~Includes 1,600~~RSU awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other RSU awards granted under the 2021 LTIP during the fiscal year ended December 31, 2022. The number of RSUs and weighted-average grant date fair value include 2,051,282 RSUs granted under the 2022 Inducement Grant Plan in July 2022, of which 683,760 RSUs had vested as of January 1, 2023 and the remaining 1,367,522 RSUs are scheduled to ~~our Chief Executive Officer (“CEO”~~vest in equal installments on December 30, 2023 and December 30, 2024, subject to continued service through each such vesting date.

(2) RSU awards granted during the three months ended of March 31, 2023 are liability classified because such awards are contingent on receipt of approval by the Company’s stockholders of the Amended and Restated Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the "Amended and Restated 2021 LTIP”) at the Company’s 2023 annual meeting of stockholders (the “2023 Annual Meeting”). ~~See “~~If the Company’s stockholders do not approve the Amended and Restated 2021 LTIP at the 2023 Annual Meeting, the Compensation Committee of the Board will settle such awards in cash upon vesting based on the fair market value per share of Class A common stock on the applicable vesting date.

~~—2022 CEO Awards” for additional details regarding this grant.~~

The total unrecognized compensation cost related to non-vested RSUs was ~~$76.8~~$42.7 million as of ~~June 30, 2022~~March 31, 2023 and is expected to be recognized over a weighted-average period of ~~2.5~~1.4 years. The total fair value for RSUs that vested was approximated ~~$3.3~~$8.4 million for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

Performance-Based Restricted Stock Units (“PSUs”)

Under the terms of the non-vested PSUs granted to certain employees, upon the achievement of certain pre-determined performance objectives, ~~subject to the participant’s continued service (except as described under “—2022 CEO Awards”),~~ each PSU may settle into shares of our Class A common stock. The PSUs will vest, if at all, upon the actual achievement of the related performance objective, subject to specified change of control exceptions.

The following table summarizes the activity under the 2021 LTIP related to PSUs as of ~~June 30, 2022:~~March 31, 2023:


		Number of PSUs	Weighted-Average Grant Date Fair Value			Number of PSUs	Weighted-Average Grant Date Fair Value
		(in thousands)				(in thousands)
Non-vested PSUs as of January 1, 2022		—	$	—
Non-vested PSUs as of January 1, 2023					Non-vested PSUs as of January 1, 2023	957	$	2.17
Granted(1)	Granted(1)	1,149	2.13		Granted(1)	1,262	0.63
Vested	Vested	—	—		Vested	(133)	2.50
Forfeited	Forfeited	—	—		Forfeited	—	—
Non-vested PSUs as of June 30, 2022(2)		1,149	$	2.13
Non-vested PSUs as of March 31, 2023(2)					Non-vested PSUs as of March 31, 2023(2)	2,086	$	1.22

(1) ~~Includes 380 PSUs~~PSU awards granted ~~to our CEO. See “—2022 CEO Awards” for additional details regarding this grant.~~during the three months ended March 31, 2023 are liability classified because such awards are contingent on receipt of approval by the Company’s stockholders of the Amended and Restated 2021 LTIP at the 2023 Annual Meeting. If the Company’s stockholders do not approve the Amended and Restated 2021 LTIP at the 2023 Annual Meeting, the Compensation Committee of the Board will settle such awards in cash upon vesting based on the fair market value per share of Class A common stock on the applicable vesting date.

(2) ~~Approximately 769~~Non-vested PSUs reflected in the table above include approximately 0.6 million of the PSUs reflected in this table may settle into shares of our Class A common stock equal to ~~80-120%~~0-120% of the PSUs and 1.3 million PSUs that may settle into shares of Class A common stock equal to 0-200% of the PSUs, in each case based on the level of performance.

~~Equity-based compensation~~Compensation expense associated with PSUs is ~~based on the fair value of our Class A common stock on the grant date, which equals the closing price of our Class A common stock on the grant date. We recognize compensation expense~~recognized over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable. ~~The total grant date fair value of unvested~~Total unrecognized compensation cost related to non-vested PSUs was $2.5 million as of ~~June 30, 2022 was $1.9 million.~~March 31, 2023. As of ~~June 30, 2022, the achievement of the related performance~~

~~objective~~March 31, 2023, the achievement of the performance objectives associated with unvested awards was deemed not probable of being achieved and, accordingly, no compensation cost ~~for the PSUs~~ has been recognized. Compensation cost recognized during the three months ended March 31, 2023 associated with PSUs which vested during the period was $0.1 million.

~~2022 CEO Awards~~

~~On June 8, 2022, the Board approved certain grants under the 2021 LTIP~~RSUs Subject to our CEO consisting of 1,600,000 RSUs that contain a service-based vesting condition (the “CEO Service-Based RSUs”), 380,000 PSUs that contain performance-based vesting conditions (the “CEO PSUs”) and 1,615,000 RSUs that contain market-based vesting conditions (the “CEO Market-Based Vesting Conditions (“Market-Based RSUs”~~, together with~~)

Under the ~~CEO Service-Based RSUs and CEO PSUs, the “2022 CEO Awards”). All~~terms of the ~~2022 CEO Awards require continued employment through the vesting date, subject~~non-vested Market-Based RSUs granted to ~~specified change in control and service termination exceptions.~~certain employees each Market-Based RSU may settle into shares of our Class A common stock. The ~~CEO Service-Based RSUs vest annually over a three-year period from the grant date. The CEO Service-Based RSUs are included in the table under “—Restricted Stock Units (“RSUs”)” above as of June 30, 2022.~~

The CEO PSUs will vest, if at all, with the achievement of certain separate performance conditions based on the achievement of pre-determined annual revenue and earnings before interest, taxes, depreciation and amortization thresholds. Any CEO PSUs that have not vested prior to the date the audited financial statements for the year ending December 31, 2026 are finalized will be forfeited. The CEO PSUs are included in the table under “~~—Performance-Based Restricted Stock Units (“PSUs”)” above as of June 30, 2022.~~

~~The CEO~~ Market-Based RSUs will vest, if at all, ~~with the achievement of certain separate market-based vesting conditions~~ based on the closing trading price per share of our Class A common stock ~~price~~ over any 30 consecutive trading day-period that occurs prior to ~~December 31, 2026. The CEO Market-Based RSUs are in addition to those described~~the end date specified in the ~~tables above under “—Restricted Stock Units (“RSUs”)” and “—Performance-Based Restricted Stock Units (“PSUs”)~~”.

~~As of June 30, 2022, none of the CEO PSUs had vested and 133,333 CEO PSUs had a performance-based~~underlying award agreement, subject to continued service through each such vesting condition deemed probable of being achieved. The total unrecognized compensation cost related to such CEO PSUs with a probable performance-based vesting condition was $0.3 million as of June 30, 2022 and is expected to be recognized over 0.6 years.date.

The grant-date fair value of ~~the CEO~~outstanding Market-Based RSUs, using a Monte Carlo simulation model, was $0.3 million. The derived service period for such ~~CEO~~ Market-Based RSUs began on June 8, 2022 ~~and is~~with a ~~weighted-average~~weighted average period of 3.8 years.

Based on the Class A common stock trading price, the market conditions for the ~~CEO~~outstanding Market-Based RSUs were not met, and no shares vested as of ~~June 30, 2022.~~March 31, 2023. The total unrecognized compensation cost related to such ~~CEO~~ Market-Based RSUs was ~~$0.3~~$0.2 million as of ~~June 30, 2022~~March 31, 2023 and is expected to be recognized over ~~3.8~~3.0 years.

Wheels Up Stock Options

The following table summarizes the activity under the 2021 LTIP related to Wheels Up stock options as of ~~June 30, 2022:~~March 31, 2023:


		Number of Wheels Up Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value			Number of Wheels Up Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value
		(in thousands)						(in thousands)
Outstanding Wheels Up stock options as of January 1, 2022		921	$	10.00	$	4.75
Outstanding Wheels Up stock options as of January 1, 2023							Outstanding Wheels Up stock options as of January 1, 2023	768	$	10.00	$	4.75
Granted	Granted	—	—		—		Granted	—	—		—
Exercised	Exercised	—	—		—		Exercised	—	—		—
Forfeited	Forfeited	—	—		—		Forfeited	—	—		—
Expired	Expired	—	—		—		Expired	—	—		—
Outstanding Wheels Up stock options as of June 30, 2022		921	$	10.00	$	4.75
Exercisable Wheels Up stock options as of June 30, 2022		307	$	10.00	$	4.75
Outstanding Wheels Up stock options as of March 31, 2023							Outstanding Wheels Up stock options as of March 31, 2023	768	$	10.00	$	4.75
Exercisable Wheels Up stock options as of March 31, 2023							Exercisable Wheels Up stock options as of March 31, 2023	768	$	10.00	$	4.75

The aggregate intrinsic value as of ~~June 30, 2022,~~March 31, 2023, for Wheels Up stock options that were outstanding and exercisable was ~~$0.~~nil.

The weighted-average remaining contractual term as of ~~June 30, 2022,~~March 31, 2023, for Wheels Up stock options that were outstanding and exercisable was approximately ~~9.0~~4.6 years, ~~and 9.0 years,~~ respectively.

~~The following table summarizes the status of non-vested~~ All Wheels Up stock options ~~as of June 30, 2022:~~

Number of Wheels Up Stock Options Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested Wheels Up stock options as of January 1, 2022 768 $ 4.75
Granted — —
Vested (154) 4.75
Expired — —
Forfeited — —
Non-vested Wheels Up stock options as of June 30, 2022 614 $ 4.75

The total unrecognized compensation cost related to non-vested Wheels Up stock options was $2.7 million as of June 30, 2022 and is expected to be recognized over a weighted-average period of 1.9 years. The total fair value of Wheels Up stock options that vested ~~was approximated $0.7 million for the six months ended June 30, 2022.~~in prior periods.

Equity-Based Compensation Expense

Compensation expense for WUP profits interests recognized in the condensed consolidated statements of operations was ~~$0.2~~$0.1 million and ~~$0.9~~$0.7 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, ~~respectively, and $0.2 million and $0.5 million for the three and six months ended June 30, 2021,~~ respectively.

Compensation expense for WUP restricted interests recognized in the condensed consolidated statements of operations was ~~$0.2~~nil and $0.2 million ~~and $0.4 million~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, ~~respectively, and $0 for each of the three and six months ended June 30, 2021.~~respectively.

Compensation expense for WUP stock options under the WUP Option Plan and Wheels Up stock options under the 2021 LTIP recognized in the condensed consolidated statements of operations was ~~$1.1~~$0.5 million and ~~$4.2~~$3.1 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, ~~respectively, and $1.1 million and $2.3 million for the three and six months ended June 30, 2021,~~ respectively.

Compensation expense for RSUs, PSUs, and Market-Based RSUs recognized in the condensed consolidated statements of operations was ~~$9.7~~$5.7 million and ~~$18.7~~$9.0 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, ~~respectively, and $0 for the three and six months ended June 30, 2021.~~respectively.

The following table summarizes equity-based compensation expense recognized by condensed consolidated statement of operations line item (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Cost of revenue $ 3,307 $ 49 $ 7,739 $ 100
Technology and development 655 93 1,296 187
Sales and marketing 2,857 216 5,558 452
General and administrative 13,962 990 28,742 2,023
Total equity-based compensation expense $ 20,781 $ 1,348 $ 43,335 $ 2,762


	Three Months Ended March 31,
	2023		2022
Cost of revenue	$	1,179	$	4,432
Technology and development	484		641
Sales and marketing	700		2,701
General and administrative	9,175		14,780
Total equity-based compensation expense	$	11,538	$	22,554

Earnout Shares

~~The 9,000,000 Earnout Shares vest~~On July 13, 2021 (the “Closing Date”), we consummated the transactions contained in the Agreement and Plan of Merger with ~~the achievement~~Aspirational Consumer Lifestyle Corp. (“Aspirational”), a blank check company, dated as of ~~separate market conditions. One-third~~February 1, 2021, as amended on May 6, 2021 (the “Business Combination”). As part of the ~~Earnout Shares will meet~~Business Combination, existing holders of WUP equity, including certain holders of WUP profits interests and restricted interests, but excluding holders of WUP stock options, have the ~~market condition when the closing~~right to receive up to an aggregate of 9 million additional shares of our Class A common stock in three equal tranches, which are issuable upon the achievement of share price ~~is greater than or equal to~~thresholds of $12.50, $15.00 and $17.50 for any 20 trading days within a period of 30 consecutive trading days within five years of the Closing ~~Date. An additional one-third will vest when the Class A common stock is greater than or equal~~Date, respectively (the “Earnout Shares”). Earnout Shares are not attributable to ~~$15.00 over the same measurement period. The final one-third will vest when the Class A common stock is greater than or equal to $17.50 over the same measurement period.~~any equity compensation plan.

Earnout Shares that are attributable to WUP profits interests and restricted interests require continued employment as of the date on which each of the Earnout Share market conditions are met. ~~As of June 30, 2022~~There have been no forfeitures of Earnout Shares ~~were not material.~~as of March 31, 2023.

The grant-date fair value of the Earnout Shares attributable to the holders of WUP profits interests and restricted interests, using a Monte Carlo simulation model, was $57.9 million. The derived service period began on the Closing Date and is a weighted-average period of 1.7 years.

Based on the Class A common stock trading price, the market conditions were not met, and no Earnout Shares vested as of ~~June 30, 2022.~~March 31, 2023. Compensation expense for Earnout Shares recognized in the condensed consolidated statements of operations was ~~$9.6~~$1.4 million and ~~$19.1~~$9.5 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, respectively, and $0 for each of the three and six months ended June 30, 2021. The total unrecognized compensation cost related to Earnout Shares was $20.8 million as of June 30, 2022 and is expected to be recognized over 0.8 years.respectively.

Treasury Stock

~~During the three~~As of March 31, 2023 and ~~six months ended June 30,~~December 31, 2022, ~~respectively, 230,866 and 1,913,246~~we had 2,644,415 shares ~~with a market value~~ of ~~$0.6 million and $6.7 million, or $2.52 and $3.59 per share, were~~treasury stock. Treasury stock has historically consisted of shares of Class A common stock withheld to settle employee taxes due upon the vesting of ~~either restricted stock or~~ RSUs and ~~were added to treasury stock on our condensed consolidated balance sheets as~~WUP restricted interests, none of ~~June 30, 2022.~~which occurred during the three months ended March 31, 2023.

~~14.~~11. WARRANTS

Prior to the Business Combination, Aspirational issued 7,991,544 public warrants (“Public Warrants”) and 4,529,950 private warrants (“Private Warrants”). On the Closing Date, Wheels Up assumed the warrants. Each

whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. The Public Warrants and Private Warrants became exercisable on September 25, 2021, which was 12 months from the closing of the Aspirational initial public offering, and expire on July 13, 2026 or earlier upon redemption or liquidation.

In connection with the Business Combination, we filed a Registration Statement on Form S-1 that was declared effective by the SEC on August 24, 2021, as amended by Post-Effective Amendment No. 1 thereto that was declared effective by the SEC on March 21, 2022, as further amended by Post-Effective Amendment No. 2 to Form S-1 on Form S-3 filed with the SEC on July 20, 2022, and as further amended by Post-Effective Amendment No. 3 to Form S-1 on Form S-3 that was declared effective by the SEC on August 10, 2022 (collectively, the “Selling Stockholder Registration Statement”). The Selling Stockholder Registration Statement relates to the issuance of an aggregate of 12,521,494 shares of Class A common stock underlying the Public Warrants and Private Warrants. As of March 31, 2023, there have not been any warrants exercised and 12,521,494 remain outstanding.

12. NON-CONTROLLING INTERESTS

MIP LLC is a single purpose entity formed for the purpose of administering and effectuating the award of WUP profits interests to employees, consultants and other qualified persons. Wheels Up is the sole managing member of MIP LLC and, as a result, consolidates the financial results of MIP LLC. We record non-controlling interests representing the ownership interest in MIP LLC held by other members of MIP LLC. In connection with the Business Combination, the Seventh Amended and Restated LLC Agreement of WUP was adopted, allowing members of MIP LLC, subject to certain restrictions, to exchange their vested WUP profits interests for cash or a corresponding number of shares of Class A common stock, at the option of Wheels Up, based on the value of such WUP profits interests relative to their applicable participation threshold.

The decision of whether to exchange WUP profits interests for cash or Class A common stock is made solely at the discretion of Wheels Up. Accordingly, the WUP profits interests held by MIP LLC are treated as permanent equity and changes in the ownership interest of MIP LLC are accounted for as equity transactions. Future exchanges of WUP profits interests, if settled in Class A common stock at the discretion of Wheels Up, will reduce the amount recorded as non-controlling interests and increase additional paid-in-capital on the condensed consolidated balance sheets.

The calculation of non-controlling interests was as follows:

June 30, 2022 December 31, 2021
Number of WUP common units held by Wheels Up(1)
244,274,300 100.0 % 245,834,569 99.2 %
Number of vested WUP profits interests attributable to non-controlling interests(2)
— % — % 2,045,995 0.8 %
Total WUP common units and vested WUP profits interests outstanding 244,274,300 100.0 % 247,880,564 100.0 %


	March 31, 2023				December 31, 2022
Number of WUP common units held by Wheels Up(1)	251,613,698		100.0	%	249,338,569	100.0	%
Number of vested WUP profits interests attributable to non-controlling interests(2)	—	%	—	%	—	—	%
Total WUP common units and vested WUP profits interests outstanding	251,613,698		100.0	%	249,338,569	100.0	%

(1) WUP common units represent an equivalent ownership of Class A common stock outstanding.

(2) Based on the closing price of Class A common stock on the last trading day of the period covered by this Quarterly Report, there would be 0no WUP common units issuable upon conversion of vested and unvested WUP profits interests outstanding as of ~~June 30, 2022.~~March 31, 2023.

Weighted-average ownership percentages are used to allocate net loss to Wheels Up and the non-controlling interest holders. The non-controlling interests weighted-average ownership percentage was 0%0.0% and ~~0.2%~~0.4% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022, ~~respectively, and 9.7% and 9.2% for the three and six months ended June 30, 2021,~~ respectively.

~~15.~~

13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to various legal actions arising in the normal course of business. While we do not expect that the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial position, or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which we believe to be immaterial as of March 31, 2023, does not become material in the future.

Sales and Use Tax Liability

We regularly provide services to members in various states within the continental U.S., which may create sales and use tax nexus via temporary presence, potentially requiring the payment of these taxes. We determined that there is uncertainty as to what constitutes nexus in respective states for a state to levy taxes, fees and surcharges relating to our activity. As of March 31, 2023 and December 31, 2022, we estimate the potential exposure to such tax liability was $10.5 million and $10.4 million, respectively, the expense for which was included in accrued expenses on the condensed consolidated balance sheets and cost of revenue in the condensed consolidated statements of operations as of and for the applicable periods presented.

14. RELATED PARTIES

We engage in transactions with certain stockholders who are also members, ambassadors or customers. Such transactions primarily relate to their membership in the Wheels Up program, flights and flight-related services.

We incurred ~~net~~ expenses of $0$0.6 million and $0.3 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~respectively, and $1.0 million and $1.8 million for the three and six months ended June 30, 2021,~~ respectively, from transactions related to a commercial cooperation agreement with our stockholder Delta. ~~We have also recorded $4.2~~As of March 31, 2023 and December 31, 2022, $2.9 million and ~~$5.3~~$2.4 million, respectively, were included in ~~accrued~~Accrued expenses on the condensed consolidated balance sheets ~~as of June 30, 2022 and December 31, 2021, respectively, for~~related to transactions associated with the commercial cooperation agreement. ~~In addition,~~

Other transactions with related parties during the three months ended March 31, 2023 and 2022 were immaterial individually and in the aggregate for financial reporting purposes.

15. RESTRUCTURING AND RELATED CHARGES

On March 1, 2023, we ~~provided $0.5~~announced a restructuring plan (the “Restructuring Plan”) as part of our previously announced focus on implementing cost reductions and improving the efficiency of our operations, which consisted of a reduction in headcount (excluding pilots, maintenance and operations-support personnel). We estimated that we would incur approximately $14 million in total pre-tax charges in connection with the Restructuring Plan, primarily related to severance payments, employee benefits and ~~$1.4~~equity-based compensation.

As of March 31, 2023, we have incurred $17.7 million of ~~flights~~charges associated with the Restructuring Plan related to ~~certain persons currently~~severance payments, employee benefits and ~~previously affiliated~~equity-based compensation, which represents substantially all cash and non-cash charges expected under the Restructuring Plan. During the three months ended December 31, 2022, we recorded $7.2 million of expenses related to actions taken in the fourth quarter of 2022 and in connection with ~~Delta at a discount~~the Restructuring Plan. During the three months ended March 31, 2023, $10.5 million of expenses related to the Restructuring Plan were recorded in the Company’s condensed consolidated statement of net income, as follows (in thousands):


Cost of revenue	$	755
Technology and development	2,299
Sales and marketing	5,379
General and administrative	2,058
Total restructuring expenses	$	10,491

Approximately $2.7 million of charges associated with the Restructuring Plan remained unpaid and were included within Accrued expenses in the Company’s condensed consolidated balance sheet as of March 31, 2023 and are expected to be paid during the second quarter of fiscal 2023.

16. INCOME TAXES

We are subject to U.S. federal, state and local income taxes with respect to our ~~retail pricing for the three and six months ended June 30, 2022, respectively, and $0.5 million and $1.2 million for the three and six months ended June 30, 2021, respectively. Delta provided~~allocable share of any taxable income or loss from WUP, as well as any standalone income or loss Wheels Up ~~Private Jets pilots airfare~~generates. WUP is treated as a partnership for ~~business travel at no cost for all periods presented.~~U.S. federal and most applicable state and local income tax purposes and generally does not pay income taxes in most jurisdictions. Instead, any taxable income or loss generated by WUP is passed through to and included in the taxable income or loss of its members, including Wheels Up. We are also subject to income taxes in the various foreign jurisdictions in which we operate.

We ~~incurred expenses~~recorded income tax expense of ~~$0.1 million and~~ $0.2 million for the three ~~and six~~ months ended June 30, 2022, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively, for an aircraft leased from an employee. We recognized revenue of $1.2 million and $2.6 million for flights and other services, including aircraft management, provided to Board members for the three and six months ended June 30, 2022, respectively, and $0.3 million and $0.7 million for the three and six months ended June 30, 2021, respectively. We incurred expenses of $0 for the three and six months ended June 30, 2022, and $0.1 million for the three and six months ended June 30, 2021, respectively, for an immediate family member of a Wheels Up executive and a member of the Board who was a full-time employee. We incurred marketing expenses of $0 and $0.3 million for the three and six months ended June 30, 2022, respectively,March 31, 2023, and $0 for the three ~~and six~~ months ended ~~June 30, 2021, with~~March 31, 2022. The effective tax rate was (0.2) % for the three months ended March 31, 2023, and 0% for the three months ended March 31, 2022. Our effective tax rate for the three months ended March 31, 2023 differs from the federal statutory rate of 21% primarily due to a ~~company~~full valuation allowance against the majority of our net deferred tax assets where it is more likely than not that the deferred tax assets will not be realized and geographical mix of our earnings.

We currently expect the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested. Accordingly, the Company has not provided for the tax effect, if any, of limited outside basis differences of its foreign subsidiaries. If these foreign earnings are repatriated to the U.S., or if the Company determines that such earnings are repatriated to the U.S., or if the Company determines that such earnings will be remitted in a ~~member~~future period, additional tax provisions may be required.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of the ~~Board~~deferred tax assets may not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. As of March 31, 2023, we concluded, based on the weight of all available positive and negative evidence, that it is ~~an executive.~~more likely than not that the majority of U.S. deferred tax assets will not be realized. Accordingly, a valuation allowance has been established on the majority of our net deferred tax assets in the U.S.

Additionally, the Company is subject to the income tax effects associated with the Global Intangible Low-Taxed Income (“GILTI”) provisions and treats the tax effects of GILTI as a current period expense in the period incurred.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (“IRA Act”), which is effective January 1, 2023 and contains provisions implementing a 15% minimum corporate income tax and a 1% excise tax on stock repurchases. While we are continuing to evaluate the impact of the IRA Act, at this time, we do not believe it will have a material impact on our consolidated financial statements.

2728

~~16.~~17. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Numerator:	Numerator:									Numerator:
Net loss attributable to Wheels Up Experience Inc. - basic and diluted	Net loss attributable to Wheels Up Experience Inc. - basic and diluted	$	(92,760)	$	(26,156)	$	(181,413)	$	(55,565)	Net loss attributable to Wheels Up Experience Inc. - basic and diluted	$	(100,866)	$	(88,653)
Denominator:	Denominator:									Denominator:
Weighted-average shares of Class A common stock outstanding - basic and diluted	Weighted-average shares of Class A common stock outstanding - basic and diluted	244,086		169,024		244,347		168,936		Weighted-average shares of Class A common stock outstanding - basic and diluted	253,345,272		244,609,635
Basic and diluted net loss per share of Class A common stock	Basic and diluted net loss per share of Class A common stock	$	(0.38)	$	(0.15)	$	(0.74)	$	(0.33)	Basic and diluted net loss per share of Class A common stock	$	(0.40)	$	(0.36)

There were no dividends declared or paid ~~for~~during each of the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 or ~~2021.~~2022.

Basic and diluted net loss per share were computed using the two-class method. Shares of unvested restricted stock are considered participating securities, because these awards contain a non-forfeitable right to participate equally in any dividends prior to forfeiture of the restricted stock, if any, irrespective of whether the awards ultimately vest. All issued and outstanding shares of restricted stock are included in the weighted-average shares of Class A common stock outstanding.

WUP profits interests held by other members of MIP LLC are not subject to the net loss per share calculation until such time the vested WUP profits interests are actually exchanged for shares of Class A common stock.

The following securities were not included in the computation of diluted shares outstanding, because the effect would be anti-dilutive, orand issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
Warrants	Warrants	12,521,494	—	12,521,494	—	Warrants	12,521,494	12,521,494
Earnout Shares	Earnout Shares	9,000,000	—	9,000,000	—	Earnout Shares	9,000,000	9,000,000
RSUs(1)	RSUs(1)	22,574,086	—	22,574,086	—	RSUs(1)	27,852,662	15,633,060
Stock options	Stock options	15,943,297	16,234,297	15,943,297	16,234,297	Stock options	13,665,147	16,193,621
Total anti-dilutive securities	Total anti-dilutive securities	60,038,877	16,234,297	60,038,877	16,234,297	Total anti-dilutive securities	63,039,303	53,348,175

(1) Includes RSUs, PSUs and CEO Market-Based RSUs outstanding as of ~~June 30, 2022.~~

~~17. INCOME TAXES~~

We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income or loss from Wheels Up Partners Holdings LLC, as well as any standalone income or loss Wheels Up generates. Wheels Up Partners Holdings LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes and generally does not pay income taxes in most jurisdictions. Instead, any taxable income or loss generated by Wheels Up Partners Holdings LLC is passed through to and included in the taxable income or loss of its members, including Wheels Up.

As a result of the Air Partner acquisition, we now conduct business in various foreign jurisdictions and are subject to tax in those foreign jurisdictions. We currently expect the undistributed earnings of our foreign

subsidiaries to be indefinitely reinvested. Accordingly, the Company has not provided for the tax effect, if any, of limited outside basis differences of its foreign subsidiaries. The determination of the future tax consequences of the remittance of these earnings is not practicable.

We recorded income tax expense of $0.3 million for each of the three and six months ended June 30, 2022 and $0 for the three and six months ended June 30, 2021. The effective tax rate was (0.3)% and (0.2)% for the three and six months ended June 30, 2022, respectively, and 0% for the three and six months ended June 30, 2021. Our effective tax rate for each of the three and six months ended June 30, 2022, differs from the federal statutory rate of 21% primarily due to a full valuation allowance against the majority of our net deferred tax assets where it is more likely than not that the deferred tax assets will not be realized. For the periods prior to the Business Combination, there is no income tax expense recorded as Wheels Up Partners Holdings LLC, as a partnership, is not subject to U.S. federal and most applicable state and local income taxes.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of the deferred tax assets may not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and tax-planning strategies. As of June 30, 2022, we concluded, based on the weight of all available positive and negative evidence, that it is more likely than not that the U.S. deferred tax assets will not be realized. Accordingly, a full valuation allowance has been established on the majority of our net deferred tax assets in the U.S.

~~18. WARRANTS~~

Prior to the Business Combination, Aspirational issued 7,991,544 Public Warrants and 4,529,950 Private Warrants. On the Closing Date, Wheels Up assumed the warrants. Each whole warrant entitles the holder to purchase 1 share of Class A common stock at a price of $11.50 per share. The Public Warrants and Private Warrants became exercisable on September 25, 2021, which was 12 months from the closing of the Aspirational initial public offering, and expire five years from the completion of the Business Combination or earlier upon redemption or liquidation.

~~19. SUBSEQUENT EVENTS~~

On July 1, 2022, we granted approximately 2.1 million shares of Class A common stock, which were all granted in the form of RSUs to our new Chief Financial Officer, Todd Smith, under the 2022 Inducement Plan. The RSUs granted under the 2022 Inducement Plan will vest ratably on December 30, 2022, December 30, 2023 and December 30, 2024, respectively, in each case subject to Mr. Smith’s continued employment with Wheels Up through the vesting date.

31, 2023.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1 of this Quarterly Report and our audited consolidated financial statements included in our most recent Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. This discussion contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” included in this Quarterly Report. Unless the context otherwise requires, references in this MD&A section to “Wheels Up”, “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Wheels Up Experience Inc. and its consolidated subsidiaries.

Overview of Our Business

Wheels Up strives to disrupt private aviation by delivering innovative, accessible, travel through simple-to-use proprietary technology and mobile applications. We have become a recognized market leader and are redefining private flying by leveraging our unique technology-enabled marketplace platform. We connect flyers to private aircraft, and to one another, creating memorable lifestyle experiences.

We have a diversified and evolving business model generating revenue through flights, membership fees, management of aircraft and other services. Our chief operating decision maker, Kenny Dichter, our ~~chief executive officer,~~Chief Executive Officer and Chairman of our Board of Directors, reviews our financial information presented on a consolidated basis, and accordingly, we operate under one reportable segment, which is private aviation services.

Flight revenue includes both retail and wholesale charter. Wheels Up has one of the largest and most diverse mix of available aircraft in the industry. As of ~~June 30, 2022,~~March 31, 2023, we ~~have~~had over 200 aircraft in our owned and leased fleet that includes Turboprops, Light, Midsize, Super-Midsize and Large-Cabin jets, ~~more than~~approximately half of which are Wheels Up branded aircraft. As of ~~June 30, 2022,~~March 31, 2023, we also ~~have~~had a managed fleet across all private aircraft cabin classes of ~~approximately 150~~over 100 aircraft and an extensive network of third-party operators available in our program fleet from whom we can access over 1,200 additional safety vetted and verified partner aircraft.

Members pay a fixed quoted amount for flights plus certain incidental or additional costs, if applicable. The quoted amount can be based on a contractual capped hourly rate or dynamically priced based on a number of variables at time of booking. Wholesale customers, such as charter flight brokers and third-party operators, primarily pay a fixed rate for flights. Members are also able to ~~pre-purchase amounts of~~purchase dollar-denominated credits ~~(“Prepaid Blocks”), which~~that can be applied to future costs incurred by members, including annual dues, flight services and other incidental costs such as catering and ground ~~transportation.~~transportation (“Prepaid Blocks”). Prepaid Block sales allow us to have a certain amount of revenue visibility into future flight and travel ~~demand.~~demand, and are an important source of cash for our operations. Members who elect not to purchase a Prepaid Block “pay as they fly” by paying for their flights at the time of booking or after their ~~flights.~~flights based on then-current market rates.

Membership revenue is generated from initiation and annual renewal fees across three different annual subscription tiers — Connect, Core and Business — each of which is designed to provide the varying services required across a range of existing and potential private flyers. Core membership is ideal for the more frequent individual private flyer who wants guaranteed availability and pricing, high-touch account management, capped rates and values ultimate convenience and flexibility. The Business membership is best suited for companies of any size that want a broader group of individuals in their organization to be able to book and fly, while also requiring maximum flexibility to meet their business needs. Our Business customers include companies that fully-outsource their private travel solution to Wheels Up, including but not necessarily managing their privately owned aircraft, and those that use Wheels Up to serve or supplement their in-house flight desks. We have offered Core and Business memberships with guaranteed aircraft availability and fixed rate pricing since our inception. ~~During 2019, we launched~~The Connect membership, our introductory ~~membership tier. The Connect membership~~tier, offers variable rate pricing on a per trip basis and is designed for the consumer with less frequent flight needs or who has more flexibility in their schedule or does not seek capped rate pricing. All membership options provide access through the Wheels Up mobile app to on-demand charter flights, dynamic

pricing, a variety of Shared Flights, empty-leg Hot Flights,

Shuttles and The Community, an online platform of members-only forums to facilitate flight sharing, enabling members to reduce their cost of flying private. In addition, customers can qualify for Delta Air Lines, Inc. (“Delta”) miles in the Delta SkyMiles Program as part of their membership.

~~During 2020, we added a non-membership offering to tap into a larger addressable market and expand flyer participation in our marketplace. Non-member~~In addition, non-member customers now have access to a full-scale marketplace of private aircraft through the Wheels Up mobile app, available on iOS and Android where they can view real-time dynamic pricing for available aircraft classes, making it possible to instantaneously search, book and fly. These flyers are not required to purchase a membership but may pay additional transaction fees not applicable to members and do not receive membership benefits. In addition, non-member flyers do not have aircraft availability guarantees as members do and flights are priced dynamically at rates that are not capped.

We also manage aircraft for owners in exchange for a recurring contractual fee. Under the terms of many of our management agreements, in addition to owners utilizing their own aircraft, the managed aircraft may be used by us to fulfill member and non-member flights on a revenue sharing arrangement with the owner. Revenue associated with the management of aircraft also includes the recovery of owner incurred expenses, as well as the recharging of certain incurred aircraft operating costs.

~~In addition, we~~We earn other revenue from sales of whole aircraft, group charter, cargo, maintenance, repair and operations (“MRO”), ground services and fixed-base operator (“FBO”) activities. In addition, other revenue includes safety and ~~maintenance, repair and overhaul (“MRO”) ground services,~~security revenue, flight management software ~~subscriptions, sponsorship~~subscription fees from third-party operators for access to our proprietary cloud-based flight management system, UP FMS, sponsorships and partnership fees, ~~freight, group charter, safety & security,~~and special missions revenue, including government, defense, emergency and ~~whole aircraft acquisitions and sales where we act as the broker.~~medical transport.

Recent Developments

~~Completion~~Operational Efficiency and Cost Reduction Initiatives

Member Program Changes

On May 9, 2023, we announced changes to our member program that we expect will better serve members and customers, while also improving our operational efficiency and flight margins. These member program changes include, among others, creating two primary service areas – one East of the ~~Business Combination~~

On July 13, 2021 (the “Closing Date”), we completed a business combination with Aspirational Consumer Lifestyle Corp., a blank check company originally incorporated as a Cayman Islands exempted company (the “Business Combination”). We received approximately $656.3 millionMississippi River and one focused in ~~gross proceeds in connection with~~ the ~~transaction.~~

~~Payoff of Credit Facilities and Promissory Notes~~

~~Shortly following the Closing Date, we repaid substantially all~~Western region of the ~~outstanding principal~~country – that we believe will allow us to better position our King Air and Light, Mid and Super-Midsize jet fleets to enhance flight experience and member service in our primary operating areas. We will continue to provide flight services to all regions in the United States. Regions outside of our ~~credit facilities and promissory notes, together with all accrued and unpaid interest~~primary service areas will be dynamically priced at competitive market rates. We currently expect these latest member program changes to take effect in June 2023. The nature of these program changes could cause financial variability in the ~~amount~~short-term during the period of ~~approximately $175.5 million.~~implementation. However, we believe that these program changes will support our previously announced goal of delivering positive Adjusted EBITDA in 2024.

~~Aircraft Purchases~~Certificate Consolidation and Operational Efficiency Efforts

~~On January 12, 2022,~~We expect the consolidation of our FAA operating certificates will simplify our flight operations by harmonizing our procedures across the entire company versus the multiple operating silos that exist today. In February 2023, we entered into an agreement with Textron Financial Corporation to exercise our purchase option on 32 leased aircraft. The negotiated purchase price for all aircraft was $65.0 million, and in connection withconsolidated the ~~purchase we received a reimbursement of approximately $7.3 million for unused maintenance reserves. The sale was completed on February 22, 2022.~~

legacy Alante Air Charter ~~LLC Acquisition~~

On February 3, 2022, we acquired Alante Air Charter, LLC (“Alante Air”), a Scottsdale, Arizona based private jet charter business. The total purchase price for Alante Air was $15.5 million, which was paid in cash. The acquisition added 12 Light jetsoperations and our Cessna CJ3 aircraft onto one certificate. We anticipate that our certificate consolidation and related operational efficiency efforts will contribute meaningfully to our ~~controlled fleet.~~service delivery and financial results in future periods. In addition, we have also implemented changes to our aircraft fleet management and maintenance operations intended to improve the efficiency of our operations and the availability of our aircraft. We are also conducting a strategic review to further simplify our business and focus on our core charter operations, which could include divesting some of our non-core assets.

~~Tropic Ocean Investors LLC Investment and Partnership~~Restructuring Plan

OnIn March ~~7, 2022,~~2023, we ~~made~~announced the adoption of a ~~minority cash investment~~restructuring plan (the “Restructuring Plan”) as part of ~~$10.0 million~~the Company’s previously announced focus on delivering positive Adjusted EBITDA in ~~Tropic Ocean Investors LLC (“Tropic Ocean”) and entered into a multiyear commercial cooperation agreement. Tropic Ocean~~2024. The Restructuring Plan is the world’s largest amphibious airline and leading provider of last-mile private charter and scheduled service in Florida, the Northeastern United States (“U.S.”), the Bahamas, the Caribbean and beyond.

~~Air Partner plc Acquisition~~intended to streamline the Company’s organization and reduce headcount in areas of the business that do not directly impact the Company’s operations or its customers’ experience. Excluded from these actions were key operationally focused employee groups such as pilots, maintenance and operations-support personnel.

On April 1, 2022, we acquired Air Partner plc (“Air Partner”), a United Kingdom-based international aviation services group with operations in 18 locations across four continents. The total purchase price for Air Partner was $108.2 million, which was paid in cash.Atlanta Member Operations Center

~~Fuel Surcharge and Carbon Offset Fee~~

~~On April 9, 2022, we implemented a fixed hourly fuel surcharge ranging from $295 per hour to $895 per hour across our fleet.~~

~~On May 2,~~In October 2022, we announced ~~we would implement~~our plan to relocate significant elements of our member operations team from Columbus, Ohio to Atlanta, Georgia, which will include construction of a ~~new fuel surcharge framework effective June 1, 2022.~~34,000 square foot Member Operations Center (the “Atlanta Member Operations Center”) and the relocation of certain employees to the Atlanta area. Establishment of the Atlanta Member Operations Center is expected to centralize our critical functions with the goal of better serving our members and customers. The ~~fuel surcharge~~Atlanta Member Operations Center is ~~applied when the cost of Jet A fuel, as published by the Argus U.S. Jet Fuel IndexTM., is more than $2.00 per gallon and is calculated based~~expected to open on ~~estimated billable flight time.~~May 15, 2023.

UP Global Response

In ~~addition, on May 2,~~November 2022, we announced a ~~carbon offset fee will be added~~partnership with AirMed International, a global leader in air medical transport, to ~~each hour~~bring an array of ~~flight time effective June 1, 2022.~~medical-travel services to our members and their families through our new UP Global Response membership offering. UP Global Response provides the member and up to 11 additional designated individuals with access to air medical transport from nearly any location in the world should they have a covered medical event while traveling more than 150 miles from home. The ~~fee ranges from $20 per flight hour to $65 per flight hour.~~

~~Business Impact of COVID-19~~

For the foreseeable future, we plan to continue the Wheels Up Safe Passage™ program introduced in response to the outbreak of the coronavirus pandemic (“COVID-19”). We have not had and do not expect any material COVID-19 related contingencies, impairments, concessions, credit losses or other expenses in future periods.

~~As a result of the increased rate of COVID-19 spread during a portion of the fourth quarter of 2021 and into the first quarter of 2022, flight volumes were negatively impacted, primarily due~~membership also includes access to a ~~combination~~24/7 global medical services referral hotline, and a transport of ~~customer cancellations, access~~mortal remains benefit, among other features. We began offering the UP Global Response membership to ~~third-party supply~~our current and ~~reduced crew availability resulting from COVID-19 exposure. Although flight volumes recovered~~prospective members in ~~the second quarter of 2022, we continue to experience supply chain disruptions and increased costs for parts and supplies related to COVID-19.~~

Moving forward, we believe the COVID-19 pandemic has led to a shift in consumer prioritization of wellness and safety, with private aviation viewed increasingly by those in the addressable market as a health-conscious decision rather than a discretionary luxury. We believe this will translate into an increase in flight demand over time.January 2023.

Non-GAAP Financial Measures

In addition to our results of operations below, we report certain key financial measures that are not required by, or presented in accordance with, U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

These non-GAAP financial measures are in addition to, and not a substitute for, measures of financial performance prepared in accordance with U.S. GAAP and should not be considered as an alternative to any performance measures derived in accordance with U.S. GAAP. We believe that these non-GAAP financial measures of financial results provide useful supplemental information about Wheels Up to investors and are utilized internally by our management team to assess certain aspects of our performance. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest U.S. GAAP equivalents, including that they exclude significant expenses that are required by U.S. GAAP to be recorded in Wheels Up’s financial measures. In addition, other companies may calculate non-GAAP financial measures differently or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.

Adjusted EBITDA

We calculate Adjusted EBITDA as net income (loss) adjusted for (i) interest income (expense), (ii) income tax expense, (iii) depreciation and amortization, (iv) equity-based compensation expense, (v) acquisition and integration related expenses and (vi) ~~public company readiness related expenses, (vii) change in fair value of warrant liability and~~

~~(viii)~~ other items not indicative of our ongoing operating performance, including but not limited to, restructuring charges. We include Adjusted EBITDA as a supplemental measure for assessing operating performance and for the following:

•~~Use~~To be used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions; and

•~~Provides~~To provide useful information for historical period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and variable amounts.

The following table reconciles Adjusted EBITDA to net loss, which is the most directly comparable U.S. GAAP measure (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net loss	Net loss	$	(92,760)	$	(28,954)	$	(181,800)	$	(61,167)	Net loss	$	(100,866)	$	(89,040)
Add back (deduct)	Add back (deduct)									Add back (deduct)
Interest expense	Interest expense	—		4,164		—		8,721		Interest expense	8,119		—
Interest income	Interest income	(405)		(6)		(482)		(18)		Interest income	(3,821)		(77)
Income tax expense	Income tax expense	320		—		320		—		Income tax expense	188		—
Other expense, net	Other expense, net	850		—		880		—		Other expense, net	(145)		30
Depreciation and amortization	Depreciation and amortization	16,134		13,482		30,362		27,313		Depreciation and amortization	14,445		14,228
Change in fair value of warrant liability										Change in fair value of warrant liability	(125)		(3,631)
Equity-based compensation expense	Equity-based compensation expense	20,781		1,348		43,335		2,762		Equity-based compensation expense	11,538		22,554
Public company readiness expense(1)		—		370		—		843
Acquisition and integration expense~~(2)~~(1)	Acquisition and integration expense~~(2)~~(1)	7,511		1,116		11,345		4,374		Acquisition and integration expense~~(2)~~(1)	2,034		3,834
Restructuring charges~~(3)~~(2)	Restructuring charges~~(3)~~(2)	2,809		—		5,483		—		Restructuring charges~~(3)~~(2)	10,491		2,674
Change in fair value of warrant liability		(2,129)		—		(5,760)		—
Corporate headquarters relocation expense		—		—		—		31
Atlanta Member Operations Center set-up expense(3)										Atlanta Member Operations Center set-up expense(3)	6,960		—
Certificate consolidation expense(4)										Certificate consolidation expense(4)	2,647		—
Other(5)										Other(5)	(380)		—
Adjusted EBITDA	Adjusted EBITDA	$	(46,889)	$	(8,480)	$	(96,317)	$	(17,141)	Adjusted EBITDA	$	(48,915)	$	(49,428)

__________________

(1)~~Includes costs primarily~~Consists of expenses incurred associated with ~~compliance, updated systems and consulting in advance~~acquisitions as well as integration-related charges incurred within one year of ~~transitioning~~acquisition date primarily related to ~~a public company.~~

~~(2)Consists mainly of~~ system conversions, ~~merging of operating certificates,~~ re-branding costs and fees paid to external ~~advisors in connection with strategic transactions.~~advisors.

~~(3)~~(2)~~During~~For the three months ended March 31, 2023, includes restructuring charges related to the Restructuring Plan and other strategic business initiatives. For the three months ended March 31, 2022, ~~we recorded~~includes restructuring charges for employee separation programs following strategic business decisions.

(3)Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations.

(4)Consists of expenses incurred to execute our consolidation of our FAA operating certificates.

(5)Includes collections of certain aged receivables which were added back to Net Loss in the reconciliation presented for the three and twelve months ended December 31, 2022.

Adjusted Contribution and Adjusted Contribution Margin

We calculate Adjusted Contribution as gross profit (loss) excluding depreciation and amortization and adjusted further for ~~(i)~~ equity-based compensation included in cost of revenue ~~(ii) acquisition~~ and ~~integration expense included in cost of revenue and (iii)~~ other items included in cost of revenue that are not indicative of our ongoing operating performance. Adjusted Contribution Margin is calculated by dividing Adjusted Contribution by total revenue. We include Adjusted Contribution and Adjusted Contribution Margin as supplemental measures for assessing operating performance and for the following:

•To be used to understand our ability to achieve profitability over time through scale and leveraging costs; and

•~~Provides~~To provide useful information for historical period-to-period comparisons of our business and to identify trends.

The following table reconciles Adjusted Contribution to gross profit (loss), which is the most directly comparable U.S. GAAP measure (in thousands, except percentages):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2022			2021			2022			2021				2023			2022
Revenue	Revenue	$	425,512		$	285,580		$	751,147		$	547,237		Revenue	$	351,812		$	325,635
Less: Cost of revenue	Less: Cost of revenue	(408,898)			(255,188)			(741,656)			(489,695)			Less: Cost of revenue	(353,791)			(332,758)
Less: Depreciation and amortization	Less: Depreciation and amortization	(16,134)			(13,482)			(30,362)			(27,313)			Less: Depreciation and amortization	(14,445)			(14,228)
Gross profit (loss)	Gross profit (loss)	$	480		$	16,910		$	(20,871)		$	30,229		Gross profit (loss)	$	(16,424)		$	(21,351)
Gross margin	Gross margin	0.1		%	5.9		%	(2.8)		%	5.5		%	Gross margin	(4.7)		%	(6.6)		%
Add back:	Add back:													Add back:
Depreciation and amortization	Depreciation and amortization	$	16,134		$	13,482		$	30,362		$	27,313		Depreciation and amortization	$	14,445		$	14,228
Equity-based compensation expense in cost of revenue	Equity-based compensation expense in cost of revenue	3,307			49			7,739			100			Equity-based compensation expense in cost of revenue	1,179			4,432
Acquisition and integration expense in cost of revenue		—			—			—			1,010

Restructuring expense in cost of revenue(1)														Restructuring expense in cost of revenue(1)	755			—
Atlanta Member Operations Center set-up expense in cost of revenue(2)														Atlanta Member Operations Center set-up expense in cost of revenue(2)	3,799			—
Certificate consolidation expense in cost of revenue(3)														Certificate consolidation expense in cost of revenue(3)	2,601			—
Adjusted Contribution	Adjusted Contribution	$	19,921		$	30,441		$	17,230		$	58,652		Adjusted Contribution	$	6,355		$	(2,691)
Adjusted Contribution Margin	Adjusted Contribution Margin	4.7		%	10.7		%	2.3		%	10.7		%	Adjusted Contribution Margin	1.8		%	(0.8)		%

__________________

(1)For the three months ended March 31, 2023, includes restructuring charges related to the Restructuring Plan and other strategic business initiatives. For the three months ended March 31, 2022, includes restructuring charges for employee separation programs following strategic business decisions.

(2)Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations.

(3)Consists of expenses incurred to execute our consolidation of our FAA operating certificates.

Key Operating Metrics

In addition to financial measures, we regularly review certain key operating metrics to evaluate our business, determine the allocation of resources and make decisions regarding business strategies. We believe that these metrics can be useful for understanding the underlying trends in our business.

The following table summarizes our key operating metrics:

As of June 30,
2022 2021 % Change
Active Members 12,667 10,515 20 %
Three Months Ended June 30,
2022 2021 % Change
Active Users 13,119 11,281 16 %
Live Flight Legs 21,705 18,234 19 %
Flight revenue per Live Flight Leg 13,088 11,663 12 %


		Six Months Ended June 30,					As of March 31,
							2023		2022		% Change
Active Members						Active Members	12,285		12,424		(1)	%

							Three Months Ended March 31,
							2023		2022		% Change
Active Users						Active Users	13,336		12,547		6	%
		2022	2021	% Change
Live Flight Legs	Live Flight Legs	39,331	33,512	17	%	Live Flight Legs	15,389		17,626		(13)	%

Flight revenue per Live Flight Leg	Flight revenue per Live Flight Leg	13,232	12,030	10	%	Flight revenue per Live Flight Leg	$	15,060	$	13,410	12	%

Active Members

We define Active Members as the number of Connect, Core and Business membership accounts that generated membership revenue in a given period and are active as of the end of the reporting period. We use Active Members

to assess the adoption of our premium offerings which is a key factor in our penetration of the market in which we operate and a key driver of membership and flight revenue.

Active Users

We define Active Users as Active Members ~~and legacy Wheels Up Private Jets LLC (“WUPJ”) jet card holders~~ as of the reporting date plus unique non-member consumers who completed a revenue generating flight at least once in a given period and excluding wholesale flight activity. While a unique consumer can complete multiple revenue generating flights on our platform in a given period, that unique user is counted as only one Active User. We use Active Users to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the market in which we operate and our growth in revenue.

Live Flight Legs

We define Live Flight Legs as the number of completed one-way revenue generating flight legs in a given period. The metric excludes empty repositioning legs and owner legs related to aircraft under management. We believe Live Flight Legs are a useful metric to measure the scale and usage of our platform, and our growth in flight revenue.

~~Component~~Components of Results of Our Operations

The key components of our results of operations include:

Revenue

Revenue is derived from flight, membership, aircraft management and other services.

Flight revenue consists of retail and wholesale flights and certain related fees and surcharges. Members can either pay as they fly or prepay for flights when they purchase a Prepaid Block.

Membership revenue is comprised of a one-time initiation fee paid at the commencement of a membership and recurring annual dues. In the first year of membership, a portion of the initiation fee is applied to annual dues. The remainder of the initiation fee, less any flight credits, is deferred and recognized on a straight-line basis over the estimated duration of the customer relationship period, which is estimated to be three years as of ~~June 30, 2022.~~March 31, 2023. Members are charged recurring annual dues to maintain their membership. Revenue related to the annual dues are deferred and recognized on a straight-line basis over the related contractual period. If a member qualifies to earn Delta miles in the Delta SkyMiles Program as part of their membership, then a portion of the membership fee is allocated at contract inception.

Aircraft management revenue consists of contractual monthly management fees charged to aircraft owners, recovery of owner incurred expenses including maintenance coordination, cabin crew and pilots, and recharging of certain incurred aircraft operating costs such as maintenance, fuel, landing fees and parking. We pass recovery and recharge amounts back to owners at either cost or at a predetermined margin.

Other revenue primarily consists of (i) ~~ground services derived from~~sales of whole aircraft, ~~customers that use our~~(ii) group charter revenue, (iii) cargo revenue, and (iv) MRO and FBO ~~and MRO facilities and (ii) flight-related services.~~revenues. In addition, other revenue includes safety and security revenue, flight management software subscription fees from third-party operators for access to ~~our~~ UP FMS, ~~software,~~ fees ~~we may receive~~ from third-party sponsorships and ~~partnerships, freight, group charter, safety & security, whole aircraft acquisitions and sales where we act as the broker,~~partnership fees, and special missions revenue, including government, defense, emergency and medical transport.

Costs and Expenses

Costs and expenses consist of the following components:

Cost of Revenue

Cost of revenue primarily consists of direct expenses incurred to provide flight services and facilitate operations, including aircraft lease costs, fuel, crew travel, maintenance and third-party flight costs. Cost of revenue

also consists of compensation expenses, including equity-based compensation and related benefits for employees that directly facilitate flight operations. In addition, cost of revenue includes aircraft owner expenses incurred such as maintenance coordination, cabin crew and pilots, and certain aircraft operating costs such as maintenance, fuel, landing fees and parking.

~~Other Operating Expenses~~

Technology and Development

Technology and development expense primarily consists of compensation expenses for engineering, product development and design employees, including equity-based compensation, expenses associated with ongoing improvements to, and maintenance of, our platform offerings and other technology. Technology and development expense also includes software expenses and technology consulting fees.

Sales and Marketing

Sales and marketing expense primarily consists of compensation expenses in support of sales and marketing such as commissions, salaries, equity-based compensation and related benefits. Sales and marketing expense also includes expenses associated with advertising, promotions of our services, member experience, account management and brand-building.

General and Administrative

General and administrative expense primarily consists of compensation expenses, including allocable portions of equity-based compensation and related benefits for our executive, finance, human resources and legal teams, and other personnel performing administrative functions. General and administrative expense also includes corporate office rent expense, third-party professional fees, acquisition and integration related expenses, ~~public company readiness expenses~~ and any other cost or expense incurred not deemed to be related to cost of revenue, sales and marketing expense or technology and development expense.

~~Depreciation and Amortization~~

Depreciation and amortization expense primarily consists of depreciation of capitalized aircraft. Depreciation and amortization expense also includes amortization of capitalized software development costs and acquired finite-lived intangible assets. We allocate overhead such as facility costs and telecommunications charges, based on department headcount, as we believe this to be the most accurate measure. As a result, a portion of general overhead expenses are reflected in each operating expense category.

Depreciation and Amortization

Depreciation and amortization expense primarily consists of depreciation of capitalized aircraft as well as amortization of capitalized software development costs and acquired finite-lived intangible assets.

Gain on Sale of Aircraft Held for Sale

Gain on sale of aircraft held for sale consists of the gain on aircraft ~~sold~~previously held as property and equipment and subsequently elected to actively market for sale or aircraft purchased where ~~we did not act as a broker. When these aircraft were acquired, it was~~ our intent to sell and not to hold ~~them~~the asset long-term.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability consists of unrealized gain (loss) on warrants assumed as part of the ~~Business Combination,~~business combination consummated on July 13, 2021 between Wheels Up Partners Holdings LLC, a Delaware limited liability company (“WUP”), and Aspirational Consumer Lifestyle Corp. (“Aspirational”), a blank check company (the “Business Combination’), including ~~Private~~7,991,544 public warrants (“Public Warrants”) and 4,529,950 private warrants (the “Private Warrants” and, together with the Public Warrants, ~~and Public Warrants.~~the “Warrants”).

Interest Income

Interest income primarily consists of interest earned on cash equivalents in money market funds, U.S. treasury bills and time deposits.

Interest Expense

Interest expense primarily consists of the interest paid or payable and the amortization of debt discounts and deferred financing costs on our credit facilities, promissory notes and ~~promissory notes.~~

other debt obligations.

Income Tax Expense

Income tax expense consists of income taxes ~~are~~ recorded using the asset and liability method. Under this method, deferred tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial reporting and tax bases of existing assets and liabilities. These differences are measured using the enacted tax rates that are expected to be in effect when these differences are anticipated to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized.

Results of Our Operations ~~for the Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021~~

The following table sets forth our results of operations for each of the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands, except percentages):


		Three Months Ended June 30,				Change in					Three Months Ended March 31,				Change in
		2022		2021		$		%			2023		2022		$		%
Revenue	Revenue	$	425,512	$	285,580	$	139,932	49	%	Revenue	$	351,812	$	325,635	$	26,177	8.0	%

Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenue	Cost of revenue	408,898		255,188		153,710		60	%	Cost of revenue	353,791		332,758		21,033		6.3	%
Technology and development	Technology and development	14,606		8,025		6,581		82	%	Technology and development	15,873		11,191		4,682		41.8	%
Sales and marketing	Sales and marketing	33,688		17,895		15,793		88	%	Sales and marketing	25,803		23,243		2,560		11.0	%
General and administrative	General and administrative	46,973		15,786		31,187		198	%	General and administrative	39,416		38,904		512		1.3	%
Depreciation and amortization	Depreciation and amortization	16,134		13,482		2,652		20	%	Depreciation and amortization	14,445		14,228		217		1.5	%
Gain on sale of aircraft held for sale	Gain on sale of aircraft held for sale	(663)		—		(663)		100	%	Gain on sale of aircraft held for sale	(866)		(1,971)		1,105		(56.1)	%
Total costs and expenses	Total costs and expenses	519,636		310,376		209,260		67	%	Total costs and expenses	448,462		418,353		30,109		7.2	%

Loss from operations	Loss from operations	(94,124)		(24,796)		(69,328)		(280)	%	Loss from operations	(96,650)		(92,718)		(3,932)		4.2	%

Other income (expense):	Other income (expense):									Other income (expense):
Change in fair value of warrant liability	Change in fair value of warrant liability	2,129		—		2,129		100	%	Change in fair value of warrant liability	125		3,631		(3,506)		(96.6)	%
Interest income	Interest income	405		6		399		**		Interest income	3,821		77		3,744		n/m
Interest expense	Interest expense	—		(4,164)		4,164		(100)	%	Interest expense	(8,119)		—		(8,119)		n/m
Other expense, net	Other expense, net	(850)		—		(850)		100	%	Other expense, net	145		(30)		175		n/m
Total other income (expense)	Total other income (expense)	1,684		(4,158)		5,842		141	%	Total other income (expense)	(4,028)		3,678		(7,706)		(209.5)	%

Loss before income taxes	Loss before income taxes	(92,440)		(28,954)		(63,486)		(219)	%	Loss before income taxes	(100,678)		(89,040)		(11,638)		13.1	%

Income tax expense	Income tax expense	(320)		—		(320)		100	%	Income tax expense	(188)		—		(188)		n/m

Net loss	Net loss	(92,760)		(28,954)		(63,806)		(220)	%	Net loss	(100,866)		(89,040)		(11,826)		13.3	%
Less: Net loss attributable to non-controlling interests	Less: Net loss attributable to non-controlling interests	—		(2,798)		2,798		100	%	Less: Net loss attributable to non-controlling interests	—		(387)		387		(100.0)	%
Net loss attributable to Wheels Up Experience Inc.	Net loss attributable to Wheels Up Experience Inc.	$	(92,760)	$	(26,156)	$	(66,604)	(255)	%	Net loss attributable to Wheels Up Experience Inc.	$	(100,866)	$	(88,653)	$	(12,213)	13.8	%

** Percentage not meaningful.__________________

n/m - Not meaningful

3738

Revenue

Revenue increased by ~~$139.9~~8.0%, or $26.2 million, ~~or 49%,~~ for the three months ended ~~June 30, 2022,~~March 31, 2023, compared to the three months ended ~~June 30, 2021.~~March 31, 2022, as follows (in thousands, except percentages).


	Three Months Ended March 31,				Change in
	2023		2022		$		%
Membership	$	21,680	$	20,647	$	1,033	5.0	%
Flight	231,762		236,363		(4,601)		(1.9)	%
Aircraft management	63,694		60,506		3,188		5.3	%
Other	34,676		8,119		26,557		327.1	%
Total	$	351,812	$	325,635	$	26,177	8.0	%

Membership revenue increased 5.0% year-over-year. The ~~increase~~1% decrease in Active Members year-over-year was offset by a higher mix of Core members combined with lower incentives on memberships.

The decrease in Flight revenue was primarily ~~attributable to the following changes in membership revenue, flight revenue, aircraft management revenue and other revenue (in thousands, except percentages):~~

Three Months Ended June 30, Change in
2022 2021 $ %
Membership $ 24,020 $ 16,188 $ 7,832 48 %
Flight 284,071 212,660 71,411 34 %
Aircraft management 60,718 49,955 10,763 22 %
Other 56,703 6,777 49,926 737 %
Total $ 425,512 $ 285,580 $ 139,932 49 %

~~Growth in membership revenue was driven primarily by a 20% increase in Active Members compared to the three months ended June 30, 2021 combined with an increased mix of Core members.~~

~~Flight revenue growth was~~ driven by a ~~19% increase~~13% decrease in Live Flight Legs year-over-year, which resulted in ~~$40.5~~a $30.0 million ~~of growth, and~~reduction to revenue during the period, partially offset by a 12% increase in flight revenue per Live Flight Leg, which drove ~~$30.9~~$25.4 million of year-over-year ~~improvement.~~revenue increase. The ~~increase~~decrease in ~~Live Flight Legs was primarily attributable to an increase in the number of Active Members, as well as an increase in flying by Active Members and the acquisition of Air Partner.~~ Flight revenue for the three months ended ~~June 30, 2022 also includes $15.6~~March 31, 2023 was partially offset by $10.7 million of fuel surcharge revenue, which we began collecting effective April 1, 2022 and modified to a fuel surcharge indexed to fuel prices effective June 1, ~~2022. In addition,~~2022, as well as $8.5 million of flight revenue ~~increased due~~attributable to ~~the acquisition of~~ Air Partner plc (“Air Partner”), which ~~added $13.3 million for the three months ended June 30,~~we acquired on April 1, 2022.

The increase in ~~aircraft~~Aircraft management revenue was primarily attributable to an increase in our recovery of owner and rechargeable costs related to operating aircraft under management, both of which ~~stem~~stemmed from ~~increased flight activity.~~an increase in operating costs.

The increase in ~~other~~Other revenue was primarily attributable to ana $9.6 million increase in sales of aircraft inventory and ~~the acquisition of~~a $14.3 million increase attributable to Air Partner for the three months ended ~~June 30, 2022.~~March 31, 2023.

Cost of Revenue

Cost of revenue increased by ~~$153.7~~$21.0 million, or ~~60%~~6%, for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021.~~March 31, 2022. The increase in cost of revenue is primarily attributable ~~to the increase in Live Flight Legs, the increase in~~sales of aircraft ~~management~~inventory, cost of revenue and increased whole aircraft sales. In addition, excluding aircraft owner expenses, fuel expense increased by $21.0 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, which was primarily attributable to anAir Partner and one-time expenses associated with certificate consolidation and set-up of our Atlanta Member Operations Center. The increase was partially offset by a decrease in ~~fuel prices.~~equity-based compensation expense associated with historical awards which vested prior to or within the current period.

Adjusted Contribution Margin decreased ~~600~~260 basis points for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021,~~March 31, 2022, which was primarily attributable to fixed costs while we experienced lower live flight legs combined with cost pressures ~~and supply constraints~~ impacting us and the industry, partially offset by ~~the acquisition of Air Partner and additional~~increased whole aircraft ~~sales.~~sales during the period. Specifically, ~~pilot~~reduced maintenance availability, which can result in lower utility or higher procurement costs, increased ~~fuel~~crew travel costs ~~maintenance challenges,~~and wage inflation ~~and increased third-party fulfillment costs~~ each contributed to the decline in Adjusted Contribution Margin. See “Non-GAAP Financial Measures” above for a definition of Adjusted Contribution Margin, information regarding our use of Adjusted Contribution Margin and a reconciliation of gross margin to Adjusted Contribution Margin.

Other Operating Expenses

Technology and Development

Technology and development expenses increased by ~~$6.6~~$4.7 million, or ~~82%~~41.8%, for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021. The~~March 31, 2022, primarily attributable to a $6.3 million increase in ~~technology~~employee compensation and ~~development expenses was~~allocable costs, including $2.3 million of one-time charges associated with the

3839

~~primarily~~Restructuring Plan. The increase was also attributable to ~~an increase of $3.7~~a $1.3 million ~~in employee compensation and allocable costs combined with third-party consultant fees increasing $4.5 million. The~~ increase in ~~employee costs~~enterprise software expense and ~~consultant fees~~$1.0 million of expenses attributable to Air Partner. The increase was partially offset by ~~higher capitalized costs related to the development of internal use software of $4.0 million. Additionally, enterprise software expense increased by~~a $1.3 ~~million. Lastly, technology and development expenses increased due to the acquisition of Air Partner, which added $1.1~~ million ~~for the three months ended June 30, 2022.~~decrease in IT equipment spend.

Sales and Marketing

Sales and marketing expenses increased by ~~$15.8~~$2.6 million, or ~~88%~~11.0%, for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021. The increase in sales and marketing was~~March 31, 2022, primarily attributable to an$7.2 million of expenses attributable to Air Partner, of which $1.2 million were one-time charges incurred associated with the Restructuring Plan, as well as $0.9 million of other one-time charges associated with the Restructuring Plan charges. The increase of $4.7 million for employee compensation costs and allocable costs. In addition, sales commissions increased $1.8 million driven by higher sales activity. Expenses related to in-person Wheels Down events and member benefits increased $3.7 million as we resumed holding events for our members after COVID-19 restrictions were lifted, which was partially offset by a $2.0 million decrease in equity-based compensation associated with historical awards which vested prior to or within the current period, a $1.1 million decrease in events spending, a $1.7 million decrease in employee compensation and allocable costs, due in part to the effect of the Restructuring Plan, and a $0.5 million decrease in advertising ~~spending of $0.9 million. Lastly, sales and marketing expenses increased due to the acquisition of Air Partner, which added $6.5 million for the three months ended June 30, 2022.~~spend.

General and Administrative

General and administrative expenses increased by ~~$31.2~~$0.5 million, or ~~198%~~1.3%, for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021. The increase in general and administrative expenses was~~March 31, 2022, primarily attributable to $5.5 million of expenses attributable to Air Partner, $5.4 million in one-time restructuring charges associated with the Restructuring Plan, a ~~$13.0~~$2.7 million increase year-over-year, and $0.7 million in one-time costs related to the set-up of the Atlanta Member Operations Center. The increase was also attributable to a $1.8 million increase in acquisition and integration charges and a $0.9 million increase in professional fees. The increases were partially offset by a $5.7 million decrease in equity-based compensation ~~expense due~~associated with historical awards which vested prior to ~~additional awards that were granted during~~or within the ~~three months ended June 30, 2022. In addition, personnel expenses~~current period, a $3.5 million decrease in acquisition-related consulting charges and ~~allocable costs increased $4.0~~a $1.9 million and professional service-related fees increased $7.9 million for the three months ended June 30, 2022. Public company related costs, travel and entertainment expenses, office expenses and other costs also increased by approximately $0.8 million. Additionally, general and administrative expenses increased due to the acquisition of Alante Air and Air Partner, which added $0.3 million and $5.2 million, respectively, for the three months ended June 30, 2022.decrease in legal-related charges.

Depreciation and Amortization

Depreciation and amortization expenses ~~increased by $2.7 million, or 20%,~~were relatively flat for the three months ended ~~June 30, 2022~~March 31, 2023 compared to the three months ended June 30, 2021. The increase in depreciation and amortization expense was primarily attributable to a $1.4 million increase in amortization of software development costs. The increase was partially offsetMarch 31, 2022.

Interest Income

Interest income increased by ~~a decrease in amortization of intangible assets of $0.4 million. Lastly, depreciation and amortization expenses increased due to the acquisition of Air Partner, which added $1.7~~$3.7 million, for the three months ended ~~June 30, 2022.~~

~~Interest Expense~~

~~Interest expense decreased by $4.2 million, or (100)%, for the three months ended June 30, 2022~~March 31, 2023 compared to the three months ended ~~June 30, 2021.~~March 31, 2022. The ~~decrease in interest expense~~increase was attributable to ~~our repayment~~higher rates of ~~substantially all of the outstanding principal of our long-term debt~~interest earned on ~~July 21, 2021.~~

~~Results of Our Operations for the Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021~~

~~The following table sets forth our results of operations for the six months ended June 30, 2022 and 2021 (in thousands, except percentages):~~

Six Months Ended June 30, Change in
2022 2021 $ %
Revenue $ 751,147 $ 547,237 $ 203,910 37 %
Costs and expenses:
Cost of revenue 741,656 489,695 251,961 51 %
Technology and development 25,797 15,049 10,748 71 %
Sales and marketing 56,931 33,689 23,242 69 %
General and administrative 85,877 33,955 51,922 153 %
Depreciation and amortization 30,362 27,313 3,049 11 %
Gain on sale of aircraft held for sale (2,634) — (2,634) 100 %
Total costs and expenses 937,989 599,701 338,288 56 %
Loss from operations (186,842) (52,464) (134,378) (256) %
Other income (expense):
Change in fair value of warrant liability 5,760 — 5,760 100 %
Interest income 482 18 464 **
Interest expense — (8,721) 8,721 (100) %
Other expense, net (880) — (880) 100 %
Total other income (expense) 5,362 (8,703) 14,065 162 %
Loss before income taxes (181,480) (61,167) (120,313) (197) %
Income tax expense (320) — (320) 100 %
Net loss (181,800) (61,167) (120,633) (197) %
Less: Net loss attributable to non-controlling interests (387) (5,602) 5,215 93 %
Net loss attributable to Wheels Up Experience Inc. $ (181,413) $ (55,565) $ (125,848) (226) %

** Percentage not meaningful.

~~Revenue~~

~~Revenue increased by $203.9 million, or 37%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase~~cash equivalents in ~~revenue was primarily attributable to the following changes in membership revenue, flight revenue, aircraft management revenue and other revenue (in thousands, except percentages):~~

Six Months Ended June 30, Change in
2022 2021 $ %
Membership $ 44,667 $ 31,162 $ 13,505 43 %
Flight 520,434 403,134 117,300 29 %
Aircraft management 121,224 100,835 20,389 20 %
Other 64,822 12,106 52,716 435 %
Total $ 751,147 $ 547,237 $ 203,910 37 %

~~Growth in membership revenue was driven primarily by a 20% increase in Active Members compared to the six months ended June 30, 2021 combined with an increased mix of Core members.~~

Flight revenue growth was driven by a 17% increase in Live Flight Legs year-over-year, which resulted in $70.0 million of growth, and a 10% increase in flight revenue per Live Flight Leg, which drove $47.2 million of year-over-year improvement. The increase in Live Flight Legs was primarily attributable to an increase in the number of Active Members, as well as an increase in flying by Active Members and the acquisition of Air Partner. Flight revenue for the six months ended June 30, 2022 also includes $15.6 million of fuel surcharge revenue, which we began collecting effective June 1, 2022. In addition, flight revenue increased due to the acquisition of Air Partner, which added $13.3 million for the six months ended June 30, 2022.

The increase in aircraft management revenue was primarily attributable to an increase in our recovery of owner and rechargeable costs related to operating aircraft under management, both of which stem from increased flight activity.

~~The increase in other revenue was primarily attributable to an increase in sales of aircraft inventory and the acquisition of Air Partner for the six months ended June 30, 2022.~~

~~Cost of Revenue~~

Cost of revenue increased by $252.0 million, or 51%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in cost of revenue is primarily attributable to the increase in Live Flight Legs, the increase in aircraft management revenue and increased whole aircraft sales. In addition, excluding aircraft owner expenses, fuel expense increased by $33.0 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, which was primarily attributable to an increase in fuel prices.

Adjusted Contribution Margin decreased 840 basis points for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, which was primarily attributable to cost pressures and supply constraints impacting us and the industry, partially offset by the acquisition of Air Partner and additional whole aircraft sales. Specifically, pilot availability, increased fuel costs, maintenance challenges. wage inflation and increased third-party fulfillment costs each contributed to the decline in Adjusted Contribution Margin. See ~~“Non-GAAP Financial Measures”~~ ~~above for a definition of Adjusted Contribution Margin, information regarding our use of Adjusted Contribution Margin and a reconciliation of gross margin to Adjusted Contribution Margin.~~

~~Other Operating Expenses~~

~~Technology and Development~~

Technology and development expenses increased by $10.7 million, or 71%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in technology and development expenses was

primarily attributable to an increase of $5.8 million in employee compensation costs and allocable costs, which was partially offset by higher capitalized costs related to the development of internal use software of $0.7 million. Third-party consultant fees also increased $7.3 million, which was offset by a $6.3 million increase in capitalized costs related to internal use software. Additionally, equipment and enterprise software expense increased by $1.3 million and $2.2 million, respectively. Lastly, technology and development expenses increased due to the acquisition of Air Partner, which added $1.1 million for the six months ended June 30, 2022.

~~Sales and Marketing~~

Sales and marketing expenses increased by $23.2 million, or 69%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in sales and marketing was primarily attributable to an increase of $8.5 million for employee compensation costs and allocable costs. In addition, sales commissions increased $2.9 million driven by higher sales activity. Expenses related to in-person Wheels Down events and member benefits increased $5.6 million as we resumed holding events for our members after COVID-19 restrictions were lifted. Additionally, advertising expense decreased $0.5 million, which was partially offset by an increase in professional service-related fees of $0.2 million. Lastly, sales and marketing expenses increased due to the acquisition of Air Partner, which added $6.5 million for the six months ended June 30, 2022.

~~General and Administrative~~

General and administrative expenses increased by $51.9 million, or 153%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in general and administrative expenses was primarily attributable to a $26.7 million increase in equity-based compensation expense due to additional awards that were granted during the six months ended June 30, 2022. In addition, personnel expenses and allocable costs increased $7.0 million and professional service-related fees increased $10.0 million for the six months ended June 30, 2022. Public company related costs, travel and entertainment expenses, office expenses and other costs also increased by approximately $2.5 million. Additionally, general and administrative expenses increased due to the acquisition of Alante Air and Air Partner, which added $0.5 million and $5.2 million, respectively, for the six months ended June 30, 2022.

~~Depreciation and Amortization~~

Depreciation and amortization expenses increased by $3.0 million, or 11%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in depreciation and amortization expense was primarily attributable to a $2.2 million increase in amortization of software development costs and a $0.4 million increase in depreciation expense for leasehold improvements. The increase was partially offset by a decrease in depreciation expense for our owned aircraft and amortization of intangible assets of $0.9 million and $0.4 million, respectively. Lastly, depreciation and amortization expenses increased due to the acquisition of Air Partner, which added $1.7 million for the six months ended June 30, 2022.money market funds.

Interest Expense

Interest expense ~~decreased by $8.7~~was $8.1 million ~~or (100)%,~~ for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 with no comparable amount in the three months ended March 31, 2022. The increase was attributable to the Equipment Notes (as defined below) issued in October 2022.

Other Expense, Net

Other expense, net was relatively flat for the three months ended March 31, 2023 compared to the ~~six~~three months ended ~~June 30, 2021. The decrease in interest expense was attributable to our repayment of substantially all of the outstanding principal of our long-term debt on July 21, 2021.~~March 31, 2022.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity have historically consisted of financing activities, including proceeds from the Business Combination and debt financing transactions, and operating activities, primarily from the increase in

deferred revenue associated with the sale of Prepaid Blocks. As of ~~June 30, 2022,~~March 31, 2023, we had ~~approximately $427.0~~$363.2 million of cash and cash equivalents, which were primarily invested in money market funds, and ~~$27.4~~$36.6 million of restricted cash. ~~We believe~~

Long-Term Debt

From time to time, we obtain debt financing to, among other things, refinance or purchase aircraft or fund our ~~cash~~strategic growth initiatives. In October 2022, Wheels Up Partners LLC, our indirect subsidiary ("WUP LLC"), entered into a Note Purchase Agreement, dated as of October 14, 2022 (“Note Purchase Agreement”), pursuant to which WUP LLC issued $270.0 million aggregate principal amount of the equipment notes (collectively, the “Equipment Notes”) using an EETC (enhanced equipment trust certificate) loan structure. The Equipment Notes bear interest at the rate of 12% per annum with annual amortization of principal amount equal to 10% per annum and ~~cash equivalents~~balloon payments due at each maturity date. Interest and principal payments on ~~hand will be sufficient~~the Equipment Notes are payable quarterly on each January 15, April 15, July 15 and October 15, which began on January 15, 2023. The Equipment Notes are secured by first-priority liens on 134 of the Company’s owned aircraft fleet and by liens on certain intellectual property assets of the Company and certain of its subsidiaries.

The Equipment Notes were sold pursuant to ~~meet our projected working capital~~the Note Purchase Agreement, and ~~capital expenditure requirements~~issued under separate Trust Indentures and Mortgages, dated as of October 14, 2022 (each, an “Indenture” and collectively, the “Indentures”). The Note Purchase Agreement and the Indentures and related guarantees contain certain covenants, including a liquidity covenant that requires the Company to maintain minimum liquidity of $125 million, a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the Company, and restrictive covenants that provide limitations under certain circumstances on, among other things: (i) certain acquisitions, mergers or disposals of its assets; (ii) making certain investments or entering into certain transactions with affiliates; (iii) prepaying, redeeming or repurchasing the Equipment Notes, subject to certain exceptions; and (iv) paying dividends and making certain other specified restricted payments. Each Indenture contains customary events of default for ~~at least~~Equipment Notes of this type, including cross-default provisions among the ~~next 12 months.~~Equipment Notes. WUP LLC’s obligations under the Equipment Notes are guaranteed by the Company and certain of its subsidiaries. WUP LLC is also obligated to cause additional subsidiaries and affiliates of WUP LLC to become guarantors under certain circumstances.

As of March 31, 2023, approximately $263.2 million aggregate principal amount of Equipment Notes were outstanding and the carrying value of the aircraft that are subject to first-priority liens under the Equipment Notes was $323.4 million.

Cash Flows

The following table summarizes our cash flows for each of the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Net cash used in operating activities	Net cash used in operating activities	$	(140,175)	$	(118,911)	Net cash used in operating activities	$	(202,482)	$	(121,216)
Net cash used in investing activities	Net cash used in investing activities	$	(181,097)	$	(2,668)	Net cash used in investing activities	$	(11,035)	$	(119,552)
Net cash used in financing activities		$	(6,689)	$	(30,574)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	$	(6,752)	$	(6,107)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(4,345)	$	—	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(86)	$	—
Net decrease in cash, cash equivalents and restricted cash		$	(332,306)	$	(152,153)
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	$	(220,355)	$	(246,875)

Cash Flow from Operating Activities

~~Net cash used in operating activities for the six months ended June 30, 2022 was $140.2 million. In 2022, the~~The cash outflow from operating activities consisted of our net loss, net of non-cash items of ~~$65.5~~$25.9 million and ~~a decrease~~the balance from an increase in net operating assets and ~~liabilities, primarily as a result of a $67.4 million decrease in deferred revenue attributable to a significant increase in Live Flight Legs. In addition, during~~liabilities. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we sold ~~$332.9~~$99.9 million of Prepaid Blocks compared to ~~$115.9~~$174.6 million ~~for~~during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. The ~~increase~~year-over-year decrease in Prepaid Block purchases was primarily attributable to ~~the growth~~normalization of ~~Active Members and a new program and pricing announcement in May 2022.~~supply versus demand for aviation services.

Cash Flow from Investing Activities

~~Net cash used in investing activities for the six months ended June 30, 2022 was $181.1 million. In 2022, the~~The cash outflow from investing activities was primarily attributable to ~~$89.4~~$16.7 million for capital expenditures, including ~~$12.9~~$8.0 million of software development costs. ~~We also purchased $43.8 million of aircraft held for sale. In addition, we acquired Alante Air and Air Partner for $75.1 million, net of cash acquired.~~ The cash outflow was partially offset by ~~$27.1~~$5.7 million in proceeds from the sale of aircraft that were classified as held for sale.

Cash Flow from Financing Activities

~~Net cash used in financing activities for the three months ended June 30, 2022 was $6.7 million. In 2022, the~~The cash outflow from financing activities was attributable to athe payment ~~for shares that were withheld to settle employee taxes due upon~~of principal on the ~~vesting of restricted stock and restricted stock units.~~Equipment Notes.

Contractual Obligations and Commitments

~~Our~~As of March 31, 2023, our principal commitments ~~consist~~consisted of contractual cash obligations under ~~our~~the Equipment Notes, operating leases for certain controlled aircraft, corporate headquarters, and operational facilities, including aircraft ~~hangars.~~hangars, and ordinary course arrangements involving our obligation to provide services for which we have already received deferred revenue. For further information on the Equipment Notes, see “—Long-Term Debt” above and Note 7, Long-Term Debt of the Notes to Condensed Consolidated Financial Statements included herein. For further information about our ~~leases,~~lease obligations, see Note ~~12,~~9, Leases of the Notes to Condensed Consolidated Financial Statements included herein. For further information about deferred revenue, see Note 2, Revenue of the Notes to Condensed Consolidated Financial Statements included herein.

Critical Accounting Policies and Estimates

For further information on our critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Recent Accounting Pronouncements

For further information on recent accounting pronouncements, see Note 2,1, Summary of Business and Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements included herein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except for the material changes set forth below, there has not been any material change to the information included in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021.

In the ordinary course of operating our business, we are exposed to market risks. Market risk represents the risk of loss that may impact our financial position or results of operations due to adverse changes in financial market prices and rates. Our principal market risks have related to interest rates, aircraft fuel ~~inflation~~ and foreign currency exchange.

~~Aircraft Fuel~~

~~We are subject~~ There has not been any material change to ~~market risk associated with changes~~the information included in ~~the price and availability of aircraft fuel. Aircraft fuel expense for each of the three and six months ended June 30, 2022 represented 15%~~Part II, Item 7A of our ~~total cost of revenue and includes the recharge of fuel costs to our aircraft management customers. Based~~Annual Report on ~~our 2022 fuel consumption, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased fuel expense by approximately $6.2 million and $11.1 million~~Form 10-K for the ~~three and six months~~year ended June 30, 2022, respectively. We do not purchase or hold any derivative instruments to protect against the effects of changes in fuel, but due to our dynamic pricing we do have the ability to raise our prices on those flights priced that way. In addition, our agreements allow us to bill members a fuel price surcharge and we exercised our right to apply this surcharge to our hourly rate for the first time on April 9,December 31, 2022. Subsequently, on May 2, 2022, we announced a new fuel surcharge framework. Beginning on June 1, 2022, we calculated and billed the fuel surcharge based on the cost of Jet A fuel, which limits our direct exposure to volatility in Jet A fuel prices to the extent the fuel surcharge applies. See ~~“Recent Developments”~~ ~~above for further information regarding the details of the fuel surcharge.~~

~~Foreign Currency Exchange~~

We are subject to foreign currency exchange risk primarily through Air Partner’s international operations, which involve revenue and expenses denominated in foreign currencies. To manage foreign currency exchange risk, we execute international revenue and expense transactions in the same foreign currency to the extent practicable. As of June 30, 2022, we did not hold any derivative instruments to protect against the risk of foreign currency fluctuations.

4442

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act of 1934, as amended (the “Exchange Act”)), that are designed to provide reasonable assurance that information required to be disclosed in our ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, ~~as appropriate,~~ to allow for timely decisions regarding required disclosure. ~~In designing and evaluating the~~It should be noted that, because of inherent limitations, our disclosure controls and procedures, ~~management recognizes that any controls and procedures, no matter how~~however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of ~~achieving~~ the ~~desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible~~disclosure controls and ~~procedures.~~ procedures are met.

As required by Rule 13a-15(b) under the Exchange Act, our management, ~~including~~with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the ~~end of the~~ period covered by this Quarterly ~~Report.~~Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that ~~as of the end of the period covered by this Quarterly Report,~~ our disclosure controls and procedures were not effective as of March 31, 2023, due to the on-going remediation efforts associated with the material weaknesses in internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) and the need for impacted controls to operate for a sufficient period of time and for management to conclude, through testing, that the controls are ~~effective at~~designed and operating effectively.

Notwithstanding the pending remediation efforts described below, based on additional analysis and other post-closing procedures performed, management believes that the financial statements included in this report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Remediation Plans to Address Material Weaknesses

To date, we have implemented certain measures to address the controls and procedures deficiencies identified in Item 9A of the Annual Report. These measures include (i) adding key personnel, (ii) improving our internal controls around financial systems and processes and (iii) designing and operating user access and change management controls. We intend to take additional steps to remediate the deficiencies identified in Item 9A of the Annual Report and further evolve our internal controls and processes.

Since the date of the Annual Report, we have taken the following steps as part of our remediation plan:

•implemented preventative controls to better ensure segregation of duties; and

•improved system capabilities around posting of journal entries, enhancing journal entry review and approval controls.

Our remediation plan includes the following actions that management intends to undertake during the remainder of the fiscal year ending December 31, 2023:

•ensuring that the IT general controls specific to all key systems supporting financial reporting, including user access reviews, are consistently operating and evidenced; and

•formalizing our accounting policies and ensuring training of relevant personnel on the importance of internal controls and compliance with policies.

We are working aggressively and prioritizing the above actions to complete our remediation plan before the end of the second quarter of the fiscal year ending December 31, 2023, but no later than the end of the fiscal year. As we continue to evaluate and improve the applicable controls, management may take additional remedial measures or modify the remediation plan described above. We believe that these actions, when fully implemented, will remediate the deficiencies identified in Item 9A of the Annual Report. The deficiencies will not be considered remediated until

the applicable controls operate for a ~~reasonable assurance level.~~sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively.

Changes in Internal Control over Financial Reporting

~~As we integrate our business and optimize processes, we continue~~Except for the items referred to convert our business to a single instance of Netsuite and our Flight Management System to UP FMS. We are employing a phased implementation approach that will provide continued monitoring and assessment to maintain the effectiveness of internal control over financial reporting during and after the conversions. The conversions were not in response to any identified significant deficiency or material weakness in our internal control over financial reporting.

On April 1, 2022, we acquired all of the outstanding equity of Air Partner plc. We are in the process of analyzing, evaluating and where necessary, implementing changes in controls and procedures. As a result, the process may result in additions or changes to our internal control over financial reporting.

~~Except as described~~ above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended ~~June 30, 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rule 13a-15 and 15d-15 under the Exchange Act,~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal ~~control~~controls over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control over Financial Reporting and Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected or preventable.

4544

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

~~Item~~ITEM 1A. RISK FACTORS

~~In addition~~There have been no material changes to the ~~risks set forth below~~significant risk factors and uncertainties known to the ~~information set forth~~Company and disclosed in ~~this Quarterly Report, you should carefully consider~~ the ~~“Risk Factors” included under Item 1A. to Part I of our Annual Report on~~Company’s Form 10-K for the fiscal year ended December 31, 2021. You should be aware that these risk factors and other information may not describe every risk facing Wheels Up. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could adversely affect our business, financial condition and results of operations.

Because our software could be used to collect and store personal information, privacy concerns in the territories in which we operate could result in additional costs and liabilities to us or inhibit sales of our software offering.

The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, storage and disclosure of personal information and breach notification procedures. We are also required to comply with laws, rules and regulations relating to data security. Interpretation of these laws, rules and regulations and their application to our software and professional services in applicable jurisdictions is ongoing and cannot be fully determined at this time.

In the U.S., these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (“CCPA”) and other state and federal laws relating to privacy and data security. By way of example, the CCPA requires covered businesses to provide new disclosures to California residents, provide them new ways to opt-out of certain disclosures of personal information, and allows for a new cause of action for data breaches. It includes a framework that includes potential statutory damages and private rights of action. There is some uncertainty as to how the CCPA, and similar privacy laws emerging in other states, could impact our business as it depends on how such laws will be interpreted. As we expand our operations, compliance with privacy laws may increase our operating costs.

Outside the U.S., an increasing number of laws, regulations, and industry standards apply to data privacy and security. For example, the General Data Protection Regulation (“GDPR”), took effect in the European Union (“EU”) on May 25, 2018. Notwithstanding the withdrawal of the United Kingdom (“UK”), from the EU, by operation of the so-called UK GDPR, the GDPR continues to apply in substantially equivalent form, so when we refer to the GDPR, we are also making reference to the UK GDPR in the context of the UK, unless the context requires otherwise. The GDPR increased covered businesses’ data privacy and security obligations and imposed stringent data privacy and security requirements, including, for example, detailed notices about how such businesses process personal data, the implementation of security measures, mandatory security breach notification requirements, contractual data protection requirements on data processors and limitations on the retention of records of personal data processing activities.

~~Such restrictions could increase our exposure to regulatory enforcement action, increase our compliance costs, and adversely affect our business.~~

2022.

4645

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

4746

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.



No.						Description of Exhibit
3.1						Certificate of Incorporation of Wheels Up Experience Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on July 19, 2021).
3.2						Amended and Restated By-Laws of Wheels Up Experience Inc. (incorporated by reference to Exhibit 3.2 to the ~~Registrant’s Current~~Registrant's Annual Report on Form ~~8-K,~~10-K, filed with the SEC on ~~July 19, 2021)~~March 31, 2023).
~~10.1~~10.1*†^						Amendment No. 1 to the Seventh Amended and Restated Limited Liability Company Agreement of Wheels Up Partners Holdings LLC, dated as of April 1, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 13, 2022).
~~10.2~~†						Separation and Release Agreement, dated May 11, 2022, by and between Eric Jacobs and Wheels Up Partners LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 12, 2022).
~~10.3~~†						Offer Letter, dated ~~June 18,~~July 19, 2022, by and between ~~Todd Smith~~Mark Briffa and ~~Wheels Up Partners LLC (and attachments) (incorporated by reference to Exhibit 10.1 to~~Air Partner Limited (including the ~~Registrant’s Current Report on Form 8-K filed with the SEC on June 23, 2022).~~Director
~~10.4~~†						~~Wheels Up Experience Inc. 2022 Inducement Grant Plan~~’s Service Agreement attached as Annex A thereto and ~~forms of award agreements thereunder (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 (File~~Amendment No. ~~333-265991) filed with the SEC on July~~ 1 ~~2022)~~thereto).
31.1*						Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


*						Filed herewith
**						Furnished herewith
†						Identifies each management contract or compensatory plan or arrangement.
^						Certain private and confidential information have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted private or confidential information to the SEC upon request.

4847

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.



	WHEELS UP EXPERIENCE INC.


Date: ~~August 11, 2022~~May 9, 2023		/s/ Kenneth Dichter
	Name:	Kenneth Dichter
	Title:	Chief Executive Officer
		(Principal Executive Officer)


		/s/ Todd Smith
Date: ~~August 11, 2022~~May 9, 2023	Name:	Todd Smith
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

4948


	June 30, 2022		December 31, 2021
Aircraft	$	557,525	$	482,848
Software development costs	49,520		35,818
Leasehold improvements	9,023		12,584
Computer equipment	2,441		2,147
Buildings and improvements	1,425		1,424
Furniture and fixtures	2,767		1,960
Tooling	3,507		3,129
Vehicles	1,514		1,142
	627,722		541,052

Less: Accumulated depreciation and amortization	(238,327)		(223,216)
Total	$	389,395	$	317,836


	June 30, 2022		December 31, 2021
Flights - Prepaid Blocks and jet cards	$	989,019	$	876,750
Memberships - annual dues	42,886		47,069
Memberships - initiation fees	3,785		4,072
Flights - credits	5,190		6,633
Other	192		960
Deferred revenue - total	1,041,072		935,484

Less: Deferred revenue - current	(1,039,279)		(933,527)
Deferred revenue - non-current	$	1,793	$	1,957


	Public Warrants		Private Warrants		Total Warrant Liability
Fair value as of December 31, 2021	$	6,553	$	3,715	$	10,268
Change in fair value of warrant liability	(3,676)		(2,084)		(5,760)
Fair value as of June 30, 2022	$	2,877	$	1,631	$	4,508


	Number of WUP Restricted Interests	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested WUP restricted interests as of January 1, 2022	4,662	$	3.98
Granted	—	—
Vested	(3,899)	4.00
Forfeited	—	—
Non-vested WUP restricted interests as of June 30, 2022	763	$	3.91


	Number of RSUs	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested RSUs as of January 1, 2022	8,411	$	7.32
Granted(1)	13,637	3.38
Vested	(512)	6.35
Forfeited	(1,923)	6.23
Non-vested RSUs as of June 30, 2022	19,613	$	4.42


	Number of Wheels Up Stock Options	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested Wheels Up stock options as of January 1, 2022	768	$	4.75
Granted	—	—
Vested	(154)	4.75
Expired	—	—
Forfeited	—	—
Non-vested Wheels Up stock options as of June 30, 2022	614	$	4.75


	As of June 30,
	2022	2021	% Change
Active Members	12,667	10,515	20	%

	Three Months Ended June 30,
	2022	2021	% Change
Active Users	13,119	11,281	16	%

Live Flight Legs	21,705	18,234	19	%

Flight revenue per Live Flight Leg	13,088	11,663	12	%