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 ~~September 30, 2023~~March 31, 2024


☐			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: 001-39541

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,~~2135 American Way, ~~New York, New York~~Chamblee, Georgia (Address of Principal Executive Offices)						~~10001~~30341 (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

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 ☐þ

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 ~~November~~May 6, ~~2023, 166,812,505~~2024, 697,303,159 shares of Class A common stock, $0.0001 par value per share, were outstanding.

TABLE OF CONTENTS


		Page
PART I.	Financial Information
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of ~~September~~March 31, 2024 ~~30, 2023~~ and December 31, ~~2022~~2023	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~ 2023 ~~and 2022~~	3
	Condensed Consolidated Statements of Comprehensive ~~Los~~Loss sfor the three months ended March 31, 2024 and ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~ 2023 ~~and 2022~~	4
	Condensed Consolidated Statements of Equity for the three months ended March 31, 2024 and ~~nine~~ ~~months ended~~ S ~~eptember~~ ~~30,~~ 2023 ~~and 2022~~	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September~~March 31, 2024 ~~30, 2023~~ and ~~2022~~2023	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3633
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5550
Item 4.	Controls and Procedures	5650

PART II.	Other Information
Item 1.	Legal Proceedings	5851
Item 1A.	Risk Factors	5851
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6351
Item 3.	Defaults Upon Senior Securities	6352
Item 4.	Mine Safety Disclosures	6352
Item 5.	Other Information	6352
Item 6.	Exhibits	6452
	Signatures	6754

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~(this “Quarterly~~(“Quarterly Report”) of Wheels Up Experience Inc. (referred to herein as “Wheels Up”, the “Company”, “we”, “us”, or “our”) 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: (i) the impact of Wheels Up’s cost reduction efforts and measures intended to increase Wheels Up’s operational efficiency on its business and results of operations, including the timing and magnitude of such expected actions and any associated expenses in relation to liquidity levels and working capital needs; (ii) Wheels Up’s liquidity, future cash flows and certain restrictions related to its debt obligations; (iii) the size, demands, competition in and growth potential of the markets for Wheels Up’s products and services and Wheels Up’s ability to serve and compete in those markets; (iv) the degree of market acceptance and adoption of Wheels Up’s products and services, including our member ~~program changes implemented in June 2023~~programs, charter offerings and ~~the new corporate member program~~other products introduced ~~in November 2023;~~by Wheels Up; (v) Wheels Up’s ability to perform under its contractual ~~obligations~~ and ~~maintain or establish relationships with third-party vendors and suppliers;~~indebtedness obligations; (vi) the expected impact or benefits of any potential strategic actions involving Wheels Up or its subsidiaries or affiliates, including ~~realizing any anticipated benefits relating to any such transactions or~~ asset sales, ~~and any potential impacts on~~acquisitions, new financings or refinancings of existing indebtedness; (vii) Wheels Up’s ability to achieve positive Adjusted EBITDA (as defined herein) pursuant to the trading market and prices for the Company’s Class A common stock, $0.0001 par value per share (“Common Stock”), including due to future dilutive Common Stock issuances; (vii) the impact of the goodwill impairment charges recognized for the three and nine months ended September 30, 2023 or future impairment losses, which may adversely impact the perception of Wheels Up held by stockholders, investors, members and customers or the Company's business and results of operations or the market price of Common Stock;schedule that it has announced; 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. We have identified certain known material risk factors applicable to Wheels Up in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (“Annual Report”) under Part I, Item 1A — “Risk Factors,” in this Quarterly Report under Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations ”~~Operations” and Part II, Item 1A — “Risk Factors,” and elsewhere in this Quarterly Report. Moreover, it is not always possible for us to predict how new risks and uncertainties that arise from time to time may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report.

~~EXPLANATORY NOTE REGARDING REVERSE STOCK SPLIT~~

Following approval by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on May 31, 2023 (the “Annual Meeting”), the Board of Directors of the Company (the “Board”) approved a reverse stock split of Wheels Up’s outstanding shares of Common Stock, at a reverse stock split ratio of 1-for-10 (the “Reverse Stock Split”) and contemporaneously with the Reverse Stock Split, a proportionate reduction in the number of authorized shares of Common Stock from 2.5 billion shares of Common Stock to 250 million shares (the “Authorized Share Reduction”), each of which became effective immediately after the close of trading on The New York Stock Exchange (the “NYSE”) on June 7, 2023. The Company’s total stockholders’ equity, in the aggregate, and the par value for the Company’s Common Stock, did not change, in each case as a result of the Reverse Stock Split and Authorized Share Reduction. The Company has adjusted the presentation of all periods covered by the condensed consolidated financial statements contained herein to give retroactive effect to the Reverse Stock Split, including adjustments to per share net loss and other per share of Common Stock amounts.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WHEELS UP EXPERIENCE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share data)


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	244,847	$	585,881
Accounts receivable, net	Accounts receivable, net	46,773		112,383
Other receivables	Other receivables	7,452		5,524
Parts and supplies inventories, net	Parts and supplies inventories, net	23,979		29,000
Aircraft inventory	Aircraft inventory	2,073		24,826
Aircraft held for sale	Aircraft held for sale	26,855		8,952
Prepaid expenses	Prepaid expenses	46,506		39,715
Other current assets	Other current assets	11,283		13,338
Total current assets	Total current assets	409,768		819,619
Property and equipment, net	Property and equipment, net	362,053		394,559
Operating lease right-of-use assets	Operating lease right-of-use assets	73,788		106,735
Goodwill	Goodwill	214,808		348,118
Intangible assets, net	Intangible assets, net	122,783		141,765

Restricted cash
Other non-current assets	Other non-current assets	144,494		112,429
Total assets	Total assets	$	1,327,694	$	1,923,225

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Current maturities of long-term debt
Current maturities of long-term debt
Current maturities of long-term debt	Current maturities of long-term debt	$	25,227	$	27,006
Accounts payable	Accounts payable	25,568		43,166
Accrued expenses	Accrued expenses	100,814		148,947
Deferred revenue, current	Deferred revenue, current	691,214		1,075,133
Operating lease liabilities, current

Other current liabilities
Other current liabilities
Other current liabilities	Other current liabilities	26,197		49,968
Total current liabilities	Total current liabilities	869,020		1,344,220
Long-term debt, net	Long-term debt, net	235,429		226,234
Deferred revenue, non-current		1,155		1,742

Operating lease liabilities, non-current	Operating lease liabilities, non-current	58,912		82,755
Warrant liability		66		751
Operating lease liabilities, non-current
Operating lease liabilities, non-current

Intangible liabilities, non-current
Intangible liabilities, non-current
Intangible liabilities, non-current
Other non-current liabilities	Other non-current liabilities	17,873		15,603
Total liabilities	Total liabilities	1,182,455		1,671,305

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

Equity:
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 13)
Mezzanine equity:


Common Stock, $0.0001 par value; 250,000,000 authorized; 167,080,450 and 25,198,298 shares issued and 166,804,743 and 24,933,857 shares outstanding as of September 30, 2023 and December 31, 2022, respectively		17		3
Contingent performance awards
Total mezzanine equity
Equity:
Common Stock, $0.0001 par value; 1,500,000,000 authorized; 697,689,963 and 697,131,838 shares issued and 697,321,492 and 696,856,131 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
Common Stock, $0.0001 par value; 1,500,000,000 authorized; 697,689,963 and 697,131,838 shares issued and 697,321,492 and 696,856,131 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
Common Stock, $0.0001 par value; 1,500,000,000 authorized; 697,689,963 and 697,131,838 shares issued and 697,321,492 and 696,856,131 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital	Additional paid-in capital	1,849,093		1,545,530
Accumulated deficit	Accumulated deficit	(1,682,145)		(1,275,873)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(14,007)		(10,053)
Treasury stock, at cost, 275,707 and 264,441 shares, respectively		(7,718)		(7,687)
Treasury stock, at cost, 368,471 and 275,707 shares, respectively
Total Wheels Up Experience Inc. stockholders’ equity	Total Wheels Up Experience Inc. stockholders’ equity	145,239		251,920
Non-controlling interests	Non-controlling interests	—		—
Total equity	Total equity	145,239		251,920
Total liabilities and equity	Total liabilities and equity	$	1,327,694	$	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 September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Revenue
Revenue
Revenue	Revenue	$	320,063	$	420,356	$	1,006,937	$	1,171,503

Costs and expenses:	Costs and expenses:

Costs and expenses:

Costs and expenses:
Cost of revenue
Cost of revenue
Cost of revenue	Cost of revenue	299,887		403,042		981,581		1,144,698
Technology and development	Technology and development	19,962		16,639		50,265		42,436
Technology and development
Technology and development
Sales and marketing
Sales and marketing
Sales and marketing	Sales and marketing	22,548		30,830		71,500		87,761
General and administrative	General and administrative	42,853		44,323		122,334		130,200
General and administrative
General and administrative
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	15,459		16,500		45,027		46,862
Gain on sale of aircraft held for sale	Gain on sale of aircraft held for sale	(7,841)		(1,316)		(11,328)		(3,950)
Impairment of goodwill		56,200		62,000		126,200		62,000
Gain on sale of aircraft held for sale
Gain on sale of aircraft held for sale

Total costs and expenses

Total costs and expenses

Total costs and expenses	Total costs and expenses	449,068		572,018		1,385,579		1,510,007

Loss from operations	Loss from operations	(129,005)		(151,662)		(378,642)		(338,504)

Loss from operations

Loss from operations

Other income (expense):	Other income (expense):
Loss on divestiture		(2,991)		—		(2,991)		—

Other income (expense):

Other income (expense):
Gain on disposal of assets, net
Gain on disposal of assets, net
Gain on disposal of assets, net
Loss on extinguishment of debt
Loss on extinguishment of debt
Loss on extinguishment of debt	Loss on extinguishment of debt	(1,936)		—		(2,806)		—
Change in fair value of warrant liability	Change in fair value of warrant liability	(61)		2,504		685		8,265
Change in fair value of warrant liability
Change in fair value of warrant liability
Interest income
Interest income
Interest income	Interest income	404		1,130		6,090		1,612
Interest expense	Interest expense	(11,258)		—		(27,035)		—
Interest expense
Interest expense
Other income (expense), net
Other income (expense), net
Other income (expense), net	Other income (expense), net	613		(625)		(822)		(1,505)
Total other income (expense)	Total other income (expense)	(15,229)		3,009		(26,879)		8,372
Total other income (expense)
Total other income (expense)

Loss before income taxes

Loss before income taxes

Loss before income taxes	Loss before income taxes	(144,234)		(148,653)		(405,521)		(330,132)

Income tax benefit (expense)	Income tax benefit (expense)	(579)		(185)		(751)		(505)

Income tax benefit (expense)

Income tax benefit (expense)

Net loss

Net loss

Net loss	Net loss	(144,813)		(148,838)		(406,272)		(330,637)
Less: Net loss attributable to non-controlling interests	Less: Net loss attributable to non-controlling interests	—		—		—		(387)
Less: Net loss attributable to non-controlling interests
Less: Net loss attributable to non-controlling interests
Net loss attributable to Wheels Up Experience Inc.
Net loss attributable to Wheels Up Experience Inc.
Net loss attributable to Wheels Up Experience Inc.	Net loss attributable to Wheels Up Experience Inc.	$	(144,813)	$	(148,838)	$	(406,272)	$	(330,250)

Net loss per share of Common Stock (Note 18)	Net loss per share of Common Stock (Note 18)

Net loss per share of Common Stock (Note 18)

Net loss per share of Common Stock (Note 18)
Basic and diluted
Basic and diluted
Basic and diluted	Basic and diluted	$	(3.51)	$	(6.09)	$	(13.22)	$	(13.52)

Weighted-average shares of Common Stock outstanding:

Weighted-average shares of Common Stock outstanding:

Weighted-average shares of Common Stock outstanding:	Weighted-average shares of Common Stock outstanding:
Basic and diluted	Basic and diluted	41,261,003		24,435,096		30,737,324		24,434,787
Basic and diluted
Basic and diluted

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 September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Net loss
Net loss
Net loss	Net loss	$	(144,813)	$	(148,838)	$	(406,272)	$	(330,637)
Other comprehensive income (loss):	Other comprehensive income (loss):
Other comprehensive income (loss):
Other comprehensive income (loss):
Foreign currency translation adjustments
Foreign currency translation adjustments
Foreign currency translation adjustments	Foreign currency translation adjustments	(8,173)		(8,329)		(3,954)		(16,647)
Comprehensive loss	Comprehensive loss	(152,986)		(157,167)		(410,226)		(347,284)
Comprehensive loss
Comprehensive loss
Less: Comprehensive loss attributable to non-controlling interests
Less: Comprehensive loss attributable to non-controlling interests
Less: Comprehensive loss attributable to non-controlling interests	Less: Comprehensive loss attributable to non-controlling interests	—		—		—		(387)
Comprehensive loss attributable to Wheels Up Experience Inc.	Comprehensive loss attributable to Wheels Up Experience Inc.	$	(152,986)	$	(157,167)	$	(410,226)	$	(346,897)
Comprehensive loss attributable to Wheels Up Experience Inc.
Comprehensive loss attributable to Wheels Up Experience Inc.

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)


	Common Stock
		Shares
		Shares
		Shares																Amount	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Shares	Amount	Non-controlling interests	Total
Balance as of December 31, 2023
Equity-based compensation
Change in non-controlling interests allocation
Shares withheld for employee taxes on vested equity awards
Issuance of Common Stock upon settlement of restricted stock units
Net loss
Other comprehensive income (loss)
Balance as of March 31, 2024

		Common Stock									Treasury stock
		Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2022		25,198,298	$	3	$	1,545,530	$	(1,275,873)	$	(10,053)	264.441	$	(7,687)	$	—	$	251,920
Equity-based compensation		—	—		9,951		—		—		—	—		1,259		11,210
Change in non-controlling interests allocation		—	—		1,259		—		—		—	—		(1,259)		—

Issuance of Common Stock upon settlement of restricted stock units		227,513	—		—		—		—		—	—		—		—
Net loss		—	—		—		(100,866)		—		—	—		—		(100,866)
Other comprehensive income (loss)		—	—		—		—		923		—	—				923
Balance as of March 31, 2023		25,425,811	$	3	$	1,556,740	$	(1,376,739)	$	(9,130)	264,441	$	(7,687)	$	—	$	163,187
Equity-based compensation		—	—		6,592		—		—		—	—		12		6,604
Change in non-controlling interests allocation		—	—		12		—		—		—	—		(12)		—

Reclassification of equity awards		—	—		328		—		—		—	—		—		328
Issuance of Common Stock upon settlement of restricted stock units		196,685	—		—		—		—		—	—		—		—
Reverse stock split fractional shares		—	—		—		—		—		859	(3)		—		(3)
Net loss		—	—		—		(160,593)		—		—	—		—		(160,593)
Other comprehensive income (loss)		—	—		—		—		3,296		—	—		—		3,296
Balance as of June 30, 2023		25,622,496	$	3	$	1,563,672	$	(1,537,332)	$	(5,834)	265,300	$	(7,690)	$	—	$	12,819
Equity-based compensation		—	—		3,503		—		—		—	—		6		3,509
Change in non-controlling interests allocation		—	—		6		—		—		—	—		(6)		—
Issuance of Common Stock and Deferred Shares in connection with debt issuance		141,313,671	14		281,912		—		—		—	—		—		281,926
Shares withheld for employee taxes on vested equity awards		—	—		—		—		—		10,407	(28)		—		(28)
Issuance of Common Stock upon settlement of restricted stock units		144,283	—		—		—		—		—	—		—		—
Net loss		—	—		—		(144,813)		—		—	—		—		(144,813)
Other comprehensive loss		—	—		—		—		(8,173)		—	—		—		(8,173)
Balance as of September 30, 2023		167,080,450	$	17	$	1,849,093	$	(1,682,145)	$	(14,007)	275,707	$	(7,718)	$	—	$	145,239

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)


	Common Stock
		Shares
		Shares
		Shares																Amount	Additional paid-in capital	Accumulated deficit	Accumulated other comprehensive loss	Shares	Amount	Non-controlling interests	Total
Balance as of December 31, 2022
Equity-based compensation
Change in non-controlling interests allocation

Issuance of Common Stock upon settlement of restricted stock units
Issuance of Common Stock upon settlement of restricted stock units
Issuance of Common Stock upon settlement of restricted stock units
Net loss
Other comprehensive income (loss)
Balance as of March 31, 2023

		Common Stock									Treasury stock
		Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Shares	Amount		Non-controlling interests		Total
Balance as of December 31, 2021		24,583,457	$	2	$	1,450,862	$	(720,713)	$	—	—	$	—	$	6,077	$	736,228
Equity-based compensation		—	—		13,659		—		—		—	—		8,895		22,554
Change in non-controlling interests allocation		—	—		11,743		—		—		—	—		(11,743)		—
Shares withheld for employee taxes on vested equity awards		—	—		—		—		—		168,238	(6,107)		—		(6,107)
Issuance of Common Stock upon settlement of restricted stock units		7,673	—		—		—		—		—	—		—		—
Net loss		—	—		—		(88,653)		—		—	—		(387)		(89,040)
Balance as of March 31, 2022		24,591,130	$	2	$	1,476,264	$	(809,366)	$	—	168,238	$	(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		—	—		—		—		—		23.086	(582)		—		(582)
Issuance of Common Stock upon settlement of restricted stock units		27,625	—		—		—		—		—	—		—		—
Net loss		—	—		—		(92,760)		—		—	—		—		(92,760)
Other comprehensive loss		—	—		—		—		(8,318)		—	—		—		(8,318)
Balance as of June 30, 2022		24,618,755	$	2	$	1,499,887	$	(902,126)	$	(8,318)	191,324	$	(6,689)	$	—	$	582,756
Equity-based compensation		—	—		13,961		—		—		—	—		8,543		22,504
Change in non-controlling interests allocation		—	—		8,543		—		—		—	—		(8,543)		—
Shares withheld for employee taxes on vested equity awards		—	—		—		—		—		47.334	(658)		—		(658)
Issuance of Common Stock upon settlement of restricted stock units		194,400	—		—		—		—		—	—		—		—
Net loss		—	—		—		(148,838)		—		—	—		—		(148,838)
Other comprehensive loss		—	—		—		—		(8,329)		—	—		—		(8,329)
Balance as of September 30, 2022		24,813,155	$	2	$	1,522,391	$	(1,050,964)	$	(16,647)	238,658	$	(7,347)	$	—	$	447,435

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)


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Cash flows from operating activities	Cash flows from operating activities
Net loss	Net loss	$	(406,272)	$	(330,637)
Net loss
Net loss
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
Depreciation and amortization	Depreciation and amortization	45,027		46,862
Equity-based compensation	Equity-based compensation	21,650		65,839
Payment in kind interest	Payment in kind interest	972		—
Amortization of deferred financing costs and debt discount	Amortization of deferred financing costs and debt discount	2,390		—
Change in fair value of warrant liability	Change in fair value of warrant liability	(685)		(8,265)

Gain on sale of aircraft held for sale
Gain on sale of aircraft held for sale
Gain on sale of aircraft held for sale

Loss on extinguishment of debt
Loss on extinguishment of debt
Loss on extinguishment of debt

Gain on sale of aircraft held for sale		(11,328)		(3,950)
Loss on divestiture		2,991		—
Loss on extinguishment of debt		2,806		—
Impairment of goodwill		126,200		62,000
Other
Other
Other	Other	(2,099)		(489)
Changes in assets and liabilities:	Changes in assets and liabilities:
Accounts receivable	Accounts receivable	22,513		(31,474)
Accounts receivable
Accounts receivable

Parts and supplies inventories
Parts and supplies inventories
Parts and supplies inventories	Parts and supplies inventories	5,074		(8,544)
Aircraft inventory	Aircraft inventory	386		(33,231)
Prepaid expenses	Prepaid expenses	(8,589)		(8,065)

Other current assets
Other non-current assets	Other non-current assets	(36,988)		(27,534)

Accounts payable	Accounts payable	(15,177)		(2,885)
Accounts payable
Accounts payable
Accrued expenses	Accrued expenses	(36,293)		(1,131)

Deferred revenue	Deferred revenue	(378,949)		(2,653)
Other assets and liabilities	Other assets and liabilities	4,877		(4,184)
Net cash used in operating activities	Net cash used in operating activities	(661,494)		(288,341)

Cash flows from investing activities	Cash flows from investing activities
Cash flows from investing activities
Cash flows from investing activities
Purchases of property and equipment
Purchases of property and equipment
Purchases of property and equipment	Purchases of property and equipment	(12,312)		(80,039)
Purchases of aircraft held for sale	Purchases of aircraft held for sale	(2,311)		(39,894)
Proceeds from sale of aircraft held for sale, net	Proceeds from sale of aircraft held for sale, net	53,911		41,833
Proceeds from sale of divested business, net	Proceeds from sale of divested business, net	13,200		—
Acquisitions of businesses, net of cash acquired		—		(75,093)
Capitalized software development costs	Capitalized software development costs	(16,041)		(18,532)
Other	Other	172		—
Net cash (used in) provided by investing activities		36,619		(171,725)
Net cash provided by (used in) by investing activities

Cash flows from financing activities	Cash flows from financing activities
Cash flows from financing activities
Cash flows from financing activities
Purchase shares for treasury
Purchase shares for treasury
Purchase shares for treasury

Purchase shares for treasury		—		(7,347)
Purchase of fractional shares		(3)		—

Proceeds from notes payable		70,000		—
Repayment of notes payable		(70,000)		—
Proceeds from long-term debt, net		343,000		—
Payment of debt issuance costs in connection with debt		(19,630)		—

Repayments of long-term debt	Repayments of long-term debt	(40,196)		—

Net cash (used in) provided by financing activities		283,171		(7,347)

Repayments of long-term debt

Repayments of long-term debt
Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4,287)		(7,395)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash
Net decrease in cash, cash equivalents and restricted cash
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(345,991)		(474,808)
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	$	274,162	$	311,914

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:
Supplemental disclosure of cash flow information:
Supplemental disclosure of cash flow information:
Cash paid for interest	Cash paid for interest	$	23,919	$	—

Cash paid for interest
Cash paid for interest

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

WHEELS UP EXPERIENCE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Wheels Up ~~Experience Inc. (together with its consolidated subsidiaries, “Wheels Up”, the “Company”, “we”, “us”, or “our”)~~ is a leading provider of on-demand private aviation in the United States (“U.S.”) and one of the largest ~~private aviation~~ companies in the ~~world.~~industry. Wheels Up offers a complete global private aviation solution with a large ~~modern~~ and diverse aircraft fleet, backed by an uncompromising commitment to safety and service. ~~Customers can access membership programs, charter,~~We connect private flyers to aircraft, ~~management services~~ and ~~whole aircraft sales, as well as unique commercial travel benefits~~to one another, through an open platform that enables life’s most important experiences. Our offering is delivered through a ~~strategic~~mix of programmatic and charter options that strategically utilize our owned and leased aircraft fleet and an “asset-light” charter model to deliver a greater range of global travel alternatives. In addition, our unique 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.~~

Wheels Up is guided by the mission to connect private flyers to aircraft, and 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 approximately 11,000 provides our members and customers towith a ~~network of approximately 1,500 safety-vetted~~seamless offering across both private and verified private aircraft, Wheels Up is widening the aperture of private travel for millions of consumers globally. With the Wheels Up mobile app and website, members and customers have the digital convenience to search, book and fly.premium commercial travel.

Basis of Presentation

The 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 annual financial statements. In the opinion of the Company’s management, the condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of ~~September 30, 2023,~~March 31, 2024, and its results of operations, including its comprehensive loss and stockholders' equity for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, and its results of operations, including its comprehensive loss and stockholders' equity and its cash flows for the nine months ended September 30, 2023 and 2022.~~2023. All adjustments are of a normal recurring nature. The results for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 are not necessarily indicative of the results to be expected for any subsequent ~~quarter~~period or for the fiscal year ending December 31, ~~2023.~~2024.

Immediately after the close of ~~business~~trading on the New York Stock Exchange (the “ NYSE”) on June 7, 2023, the Company effected a reverse stock split of Wheels Up’s outstanding shares of Class A common stock, $0.0001 par value per share (“Common ~~Stock,~~Stock”), at a reverse stock split ratio of 1-for-10 (the “Reverse Stock Split”) and contemporaneously with the Reverse Stock Split, a proportionate reduction in the number of authorized shares of Common Stock from 2.5 billion shares of Common Stock to 250 million shares (the “Authorized Share Reduction”). Accordingly, the presentation of all periods covered by the condensed consolidated financial statements contained herein have been adjusted to give retroactive effect to the Reverse Stock Split, as applicable, including adjustments to per share net loss and other per share of Common Stock amounts.

These condensed consolidated financial statements have been prepared in accordance with ~~accounting principles generally accepted in the United States ("GAAP")~~GAAP for interim financial information. Consistent with these requirements, this Quarterly Report on Form 10-Q (this “Quarterly Report”) does not include all the information required by GAAP for complete financial statements. As a result, this ~~Form 10-Q~~Quarterly Report should be read in conjunction with the audited consolidated financial statements and related notes included in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March ~~31, 2023.~~

~~Liquidity~~

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business.

As disclosed on August 14, 2023, in the notes to the condensed consolidated financial statements for the interim period ended June 30, 2023, the Company demonstrated various adverse conditions that raised substantial doubt about the Company’s ability to continue as a going concern. These adverse conditions included insufficient liquidity, a working capital deficit, net operating cash outflows, recurring losses from operations, and the applicability of certain liquidity covenants in connection with the Equipment Notes (as defined in Note 7).

~~Subsequent to August 14, 2023, we obtained funding as discussed in Note~~ 7, ~~Long-Term Debt, amended the Equipment Notes to reduce liquidity covenant requirements and divested the aircraft management business as discussed in Note 4,~~ ~~Acquisitions and Divestitures~~. During the third quarter of 2023, we also began to realize the impacts of our spend reduction efforts, as a result of the restructuring and operational changes implemented throughout 2023. We have concluded that these events and circumstances, and continued execution of our previously implemented plans, as outlined above, have mitigated the conditions that previously raised substantial doubt about our ability to continue as a going concern.2024.

Principles of Consolidation

~~The~~These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. We consolidate Wheels Up 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 ~~12)~~12). All intercompany transactions and balances have been eliminated in consolidation.

Liquidity

While the Company has a history of recurring losses from operations, we expect to meet our liquidity needs for the next 12 months given our current cash and cash equivalents, capacity under our Revolving Credit Facility (as defined in Note 7) and expected cash flows from operations.

Use of Estimates

Preparing ~~the~~these 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. 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 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.

~~Impairment~~Recent Accounting Pronouncements

~~During~~In November 2023, the ~~second quarter of 2023, we determined that, because of continued negative cash flows~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” or ASU 2023-07. The amendments in ASU 2023-07 aim to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 will be effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and ~~changes in our management and business strategy, there was an indication that~~subsequent interim periods, with early adoption permitted. The Company is currently evaluating the carrying value of the long-lived assets associated with the WUP Legacy reporting unit 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, 2023. Based on the analysis, it was determined that there was no impairment to our long-lived assets.

As a result of the aforementioned factors, we determined that there was an indication that it was more likely than not that the fair value of our WUP Legacy reporting unit was less than its carrying amount. We performed an interim quantitative impairment assessment of goodwill as of June 1, 2023. Using a discounted cash flow approach, we calculated the fair value of WUP Legacy based on the present value of estimated future cash flows. The significant underlying inputs used to measure the fair value included forecasted revenue growth rates and margins, weighted average cost of capital, normalized working capital level and projected long-term growth rates. As a resultimpact of this ~~assessment, we recognized a goodwill impairment charge~~update on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” or ASU 2023-09. The amendments in ASU 2023-09 aim to enhance the transparency and decision usefulness of ~~$70.0 million relating to~~income tax disclosures. ASU 2023-09 will be effective for the ~~WUP Legacy~~

~~reporting unit during~~Company’s Annual Report on Form 10-K for the ~~three months ended June 30, 2023.~~year ending December 31, 2025, with early adoption permitted. The ~~decline in~~Company is currently evaluating the fair value of the reporting unit was primarily due to a more material reduction in working capital than expected during the three months ended June 30, 2023, as well as an increase in the discount rate.

To facilitate reconciliation of the fair value of our reporting units to our market capitalization as of June 1, 2023, we elected to perform a quantitative impairment assessment of the Air Partner reporting unit as of June 1, 2023, using a combination of the discounted cash flow and guideline public company methods, which did not result in impairment to goodwill. Based on the valuation, the fair value of the Air Partner reporting unit exceeded its carrying value by more than 10%.

During the third quarter of 2023, we determined that upon entering into the Term Loan and Revolving Credit Facility (as each is defined below) on September 20, 2023 (see Note 7), and due to associated changes to our ownership and governance structure on that same date (see Note 10), there was an indication that the fair value of the WUP Legacy reporting unit was less than its carrying amount. We performed an interim quantitative impairment assessment of goodwill as of September 20, 2023. Using a discounted cash flow approach, we calculated the fair value of WUP Legacy, based on the present value of estimated future cash flows. The significant underlying inputs used to measure the fair value included forecasted revenue growth rates and margins, weighted average cost of capital, normalized working capital level and projected long-term growth rates. As a resultimpact of this assessment, we recognized a goodwill impairment charge of $56.2 million relating to the WUP Legacy reporting unit during the three months ended September 30, 2023. The impairment charge represents the amount by which the carrying value of the reporting unit as of the assessment date exceeded the estimated fair value of the reporting unit as of the assessment date. Since the previous analysisupdate on June 1, 2023, the fair value of the reporting unit increased as a result of the run-off of unprofitable periods in our estimated future cash flows; however, the carrying value of the reporting unit increased in a substantially equivalent amount due to the issuance of the Term Loan (see Note 7) and Initial Shares (as defined in Note 10).

To facilitate reconciliation of the fair value of our reporting units to our market capitalization as of September 20, 2023, we elected to perform a quantitative impairment assessment of the Air Partner reporting unit as of September 20, 2023, using a combination of the discounted cash flow and guideline public company methods, which did not result in impairment to goodwill. Based on the valuation, the fair value of the Air Partner reporting unit exceeded its ~~carrying value by more than 20%.~~

~~Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Effective~~

There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the three months ended September 30, 2023 that are of significance or potential significance to us.consolidated financial statements.

109

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 September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Services transferred at a point in time:
Flights, net of discounts and incentives $ 214,645 $ 278,917 $ 681,691 $ 799,351
Aircraft management 51,081 56,558 158,396 172,914
Other 29,720 58,728 89,665 121,695
Services transferred over time:
Memberships 20,622 22,409 63,780 67,076
Aircraft management 2,154 2,404 7,035 7,272
Other 1,841 1,340 6,370 3,195
Total $ 320,063 $ 420,356 $ 1,006,937 $ 1,171,503

~~Revenue in the condensed consolidated statements of operations is presented net of discounts and incentives of $2.7 million and $6.7 million for the three and nine months ended~~


	Three Months Ended March 31,
	2024		2023
Services transferred at a point in time:
Flights, net of discounts and incentives	$	150,929	$	231,762
Aircraft management(1)	3,125		61,242
Other	25,659		31,807

Services transferred over time:
Memberships	16,854		21,680
Aircraft management(1)	68		2,452
Other	466		2,869
Total	$	197,101	$	351,812

(1) On September 30, 2023, ~~respectively, and $2.7 million and $9.4 million for~~we completed the ~~three and nine months ended September 30, 2022, respectively.~~

~~Other revenue included within services transferred at a point in time is primarily related to revenue for group charter~~sale of ~~$9.8 million, safety and security of $5.9 million, one-time software license revenue of $5.9 million and whole~~the aircraft sales of $2.8 million for the three months ended September 30, 2023, and whole aircraft sales of $35.9 million, group charter of $8.7 million, and safety and security of $5.9 million for the three months ended September 30, 2022. Other revenue included within services transferred at a point in time is primarily related to revenue for group charter of $25.7 million, whole aircraft sales of $18.2 million, safety and security of $17.5 million and software license revenue of $7.0 million for the nine months ended September 30, 2023, and whole aircraft sales of $63.9 million, group charter of $19.8 million, and safety and security of $12.6 million for the nine months ended September 30, 2022.management business. See Note 4.

Contract Balances

Accounts receivable, net consists of the following (in thousands):

September 30,
2023 December 31,
2022
Gross receivables from members and customers $ 49,705 $ 112,243
Undeposited funds 5,304 10,122
Less: Allowance for credit losses (8,236) (9,982)
Accounts receivable, net $ 46,773 $ 112,383


	March 31, 2024		December 31, 2023
Gross receivables from members and customers	$	48,716	$	43,970
Undeposited funds	1,069		2,131
Less: Allowance for credit losses	(7,468)		(7,864)
Accounts receivable, net	$	42,317	$	38,237

Deferred revenue consists of the following (in thousands):


		September 30, 2023		December 31, 2022		March 31, 2024	December 31, 2023
Flights - Prepaid Blocks		$	651,458	$	1,023,985
Flights - prepaid
Memberships - annual dues	Memberships - annual dues	35,935		43,970
Memberships - initiation fees	Memberships - initiation fees	2,804		3,899
Flights - credits	Flights - credits	1,773		4,246
Other	Other	399		775
Deferred revenue - total	Deferred revenue - total	692,369		1,076,875

Less: Deferred revenue - current		(691,214)		(1,075,133)
Deferred revenue - non-current		$	1,155	$	1,742
Less: Deferred revenue, current
Less: Deferred revenue, current
Less: Deferred revenue, current
Deferred revenue, non-current

Deferred revenue, non-current is presented within Other non-current liabilities on the condensed consolidated balance sheets.

Changes in deferred revenue for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 were as follows (in thousands):


Deferred revenue as of December 31, ~~2022~~2023	$	~~1,076,875~~724,229
Amounts deferred during the period	~~342,923~~166,132
Revenue recognized from amounts included in the deferred revenue beginning balance	~~(571,211)~~(145,300)
Revenue from current period sales	~~(156,218)~~(46,270)
Deferred revenue as of ~~September 30, 2023~~March 31, 2024	$	~~692,369~~698,791

Revenue expected to be recognized in future periods for performance obligations that are unsatisfied, or partially unsatisfied, as of ~~September 30, 2023~~March 31, 2024 were as follows (in thousands):


Remainder of 2023		$	113,830
2024		292,149
Remainder of 2024
2025	2025	143,268
2026	2026	143,122
2027
Total	Total	$	692,369

Costs to Obtain a Contract

Capitalized costs related to sales commissions and referral fees were ~~$1.9 million and $6.0~~$2.0 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, and ~~$3.3 million and $12.6~~$1.6 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, capitalized sales commissions and referral fees of ~~$4.8~~$4.6 million and ~~$8.7~~$4.8 million, respectively, were included in Other current assets on the condensed consolidated balance sheets, and ~~$0.6~~$0.4 million and ~~$1.3~~$0.4 million, respectively, were included in 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 ~~$2.6 million and $9.4~~$2.1 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 and ~~$4.4 million and $12.1~~$3.7 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023.

3.PROPERTY AND EQUIPMENT

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


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Aircraft	Aircraft	$	509,984	$	566,338
Software development costs	Software development costs	80,582		65,303
Leasehold improvements	Leasehold improvements	22,274		11,930
Computer equipment	Computer equipment	3,447		3,014
Buildings and improvements	Buildings and improvements	1,424		1,424
Furniture and fixtures	Furniture and fixtures	4,311		3,208
Tooling	Tooling	4,180		3,835
Vehicles	Vehicles	2,351		1,538
		628,553		656,590
	577,507

Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(266,500)		(262,031)
Less: Accumulated depreciation and amortization
Less: Accumulated depreciation and amortization
Total	Total	$	362,053	$	394,559

Depreciation and amortization expense, excluding amortization expense related to software development costs, was ~~$10.0 million and $28.8~~$6.2 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 and ~~$10.6 million and $30.3~~$9.0 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023.

Amortization expense related to software development costs, included as part of depreciation and amortization expense of property and equipment, was ~~$4.4 million and $11.2~~$4.3 million for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, and ~~$3.6 million and $9.0~~$2.8 million for the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023.

4.~~ACQUISITIONS AND DIVESTITURES~~

~~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 expanded 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 three months ended September 30, 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. As of the date of acquisition, the total 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.

~~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 four continents. Acquisition-related costs for Air Partner included in General and administrative expense in the condensed consolidated statements of operations for the three months ended September 30, 2022 were immaterial. The acquisition of Air Partner was determined to be a business combination.

~~As of the date of acquisition, the total 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~~	$	~~49,617~~
~~Property and equipment, net~~	~~2,012~~
~~Operating lease right-of-use assets~~	~~2,780~~
~~Goodwill~~	~~83,910~~
~~Intangible assets~~	~~20,921~~
~~Restricted cash~~	~~27,507~~
~~Other assets~~	~~1,686~~
~~Total assets acquired~~	~~188,433~~
~~Total liabilities assumed~~	~~(80,239)~~
~~Net assets acquired~~	$	~~108,194~~

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

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, consisted of the following:

Amount
(In thousands) Weighted-Average Amortization Period
(Years)
Customer relationships $ 16,521 5.7
Backlog 1,458 1.5
Trade name 1,931 1.9
Developed technology 1,011 5.8
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 8). The valuation method used for the Air Partner intangible assets was the income approach.

~~Unaudited Pro Forma Summary of Operations~~

The accompanying unaudited pro forma summary represents the consolidated results of operations as if the 2022 acquisitions of Alante Air and Air Partner had been completed as of January 1, 2022. The unaudited pro forma financial results for 2022 reflect the results for the three and nine months ended September 30, 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).

~~Nine Months Ended September 30,~~

~~2022~~

~~Net revenue~~

~~1,209,321~~

~~Net loss~~

~~(266,628)~~

~~Net loss attributable to Wheels Up Experience Inc.~~

~~(266,628)~~

~~Net loss per share(1)~~

~~(10.98)~~

~~(1) Adjusted for the impact of the Reverse Stock Split~~

DIVESTITURE

Divestiture of Aircraft Management Business

On September 30, 2023 (the ~~“Closing~~“Divestiture Closing Date”), Wheels Up Partners Holdings LLC, our direct subsidiary (“WUP”), pursuant to an equity purchase agreement (the “Purchase Agreement”) with Executive AirShare LLC, completed the sale of 100% of the issued and outstanding equity interests of Circadian Aviation LLC, our indirect subsidiary (“Circadian”). The Divestiture Closing Date fair value of the aggregate consideration transferred was $19.1 million and the Company recognized a loss on the sale of $3.0 million. The $19.1 million was comprised of $13.2 million of cash received on the Divestiture Closing Date, contingent consideration with a fair value of $4.8 million, an escrow receivable of $0.6 million and a non-contingent consideration receivable of $0.5 million. The fair value of the contingent consideration was deemed to be the approximate contract value as of the Divestiture Closing Date.

Circadian was released from all guarantor obligations with respect to the Equipment Notes (as defined below) on the Divestiture Closing Date pursuant to certain debt release letters entered into concurrently with the Purchase Agreement.

Concurrently with entering into the Purchase Agreement: (i) WUP entered into a transition services agreement with Circadian, pursuant to which WUP will provide Circadian certain specified services on a temporary basis; (ii) Wheels Up Partners LLC, our indirect subsidiary (“WUP LLC”), entered into a master operating agreement with Circadian, pursuant to which Circadian will conduct certain on-demand charter operations for certain of WUP LLC’s owned aircraft after the Divestiture Closing Date while such aircraft are transitioned from a ~~FAA~~U.S. Federal Aviation Administration (“FAA”) operating certificate held by Circadian to the Company’s subsidiaries, and WUP LLC will provide certain maintenance, pilots services, management and other related services for WUP LLC’s owned aircraft during the transition period; and (iii) certain of the Company’s subsidiaries entered into fleet management agreements with Circadian, pursuant to which Circadian will provide certain maintenance, pilots services, management and other related services for managed aircraft after the Divestiture Closing Date while they are transitioned from a FAA operating certificate held by the applicable Company subsidiary to Circadian.

During the three months ended March 31, 2024, we received $3.4 million upon finalization of the working capital adjustment under the Purchase Agreement, recognized within gain on sale of assets, net in the condensed consolidated statement of operations.

5.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents goodwill carrying values and the change in balance, by reporting unit, during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 (in thousands):

WUP Legacy Air Partner Total
Balance as of December 31, 2022(1)
$ 270,467 $ 77,651 $ 348,118
Acquisitions(2)
— 350 350
Impairment(3)
(126,200) — (126,200)
Divestitures(4)
(8,169) — (8,169)
Foreign currency translation adjustment — 708 708
Balance as of September 30, 2023 $ 136,098 $ 78,710 $ 214,808


	WUP Legacy(1)		Air Partner		Total
Balance as of December 31, 2023(2)	$	136,098	$	82,110	$	218,208



Foreign currency translation adjustment	—		(692)		(692)
Balance as of March 31, 2024	$	136,098	$	81,418	$	217,516

(1) As of March 31, 2024, the WUP Legacy reporting unit had negative net assets (stockholders’ equity).

(2) Net of accumulated impairment losses of ~~$180~~$306.2 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)~~

(3) Impairment charge recognized during the second and third quarters of 2023 as a result of an interim quantitative assessments of goodwill as of June 1, 2023 and September 20, 2023, respectively (See Note 1)

~~(4) Reflects the amount of goodwill allocated to the divestiture of the aircraft management business (See Note 4).~~

unit.

Intangible Assets

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


		September 30, 2023
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	March 31, 2024									March 31, 2024
	Gross Carrying Value							Gross Carrying Value	Accumulated Amortization		Net Carrying Value
Status	Status	$	80,000	$	29,644	$	50,356
Customer relationships	Customer relationships	89,121		32,226		56,895

Trade name	Trade name	13,161		6,321		6,840
Developed technology	Developed technology	20,556		11,580		8,976
Leasehold interest - favorable	Leasehold interest - favorable	600		96		504
Backlog		1,458		1,313		145
Foreign currency translation adjustment	Foreign currency translation adjustment	(1,480)		(547)		(933)
Total	Total	$	203,626	$	80,843	$	122,783


		December 31, 2022
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	December 31, 2023									December 31, 2023
	Gross Carrying Value							Gross Carrying Value	Accumulated Amortization		Net Carrying Value
Status	Status	$	80,000	$	23,644	$	56,356
Customer relationships	Customer relationships	91,121		24,613		66,508
Non-competition agreement		210		210		—
Trade name	Trade name	16,161		8,294		7,867
Developed technology	Developed technology	20,556		9,332		11,224
Leasehold interest - favorable	Leasehold interest - favorable	600		80		520
Backlog		1,458		880		578
Foreign currency translation adjustment	Foreign currency translation adjustment	(1,662)		(374)		(1,288)
Total	Total	$	208,444	$	66,679	$	141,765

Amortization expense of intangible assets was ~~$6.0 million and $17.8~~$5.2 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, and ~~$6.4 million and $18.1~~$5.9 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023.

Intangible Liabilities

Associated with our acquisition of Delta Private Jets on January 17, 2020, we recognized intangible liabilities for the fair value of complimentary Wheels Up Connect Memberships provided to existing Delta SkyMiles 360 customers as of the acquisition date, as required under the Commercial Cooperation Agreement (as amended, the “CCA”) with Delta. The gross carrying value, accumulated amortization and net carrying value of intangible liabilities consisted of the following (in thousands):

September 30, 2023
Gross Carrying
Value Accumulated Amortization Net Carrying
Value
Intangible liabilities $ 20,000 $ 7,417 $ 12,583


	March 31, 2024
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	8,179	$	11,821

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


	December 31, 2023
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible liabilities	$	20,000	$	7,798	$	12,202

Amortization of intangible liabilities, which reduces amortization expense, was ~~$0.5~~$0.4 million for ~~each of~~ the three months ended ~~September 30, 2023,~~March 31, 2024, and ~~2022, and $1.5~~$0.5 million for ~~each of~~ the ~~nine~~three months ended ~~September 30, 2023, and 2022.~~

March 31, 2023.

Future amortization expense of intangible assets and intangible liabilities held as of ~~September 30, 2023,~~March 31, 2024, were as follows (in thousands):


		Intangible Assets		Intangible Liabilities
Remainder of 2023		$	5,865	$	500
2024		22,759		2,000
	Intangible Assets					Intangible Assets	Intangible Liabilities
Remainder of 2024
2025	2025	22,345		2,000
2026	2026	21,486		2,000
2027	2027	17,018		2,000
2028 and Thereafter		33,310		4,083
2028
2029 and Thereafter
Total	Total	$	122,783	$	12,583

6.CASH EQUIVALENTS AND RESTRICTED CASH

~~Cash Equivalents~~

As of September 30, 2023 and December 31, 2022, cash equivalents on the condensed consolidated balance sheets were $0.1 million and $430.3 million, respectively, and generally consisted of investments in money market funds, savings and time deposits.

~~Restricted Cash~~

As of September 30, 2023 and December 31, 2022, restricted cash, which is presented within Other non-current assets on the condensed consolidated balance sheets, included $6.2 million held by financial institutions to establish standby letters of credit required by the lessors of certain corporate office space that we leased as of such dates and $3.4 million held by financial institutions to collateralize against our credit card programs. The standby letters of credit expire on December 31, 2033 and June 30, 2034. The balances as of September 30, 2023 and December 31, 2022 also included $19.7 million and $26.3 million, respectively, related to funds held but unavailable for 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 is as follows (in thousands):


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Cash and cash equivalents	Cash and cash equivalents	$	244,847	$	585,881
Restricted cash	Restricted cash	29,315		34,272
Total	Total	$	274,162	$	620,153

Cash Equivalents

As of each of March 31, 2024 and December 31, 2023, cash equivalents on the condensed consolidated balance sheets were $0.1 million, and generally consisted of investments in money market funds, savings and time deposits.

Restricted Cash

As of each of March 31, 2024 and December 31, 2023, restricted cash included $6.2 million held by financial institutions to establish standby letters of credit required by the lessors of certain corporate office space that we leased as of such dates and $5.0 million held by financial institutions to collateralize against our credit card programs. The standby letters of credit expire on December 31, 2033 and June 30, 2034. The balances as of March 31, 2024 and December 31, 2023 also included $19.8 million and $17.9 million, respectively, related to funds held but unavailable for immediate use due to contractual restrictions.

1814

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		September 30, 2023		December 31, 2022
	Weighted Average Interest Rate							Weighted Average Interest Rate	March 31, 2024	December 31, 2023
Equipment Notes	Equipment Notes	12.0	%	$	232,610	$	270,000
Term Loan	Term Loan	10.0	%	350,972		—
Total debt	Total debt			583,582		270,000
Less: Total unamortized deferred financing costs and debt discount	Less: Total unamortized deferred financing costs and debt discount			322,926		16,760
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt			25,227		27,006
Long-term debt				$	235,429	$	226,234
Long-term debt, net

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


		Maturities
Remainder of 2023		$	6,307
2024		25,227
	Maturities			Maturities
Remainder of 2024
2025	2025	43,916
2026	2026	38,907
2027	2027	33,258
2028 and Thereafter		435,967
2028

Total	Total	$	583,582
Total
Total

2022-1 Equipment Notes

On October 14, 2022, 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 stated final expected distribution date of the Equipment Notes varies from July 15, 2025 to October 15, 2029 ~~unless redeemed earlier by~~depending on the type of aircraft, subject to certain prepayment requirements under the Omnibus Amendment (as defined below) and WUP ~~LLC.~~LLC’s ability to redeem Equipment Notes prior to maturity. The Equipment Notes bear interest at the rate of 12% per annum with annual amortization of the principal amount equal to 10% per annum and balloon payments due at each maturity date. ~~As of September 30, 2023, the~~The Equipment Notes were initially secured by first-priority liens on ~~127~~134 of the Company’s owned aircraft fleet and by liens on certain intellectual property assets of the Company and certain of its subsidiaries (collectively, the “Equipment Note Collateral”). WUP LLC’s obligations under the Equipment Notes are guaranteed by 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”). On September 20, 2023, the Company, WUP LLC, certain other subsidiaries of the Company that guaranteed and/or granted collateral to secure WUP LLC’s obligations under the Equipment Notes, Wilmington Trust, National Association, ~~(“WTNA”),~~ and the ~~Lenders (as defined below)~~Equipment Note lenders entered into the Omnibus Amendment No. 1 (the “Omnibus Amendment”). The Omnibus Amendment provides for, among other ~~things,~~ things: (i) reducing the minimum liquidity covenant under the guarantee agreement related to the Equipment Notes ~~(the~~(as amended, the “Guarantee”) with respect to the Company and its subsidiaries from $125.0 million as of the end of each fiscal quarter to $75.0 million on any date; (ii) permitting the execution of the

Credit Agreement (as defined below) ~~and~~; (iii) ~~reflecting~~ the consent of the Equipment Note lenders that will allow the Company to effect a sale of certain guarantors under the ~~Guarantee.~~Guarantee; (iv) that if a prepayment under the Term Loan (as defined below) results in the weighted average life of the Term Loan being shorter than that of the Equipment Notes, a

redemption of a portion of the Equipment Notes is required; and (v) that if an Equipment Note has a maturity date on or after the maturity of the Term Loan, all obligations under such Equipment Note will be due 90 days prior to the maturity of the Term Loan.

The Note Purchase Agreement, the Indentures and the Guarantee, as each was amended by the Omnibus Amendment, contain certain covenants, including a liquidity covenant that requires the Company to maintain minimum aggregate available cash and Cash Equivalents (as defined in the Note Purchase Agreement), including ~~certain amounts~~$20.0 million held in deposit for the benefit of the lenders and presented in Other non-current assets on our consolidated balance sheets as of ~~$75.0~~each of March 31, 2024 and December 31, 2023, of $75.0 million on any date, 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) making 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 and the Term Loan and Revolving Credit Facility (as each ~~term~~ is defined below). 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 ~~September 30, 2023,~~March 31, 2024, we were in compliance with the covenants under the Note Purchase Agreement, each Indenture and the ~~related guarantees. We recognized $4.9 million in General and administrative expense in the condensed consolidated statement of operations associated with executing the Omnibus Amendment.~~Guarantee.

Interest and principal payments on the Equipment Notes began on January 15, 2023 and are payable quarterly on each January 15, April 15, July 15 and October 15 ~~which began on January 15, 2023.~~. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company redeemed in-full the Equipment Notes for ~~seven~~eight aircraft, which reduced the aggregate principal amount outstanding under the Equipment Notes by ~~$17.4~~$16.3 million. As of ~~September 30, 2023,~~March 31, 2024, the carrying value of the ~~127~~114 aircraft that ~~are~~were subject to first-priority liens under the Equipment Notes was ~~$300.2~~$265.8 million.

Amortization expense for debt discounts and deferred financing costs of ~~$0.3~~$0.5 million and ~~$2.7~~$0.9 million was recorded in interest expense in the condensed consolidated statement of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, respectively.

~~Delta Promissory Note~~

On August 8, 2023, the Company entered into a Secured Promissory Note (the “Note”) with Delta, as payee, which was subsequently amended pursuant to the First Amendment thereto, dated August 15, 2023, the Second Amendment thereto, dated August 21, 2023, the Third Amendment thereto, dated September 6, 2023, and the Fourth Amendment thereto, dated September 14, 2023 (collectively, the “Amendments” and, collectively with the Note, the “Amended Note”), pursuant to which Delta provided $70.0 million aggregate principal amount of short-term funding to the Company at an interest rate of 10% per annum, which was payable in kind and capitalized to the outstanding principal amount of the Amended Note on a quarterly basis and a maturity date of February 4, 2024. The Amended Note was secured by a first-priority lien on unencumbered assets of the Company and its direct and indirect wholly-owned U.S. subsidiaries, including unencumbered aircraft of WUP LLC. The Amended Note was guaranteed by the Company’s wholly-owned U.S. subsidiaries. On September 20, 2023, the Company repaid all amounts due and owed under the Amended Note using a portion of the proceeds from the Term Loan (as defined below) and entered into a Letter Agreement, dated as of September 20, 2023 with Delta, which terminated the Amended Note and released all liens and guarantees thereunder in connection with such repayment. The repayment of all amounts due and owed under the Amended Note was accounted for as a debt extinguishment, and no gain or loss was recognized.

Term Loan and Revolving Credit Facility

On September 20, 2023 (the “Credit Agreement Closing Date”), the Company entered into athe Credit Agreement (the ~~“Credit~~“Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as

guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”), and Cox Investment Holdings, Inc. (“CIH” and collectively with Delta and CK Wheels, the ~~“Lenders”~~“Initial Lenders”), and U.S. Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), pursuant to which (i) the Initial Lenders provided a term loan facility (the ~~“Term~~“Initial Term Loan”) in the aggregate original principal amount of $350.0 million and (ii) Delta provided commitments for a revolving loan facility (the “Revolving Credit Facility”) in the aggregate original principal amount of $100.0 million. On September 20, 2023, the Company issued the Term Loan of $350.0 million to the Lenders for net proceeds (before transaction-related expense) of $343.0 million. ~~Pursuant~~

On November 15, 2023 (the “Final Closing Date”), the Company entered into Amendment No. 1 to Credit Agreement (the “Credit Agreement Amendment” and together with the Original Credit Agreement, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, each of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP, Whitebox GT Fund, LP and Kore Fund Ltd (collectively, the “Incremental Term Lenders” and together with the Initial Lenders, the “Lenders”), and the Agent, pursuant to which, among other things, the Incremental Term Lenders joined the Credit Agreement ~~the Company, with the consent of Delta~~ and ~~CK Wheels, may request the establishment of new~~provided an additional term loan ~~commitments (each, an~~facility (the “Incremental Term Loan” and together with the Initial Term Loan, the “Term Loan”) ~~after~~in the aggregate original principal amount of $40.0 million. On the Final Closing Date, the Company issued the Incremental Term Loan of

$40.0 million to the Incremental Term Lenders for net proceeds (before transaction-related expense) of $39.2 million. Upon the closing of the Incremental Term Loan, the loans under the Credit Agreement ~~Closing Date~~consisted of (i) the Term Loan in anthe aggregate principal amount ~~up to $50.0~~of $390.0 million ~~subject to certain limitations~~ and ~~requirements. Any additional lender providing an Incremental Term Loan after~~(ii) the Revolving Credit ~~Agreement Closing Date~~Facility in ~~accordance with~~ the ~~Credit Agreement will join the Credit Agreement.~~aggregate original principal amount of $100.0 million.

The scheduled maturity date for the Term Loan is September 20, 2028, and the scheduled maturity date for the Revolving Credit Facility is the earlier of September 20, 2028 and the first date after September 20, 2025 on which all amounts owed with respect to borrowings under the Revolving Credit Facility have been repaid, ~~(in each case, as applicable, the “Maturity Date”),~~ subject in each case to earlier termination upon acceleration or termination of any obligations upon the occurrence and continuation of an event of default. Interest on the Term Loan and any borrowings under the Revolving Credit Facility (each, a “Loan” and collectively, the “Loans”) accrues at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding. Accrued interest on each Loan is payable in kind as compounded interest and capitalized to the principal amount of the applicable Loan on the last day of each of March, June, September and December, and the ~~Maturity Date.~~applicable maturity date. Also, upon the occurrence and during the continuance of an event of default under the Credit Agreement, (i) interest will accrue on the unpaid principal balance of the Loans at the rate then applicable to such Loans plus 2% and (ii) interest will accrue on all other outstanding liabilities, interest, expenses, fees and other sums under the Credit Agreement, at a rate equal to the Alternate Base Rate (as defined in the Credit Agreement) plus 2% per annum. If in the future the Company or its subsidiaries either redeem in full the outstanding Equipment Notes or commence payoff at maturity thereof, the Company may elect to make interest payments (or some portion thereof) on any Loans then outstanding in cash.

If the Company does not consummate the Deferred Issuance (as defined in Note 10 below) by January 18, 2024, the interest rate on the Term Loan will be increased to 20% per annum until such time that such Deferred Issuance is consummated. Also, upon the occurrence and during the continuance of an event of default under the Credit Agreement, (y) interest will accrue on the unpaid principal balance of the Loans at the rate then applicable to such Loans plus 2% and (z) interest will accrue on all other outstanding liabilities, interest, expenses, fees and other sums under the Credit Agreement, at a rate equal to the Alternate Base Rate (as defined in the Credit Agreement) plus 2% per annum.

The Credit Agreement also contains certain covenants and events of default, in each case customary for transactions of this type. The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding certain accounts, including any segregated account exclusively holding customer deposits, and other assets specified in the Credit Agreement), as well as a junior lien on the Equipment Note Collateral. The Credit Agreement is ~~initially~~ guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company. In the future, the Company may be required to add any new or after-acquired subsidiaries of the Company that meet certain criteria as guarantors. As of March 31, 2024, we were in compliance with the covenants under the Credit Agreement and related credit documents.

In connection with the ~~transactions contemplated by~~funding of the ~~Credit Agreement,~~Initial Term Loan, the Company entered into anthe Investment and Investor Rights Agreement, ~~on September 20, 2023~~dated as of the Credit Agreement Closing Date (the ~~“Investor~~“Original Investor Rights Agreement”), by and among the Company and the Initial Lenders. Pursuant to the Original Investor Rights Agreement, the Company issued to the Initial Lenders 141,313,671 shares in the aggregate (the “Initial Shares”) of Common Stock in a private placement that closed after the end of the trading day on September 20, 2023, which represented approximately 80% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis as of September 15, 2023 (the “Initial Issuance”)~~. The Initial Shares were issued such that each Lender received~~ in a ~~pro rata portion of the Initial Shares equal to the proportion of its participation in the Term Loan as of~~private placement on the Credit Agreement Closing Date.

~~Additionally,~~ In addition, the Company agreed to issue an additional 529,926,270 shares in the aggregate (the “Deferred Shares” and, together with the Initial Shares, the “Investor Shares”) of Common Stock ~~which~~(the “Deferred Issuance” and together with the Initial ~~Shares will represent approximately 95% of~~Issuance, the “Investor Issuances”).

On November 9, 2023, the Company’s issued and outstanding shares of Common Stock on a fully diluted basis as of September 15, 2023 (the “Deferred Issuance”). The Deferred Issuance is contingent upon, and the Deferred Shares are expected to be issued to the Lenders (and any additional lender permitted

pursuant to the Credit Agreement) after, the receipt of stockholder approval of an amendment to the Company’s Certificate of Incorporation to increase the number of shares of Common Stock authorized for issuance thereunder (the “Authorized Shares Amendment”)stockholders approved, at a special meeting of the Company’s stockholders ~~expected to be held~~(the “2023 Special Meeting”), the Amended and Restated Certificate of Incorporation of Wheels Up, filed with the Secretary of State of the State of Delaware on November 9,15, 2023 (the ~~“Special Meeting”~~“Amended and Restated Certificate of Incorporation”)~~. The~~, which, among other things, increased the number of shares of Common Stock available for issuance thereunder. In connection with the transactions contemplated by the Credit Agreement Amendment, the Company entered into Amendment No. 1 to Investment and Investor ~~Shares will be issued in a private placement such that upon completion~~Rights Agreement, dated as of the Final Closing Date (the “Investor Rights Agreement Amendment” and together with the Original Investor Rights Agreement, the “Investor Rights Agreement”), with each Initial Lender, which contained, among others, certain revisions to reflect the issuance of the Deferred ~~Issuance, if at all,~~Shares. Substantially concurrently with entering into the Investor Rights Agreement Amendment, on the Final Closing Date, the Company and Initial Lenders entered into joinders to the Investor Rights Agreement (collectively, the “Investor Rights Agreement Joinders”) with each Incremental Term Lender (or ~~any additional lender permitted~~its applicable affiliate), pursuant to which each Incremental Term Lender (or its applicable affiliate) joined the ~~Credit~~Investor Rights Agreement and assumed the rights and obligations of an Additional Investor (as defined in the Investor Rights Agreement) ~~will have been issued~~thereunder, including the right to receive a pro rata portion of the Investor Shares. The Company issued the Deferred Shares to the Lenders on the Final Closing Date in a private placement. The Investor Shares were issued in private placements such that after the Investor Issuances, each Lender was issued a

number of shares equal to its pro rata portion of the ~~proportion of~~Investor Shares based on its participation in the Term ~~Loan, together with any additional term loan issued prior to or concurrently with the Deferred Issuance.~~ Loan. The Investor Rights Agreement also contains certain other terms and conditions related to the Lenders’ ownership of Common Stock, including, among other things, that the Initial Lenders have the right to designate certain members of the Company’s Board of Directors depending on the level of Common Stock ownership and certain transfer restrictions and liquidity rights.

In accordance with ~~ASC 470,~~ ~~Debt, the value of the Term Loan, Initial Issuance, and Deferred Issuance was allocated using a relative fair value allocation. We evaluated features of the three instruments in accordance with ASC~~Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging~~. The~~, the Company determined that the Term Loan, Initial Issuance and Deferred Issuance did not contain any features that would qualify as a derivative or embedded derivative and require bifurcation. In addition, the Company determined the Initial Issuance and Deferred Issuance should be classified as equity. ~~The~~In accordance with ASC 470, Debt, the allocation on a relative fair value basis resulted in gross amounts recorded of $44.9 million for the Initial Term Loan, $64.2 million for the Initial Issuance and $240.9 million for the Deferred ~~Issuance. The fair value~~Issuance, in each case during the year ended December 31, 2023. In accordance with ASC 815, Derivatives and Hedging, the Company determined the reallocation of the Deferred Issuance between the Lenders in connection with the Credit Agreement Amendment and Investor Rights Agreement Joinders that resulted in a pro rata portion of the Investor Shares being issued to the Incremental Term Lenders on the Final Closing Date represented a modification of a freestanding equity-classified written call option and the modification is to be recognized as if cash had been paid as consideration for the shares of Common Stock issued to the Incremental Term Lenders (collectively, the “Reallocated Shares”). Accordingly, the Reallocated Shares were treated as a debt ~~was principally based on inputs such as estimated credit risk, recently completed market transactions~~ discount in accordance with the guidance in ASC 835, Interest, and ~~estimates based on interest rates, maturities, credit risk and underlying collateral. These inputs are primarily classified as Level 3 within~~ the ~~ASC 820 fair value hierarchy. The fair~~ value of the ~~Initial Issuance~~Incremental Term Loan and ~~Deferred Issuance were based on~~ the ~~quoted market prices of Common Stock, which represent Level 1 within the ASC 820~~Reallocated Shares was apportioned using a relative fair value ~~hierarchy given these issuances were announced~~allocation. The allocation on a fair value basis resulted in gross amounts recorded of $9.4 million for the Incremental Term Loan and ~~known by~~$30.6 million for the ~~public.~~Reallocated Shares during the three months ended December 31, 2023.

~~Issuance~~Aggregate issuance costs of ~~$26.6~~$29.5 million were incurred in connection with the Original Credit Agreement, Credit Agreement Amendment, Original Investor Rights Agreement and Investor Rights ~~Agreement.~~Agreement Amendment. The deferred issuance costs were allocated on a relative fair value basis, resulting in an allocation of ~~$3.4~~$4.1 million in the aggregate for the Term Loan ~~$4.9~~and $25.4 million in the aggregate for the ~~Initial Issuance, and $18.3 million for the Deferred Issuance.~~

Investor Issuances. The initial carrying value of the Term Loan was $41.4 million as of September 20, 2023, which reflected the $3.4 million of unamortized debt issuance costs and $305.2 million of unamortized debt discount. The initial carrying value of the Incremental Term Loan was $8.7 million as of November 15, 2023, which reflected $0.7 million of unamortized debt issuance costs and $30.6 million of unamortized debt discount.

Amortization of debt discounts and deferred ~~financing~~issuance costs associated with the Term Loan of ~~$(0.3)~~$2.4 million were recorded in interest expense in the condensed consolidated statement of operations for the three ~~and nine~~ months ended ~~September 30, 2023.~~

March 31, 2024.

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.

2218

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):


		September 30, 2023
		Level 1		Level 2		Level 3		Fair Value
	March 31, 2024											March 31, 2024
	Level 1									Level 1	Level 2	Level 3	Fair Value
Assets:	Assets:
Money market funds	Money market funds	$	89	$	—	$	—	89

Money market funds
Money market funds
Total assets	Total assets	$	89	$	—	$	—	$	89

Liabilities:	Liabilities:
Liabilities:
Liabilities:
Warrant liability - Public Warrants
Warrant liability - Public Warrants
Warrant liability - Public Warrants	Warrant liability - Public Warrants	$	42	$	—	$	—	$	42
Warrant liability - Private Warrants	Warrant liability - Private Warrants	—		24		—		24
Equipment Notes	Equipment Notes	—		—		269,801		269,801
Term loan		$	—	$	—	268,400		$	268,400
Term Loan
Total liabilities	Total liabilities	$	42	$	24	$	538,201	$	538,267

		December 31, 2022
		Level 1		Level 2		Level 3		Fair Value
		December 31, 2023
		December 31, 2023
		December 31, 2023
	Level 1									Level 1	Level 2	Level 3	Fair Value
Assets:	Assets:
Money market funds	Money market funds	$	230,626	$	—	$	—	$	230,626
Treasury bills		199,700		—		—		199,700
Money market funds
Money market funds
Total assets	Total assets	$	430,326	$	—	$	—	$	430,326

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

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

The Warrants (as defined below) were accounted for as a liability in accordance with ASC 815-40. 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 each of March 31, 2024 and December 31, 2023, we used Level 2 inputs for the Warrants. We valued the Warrants by applying the valuation technique of a Monte Carlo simulation model to reflect the redemption conditions. See Note 11 for additional information about the Warrants.

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, 2023	$	7	$	5	$	12
Change in fair value of warrant liability	18		10		28
Fair value as of March 31, 2024	$	25	$	15	$	40

The estimated fair value of the Equipment Notes is categorized as a Level 3 valuation. We considered the appraised value of aircraft subject to first-priority liens under the Equipment Notes, as sourced during the third

quarter of 2023 and as required under the Equipment Notes, to determine the fair value of the Equipment Notes as of ~~September 30, 2023.~~March 31, 2024.

The estimated fair value of the Term Loan is categorized as a Level 3 valuation. The estimated fair value as of the issuance date was principally based on inputs such as estimated credit risk, recently completed transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. We considered the relatively short time period between the issuance of the Term Loan and the measurement date of ~~September 30, 2023,~~March 31, 2024, in order to determine the fair value of the Term Loan as of ~~September 30, 2023.~~

The Warrants (as defined below) were accounted for as a liability in accordance with Accounting Standards Codification 815-40 (see Note 12). 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 each of September 30, 2023 and DecemberMarch 31, 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 Private Warrants by applying the valuation technique of a Monte Carlo simulation model to reflect the redemption conditions. The Private

~~Warrants are substantially similar to the Public Warrants, but are not directly traded or quoted on an active trading market. See Note 12 for additional information about the Warrants.~~

~~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, 2022 $ 479 $ 272 $ 751
Change in fair value of warrant liability (437) (248) (685)
Fair value as of September 30, 2023 $ 42 $ 24 $ 66

2024.

9.LEASES

Leases primarily pertain to certain controlled aircraft and our ~~corporate headquarters and~~ operational facilities, including aircraft hangars, our corporate headquarters located in the Atlanta, Georgia area and our corporate office in New York, New York, which are all accounted for as operating leases. We sublease an aircraft hangar at Cincinnati/Northern Kentucky International Airport from 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 are not included in the right-of-use asset and lease liability balances but rather are expensed as incurred.

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


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Operating lease costs
Operating lease costs
Operating lease costs	Operating lease costs	$	9,313	$	9,789	$	30,648	$	28,614
Short-term lease costs	Short-term lease costs	2,039		8,086		6,676		22,600
Short-term lease costs
Short-term lease costs
Variable lease costs
Variable lease costs
Variable lease costs	Variable lease costs	10,519		3,563		25,018		12,516
Total lease costs	Total lease costs	$	21,871	$	21,438	$	62,342	$	63,730
Total lease costs
Total lease costs

Lease costs related to leased aircraft and operational facilities are included in ~~cost~~Cost of revenue in the condensed consolidated statements of operations. Lease costs related to our leased corporate headquarters and other office space, including expenses for non-lease components, are included in General and administrative expense in the condensed consolidated statements of operations.

Sublease income is presented in General and administrative expense in the condensed consolidated statements of operations. Sublease income was not material for ~~any~~each of the three ~~and nine~~ month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

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


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
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	$	28,318	$	28,865
Operating cash flows paid for operating leases
Operating cash flows paid for operating leases
Right-of-use assets obtained in exchange for operating lease obligations	Right-of-use assets obtained in exchange for operating lease obligations	$	5,742	$	46,916

2420

Supplemental balance sheet information related to leases were as follows:


		September 30, 2023		December 31, 2022
	March 31, 2024								March 31, 2024				December 31, 2023
Weighted-average remaining lease term (in years):	Weighted-average remaining lease term (in years):
Operating leases
Operating leases
Operating leases	Operating leases	6.7		5.9		6.8				6.7
Weighted-average discount rate:	Weighted-average discount rate:
Operating leases	Operating leases	9.1	%	9.0	%
Operating leases
Operating leases							9.3	%			9.2	%

Maturities of lease liabilities, as of ~~September 30, 2023,~~March 31, 2024, were as follows (in thousands):


Year ending December 31,	Year ending December 31,	Operating Leases		Year ending December 31,	Operating Leases
2023 (remaining)		$	8,159
2024		28,522
2024 (remaining)
2025	2025	16,993
2026	2026	9,826
2027	2027	7,520
2028 and Thereafter		43,090
2028
2029 and Thereafter
Total lease payments	Total lease payments	114,110
Less: Imputed interest	Less: Imputed interest	(31,561)
Total lease obligations	Total lease obligations	$	82,549

10.STOCKHOLDERS’ EQUITY AND EQUITY-BASED COMPENSATION

Stockholders’ Equity

~~Authorized Shares~~

Pursuant to the ~~Wheels Up Experience Inc. certificate~~Amended and Restated Certificate of ~~incorporation, as amended, and after giving effect to the Authorized Share Reduction that became effective on June 7, 2023,~~Incorporation, we are authorized to issue ~~250,000,000~~1,525,000,000 shares, consisting of (i) 1,500,000,000 shares of Common Stock and (ii) 25,000,000 shares of preferred ~~stock, $0.0001 par value per share.~~stock. Holders of Common Stock are entitled to one vote per share; provided, that by agreement (i) ~~CK Wheels LLC~~certain Incremental Term Lenders (collectively, the “Non-Citizen Investors”) that are not “citizens of the United States” (as defined in 49 USC § 40102(a)(15)(C)), may ~~not~~be afforded collective voting rights equal to 1% of all shares of Common Stock entitled to vote ~~more than 19.9%~~at a meeting of the Company’s ~~issued and outstanding~~stockholders; (ii) for so long as such Non-Citizen Investors collectively hold such shares of Common Stock, asthe shares of Common Stock held by CK Wheels in excess of 23.9% of all shares of Common stock entitled to vote at a ~~result~~meeting of ~~restrictions on~~the Company’s stockholders, will not have voting ~~imposed under applicable regulatory provisions~~rights (subject to ratable adjustment if the Non-Citizen Investors cease to own (beneficially or of record) a certain number of shares of Common Stock); and ~~(ii) by agreement with Delta,~~(iii) any shares owned by Delta above 29.9% will be neutral shares with respect to voting rights, will be voted in proportion to all other votes cast (“for”, “against” or ~~��abstain”~~“abstain”) at a meeting of stockholders by stockholders other than by Delta.

~~Reverse Stock Split~~

Following approval by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on May 31, 2023, the Board of Directors of the Company (the “Board”) approved the Reverse Stock Split of Wheels Up’s outstanding shares of Common Stock, at a reverse stock split ratio of 1-for-10 and contemporaneously with the Reverse Stock Split, the Authorized Share Reduction, which provided for a proportionate reduction in the number of authorized shares of Common Stock from 2.5 billion shares of Common Stock to 250 million shares, each of which became effective immediately after the close of trading on the NYSE on June 7, 2023. The Company’s total stockholders’ equity, in the aggregate, did not change as a result of the Reverse Stock Split and Authorized Share Reduction. In addition, the par value for the Company’s Common Stock remained unchanged. Holders of Common Stock who would otherwise have held fractional shares because the number of shares of Common Stock they held before the Reverse Stock Split was not evenly divisible by the reverse stock split ratio received cash (without interest, and subject to any required tax withholding applicable to a holder) in lieu of issuance of such fractional shares.

2521

~~As a result of the Reverse Stock Split, equitable adjustments corresponding~~Equity-Based Compensation

The Company’s outstanding equity-based compensation awards to ~~the reverse stock split ratio were~~its directors, executive officers, employees and other eligible personnel have been made to the number of shares of Common Stock underlying Wheels Up’s outstanding equity awards and the number of shares issuable under Wheels Up’s equity incentive plans, as well as any exercise prices, hurdle amounts or market-based vesting conditions of such equity awards, as applicable. In addition, equitable adjustments corresponding to the reverse stock split ratio of 1-for-10 were made to the Warrants (as defined below), resulting in each Warrant becoming exercisable for 1/10th of one share of Common Stock at an exercise price of $115.00 per whole share of Common Stock and the stated redemption prices per Warrant being proportionately reduced (see Note 12).

~~Initial Issuance & Deferred Issuance~~

In connection with the transactions contemplated by the Credit Agreement, the Company entered into the Investor Rights Agreement on September 20, 2023. Pursuant to the Investor Rights Agreement, the Company issued the Lenders 141,313,671 Initial Shares in a private placement that closed after the end of the trading day on the Credit Agreement Closing Date, which represented approximately 80% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis. The Initial Shares were issued such that each Lender received a pro rata portion of the Initial Shares equal to the proportion of its participation in the Term Loan as of the Credit Agreement Closing Date. The amount recorded for the Initial Issuance was determined using the relative fair value basis, which resulted in allocated gross proceeds of $64.2 million for the Initial Issuance. Issuance costs of $4.9 million were recorded as a reduction to Additional paid-in capital.

Additionally, the Company agreed to issue an additional 529,926,270 Deferred Shares. The Deferred Issuance is contingent upon, and the Deferred Shares are expected to be issued to the Lenders (and any additional lender permitted pursuant to the ~~Credit Agreement) after,~~Wheels Up Experience Inc. 2021 Long-Term Incentive Plan, as amended and restated effective April 1, 2023 (the “Amended and Restated 2021 LTIP”), the ~~receipt~~Wheels Up Experience Inc. 2022 Inducement Grant Plan, dated June 30, 2022 (the “2022 Inducement Grant Plan”), the Wheels Up Experience Inc. Performance Award Agreement, dated as of ~~stockholder approval~~November 30, 2023, granted to George Mattson (the “CEO Performance Award”), the Wheels Up Experience Inc. Performance Award Agreement, dated as of the Authorized Shares Amendment at the Special Meeting. The Investor Shares will be issued in a private placement such that upon completion of the Deferred Issuance, if at all, each Lender (and any additional lender permitted pursuantMarch 3, 2024, granted to ~~the Credit Agreement) will have been issued a pro rata portion of the Investor Shares equal to the proportion of its participation in the Term Loan,~~Todd Smith (the “CFO Performance Award” and together with ~~any additional term loan issued prior to or concurrently with~~ the ~~Deferred Issuance.~~

~~The Company recorded~~CEO Performance Award, the Deferred Issuance as a forward contract for Common Stock within Additional paid-in capital on the balance sheet. The amount recorded for the Deferred Issuance was determined using the relative fair value basis, which resulted in allocated gross proceeds of $240.9 million for the Deferred Issuance. Issuance costs of $18.3 million were recorded as a reduction to Additional paid-in capital.

~~Equity-Based Compensation~~

~~As of September 30, 2023, we have~~“Executive Performance Awards”), nine equity-based compensation plans that were approved by the board of directors of WUP ~~LLC~~ (collectively, the “WUP Management Incentive Plan”) prior to the ~~Business~~business combination consummated on July 13, 2021 (the “Business Combination ~~(as defined below)~~Closing Date”) between WUP and Aspirational Consumer Lifestyle Corp. (“Aspirational”), ~~as well as~~a blank check company (the “Business Combination’), and the Wheels Up Partners Holdings LLC Option Plan (the “WUP Option Plan”)., which was approved by the board of directors of WUP prior to the Business Combination. Additional details about these equity-based compensation arrangements are below.

WUP Management Incentive Plan

In March 2014, the WUP Management Incentive Plan was established, which provided for the issuance of WUP profits interests, restricted or unrestricted, to employees, consultants and other qualified persons. Following the consummation of the Business Combination, ~~(as defined below),~~ no new grants can be made under the WUP Management Incentive ~~Plan or WUP Option~~ Plan.

In connection with the Business Combination (as defined below), the Board and stockholders of Wheels Up adopted the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “Original 2021 LTIP”), for employees, consultants and other qualified persons. Following approval by the Board, at the Annual Meeting, the Company’s stockholders approved the Amended and Restated Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “Amended and Restated 2021 LTIP”) to increase the aggregate number of shares of Common Stock available for awards made thereunder by 24,150,000 shares (2,415,000 shares after giving effect to the Reverse Stock Split) and amend certain other plan provisions.

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, pursuant to NYSE Rule 303A.08, for Todd Smith, in connection with his appointment to Chief Financial Officer. The maximum number of awards that could be granted under the 2022 Inducement Plan were 2,051,282 shares of Common Stock (205,128 shares of Common Stock after giving effect to the Reverse Stock Split), which were all granted in the form of restricted stock units (“RSUs”) to Mr. Smith on July 1, 2022. Restricted stock unit awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other awards granted under the Original 2021 LTIP during the fiscal year ended December 31, 2022.

~~WUP Management Incentive Plan~~

As of ~~September 30, 2023,~~March 31, 2024, an aggregate of 3.1 million WUP profits interests have been authorized and issued under the WUP Management Incentive Plan. Vested WUP profits interests are eligible to be exchanged into shares of 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 Common Stock. The actual number of shares of Common Stock received upon exchange of such WUP profits interests will depend on the trading price per share of 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 ~~September 30, 2023:~~March 31, 2024:


		Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value		Number of WUP Profits Interests	Weighted-Average Grant Date Fair Value
		(in thousands)
Outstanding WUP profits interests as of January 1, 2023		2,881	$	4.16
Outstanding WUP profits interests as of January 1, 2024
Outstanding WUP profits interests as of January 1, 2024
Outstanding WUP profits interests as of January 1, 2024
Granted	Granted	—	—
Exchanged	Exchanged	—	—
Expired/forfeited	Expired/forfeited	—	—
Outstanding WUP profits interests as of September 30, 2023		2,881	$	4.16
Outstanding WUP profits interests as of March 31, 2024

The weighted-average remaining contractual term as of ~~September 30, 2023,~~March 31, 2024, for WUP profits interests outstanding was approximately ~~7.8~~7.3 years.

~~The following table summarizes the status of non-vested~~All WUP profits interests were vested as of ~~September 30, 2023:~~

Number of WUP
Profits Interests Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested WUP profits interests as of January 1, 2023 170 $ 4.19
Granted — —
Vested (170) 4.19
Forfeited — —
Non-vested WUP profits interests as of September 30, 2023 — $ —
December 31, 2023.

WUP Option Plan

In December 2016, the WUP Option Plan was established, which provided for the issuance of stock options to purchase WUP common interests at an exercise price based on the fair market value of the interests on the date of grant. Generally, WUP stock options granted vest over a four-year service period and expire on the tenth anniversary of the grant date. As of ~~September 30, 2023,~~March 31, 2024, the number of WUP stock options authorized and issued in the aggregate under the WUP Option Plan was 1.8 million. Each outstanding WUP stock option is exercisable for one share of Common Stock.

2722

The following table summarizes the activity under the WUP Option Plan as of ~~September 30, 2023:~~March 31, 2024:


		Number of WUP Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value
		(in thousands)
Outstanding WUP stock options as of January 1, 2023		1,280	$	75.10	$	12.02
	Number of WUP Stock Options						Number of WUP Stock Options	Weighted- Average Exercise Price	Weighted-Average Grant Date Fair Value
	(in thousands)
Outstanding WUP stock options as of January 1, 2024
Outstanding WUP stock options as of January 1, 2024
Outstanding WUP stock options as of January 1, 2024
Granted	Granted	—	—		—
Exercised	Exercised	—	—		—
Forfeited	Forfeited	(78)	71.63		7.34
Expired	Expired	(10)	72.71		6.74
Outstanding WUP stock options as of September 30, 2023		1,192	$	75.35	$	12.38
Exercisable WUP stock options as of September 30, 2023		1,192	$	75.35	$	12.38
Outstanding WUP stock options as of March 31, 2024
Exercisable WUP stock options as of March 31, 2024

The aggregate intrinsic value as of ~~September 30, 2023,~~March 31, 2024, for WUP stock options that were outstanding and exercisable was nil.

The weighted-average remaining contractual term as of ~~September 30, 2023,~~March 31, 2024, for WUP stock options that were outstanding and exercisable was approximately ~~5.8~~5.3 ~~years.~~

~~The following table summarizes the status of non-vested~~years, respectively. All WUP stock options were vested as of ~~September 30, 2023:~~

Number of WUP Stock Options Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested WUP stock options as of January 1, 2023 104 $ 19.95
Granted — —
Vested (102) 20.03
Expired — —
Forfeited (2) 16.01
Non-vested WUP stock options as of September 30, 2023 — $ —
December 31, 2023.

Amended and Restated 2021 LTIP & 2022 Inducement Grant Plan

In connection with the Business Combination, the Board and stockholders of Wheels Up adopted the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “Original 2021 LTIP”), for employees, consultants and other qualified persons. Following approval by the Board, at the 2023 Annual Meeting, the Company’s stockholders approved the Amended and Restated 2021 LTIP to increase the aggregate number of shares of Common Stock available for awards made thereunder by 2,415,000 shares and amend certain other plan provisions. The Amended and Restated 2021 LTIP provides for the grant of incentive options, nonstatutory options, restricted stock, restricted stock units (“RSUs”), including performance-based RSUs (“PSUs”), rights, other stock-based awards, performance awards, cash awards or any combination of the foregoing. As of ~~September 30, 2023,~~March 31, 2024, an aggregate of 5.2 million shares were authorized for issuance under the Amended and Restated 2021 LTIP.

On June 30, 2022, the Board adopted the 2022 Inducement Grant Plan to be used for a one-time employment inducement grant, pursuant to NYSE Rule 303A.08, for Todd Smith, in connection with his appointment as Chief Financial Officer. The maximum number of awards that could be granted under the 2022 Inducement Grant Plan were 205,128 shares of Common Stock, which were all granted in the form of RSUs to Mr. Smith on July 1, 2022. RSU awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other awards granted under the Original 2021 LTIP during the fiscal year ended December 31, 2022. Due to such similarities, the RSUs granted under the 2022 Inducement Grant Plan are consolidated in the discussion of RSUs below.

Restricted Stock Units

RSUs granted under the Amended and Restated 2021 LTIP and 2022 Inducement Grant Plan generally vest at intervals up to a four-year service period. The following table summarizes the activity under the Amended and Restated 2021 LTIP related to RSUs as of ~~September 30, 2023:~~March 31, 2024:

2823

Number of RSUs(1)
Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested RSUs as of January 1, 2023 1,617 $ 34.64
Granted 2,297 2.69
Vested (584) 35.25
Forfeited (649) 22.28
Non-vested RSUs as of September 30, 2023 2,681 $ 10.12


	Number of RSUs(1)	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested RSUs as of January 1, 2024	1,848	$	9.35
Granted(2)	3,958	3.10
Vested	(508)	6.77
Forfeited	(86)	11.63
Non-vested RSUs as of March 31, 2024	5,212	$	4.82

(1) ~~RSU awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other RSU awards granted under the Original 2021 LTIP during the fiscal year ended December 31, 2022.~~ The number of RSUs and weighted-average grant date fair value include 205,128 RSUs granted under the 2022 Inducement Grant Plan in July 2022, of which ~~68,376~~136,752 RSUs had vested as of January 1, ~~2023~~2024 and the remaining ~~136,752~~68,376 RSUs are scheduled to vest ~~in equal installments~~ on ~~December 30, 2023 and~~ December 30, 2024, subject to continued service through ~~each~~ such vesting date.

(2) Share-based settlement of 3.1 million RSU awards granted during the three months ended March 31, 2024 is contingent on receipt of approval by the Company’s stockholders of an amendment to the Amended and Restated 2021 LTIP (the “LTIP Amendment”) at the 2024 annual meeting of the Company’s stockholders (the “2024 Annual Meeting”). If the Company’s stockholders do not approve the LTIP Amendment at the 2024 Annual Meeting, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) will settle such awards in cash upon vesting based on the fair market value per share of Common Stock on the applicable vesting date. The carrying amount of the contingent RSU awards granted during the three months ended March 31, 2024 has been classified as mezzanine equity on the condensed consolidated balance sheet as of March 31, 2024 under Contingent performance awards.

The total unrecognized compensation cost related to non-vested RSUs was ~~$20.5~~$20.4 million as of ~~September 30, 2023~~March 31, 2024 and is expected to be recognized over a weighted-average period of ~~1.6~~2.6 years.

Performance-Based Restricted Stock Units ~~(“PSUs”)~~

Under the terms of the PSUs granted to certain employees under the Amended and Restated 2021 LTIP, upon the achievement of certain pre-determined performance objectives, each PSU may settle into shares of our Common Stock. The PSUs will vest, if at all, upon the actual achievement of the related performance objectives, subject to specified change of control exceptions.

The following table summarizes the activity under the Amended and Restated 2021 LTIP related to PSUs as of ~~September 30, 2023:~~March 31, 2024:

Number of PSUs Weighted-Average Grant
Date Fair Value
(in thousands)
Non-vested PSUs as of January 1, 2023 96 $ 21.68
Granted 145 2.93
Vested (32) 12.19
Forfeited (44) 15.19
Non-vested PSUs as of September 30, 2023(1)
165 $ 8.71


	Number of PSUs	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested PSUs as of January 1, 2024	18	$	2.89
Granted(1)	464	3.07
Vested	—	—
Forfeited	(5)	2.89
Non-vested PSUs as of March 31, 2024	477	$	3.06

(1) ~~Non-vested PSUs reflected in~~Share-based settlement of PSU awards granted during the ~~table above include approximately 84 thousand~~three months ended March 31, 2024 is contingent on receipt of ~~PSUs that may settle in shares of our Common Stock equal to 0-120%~~approval by the Company’s stockholders of the ~~PSUs and 106 thousand PSUs that may~~LTIP Amendment at the 2024 Annual Meeting. If the Company’s stockholders do not approve the LTIP Amendment at the 2024 Annual Meeting, the Compensation Committee will settle ~~into shares~~such awards in cash upon vesting based on the fair market value per share of Common Stock ~~equal to 0-200%~~on the applicable vesting date. The carrying amount of the ~~PSUs, in each case based~~PSU awards granted during the three months ended March 31, 2024 has been classified as mezzanine equity on the ~~level~~condensed consolidated balance sheet as of ~~performance.~~March 31, 2024 under Contingent performance awards.

Compensation expense associated with PSUs is recognized over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable. As of ~~September 30, 2023,~~March 31, 2024, the achievement of the performance objectives associated with ~~certain~~non-vested PSUs were deemed probable of being achieved. The total unrecognized compensation cost related to non-vested PSUs was ~~deemed not probable~~$1.4 million as of ~~being achieved~~March 31, 2024 and ~~accordingly, $0.3 million~~is expected to be recognized over a weighted-average period of ~~compensation cost has not been recognized.~~

~~RSUs Subject to Market-Based Vesting Conditions (“Market-Based RSUs”)~~

The Company previously granted Market-Based RSUs to certain employees, pursuant to the terms of which each Market-Based RSU was settleable into shares of Common Stock. The Market-Based RSUs were subject to vesting, if at all, based on the closing trading price per share of our Common Stock over any 30 consecutive trading day-period that occurred prior to the end date specified in the underlying award agreement, subject to continued service through each such vesting date. Based on the Common Stock trading price, the market conditions for the2.6 years.

2924

outstanding Market-Based RSUs were not met, and no shares vested as of June 30, 2023. All outstanding unvested Market-Based RSUs were forfeited and cancelled during the three months ended June 30, 2023.

Wheels Up Stock Options

Wheels Up stock options granted under the Amended and Restated 2021 LTIP vest quarterly over a three-year service period and expire on the tenth anniversary of the grant date. The following table summarizes the activity under the Amended and Restated 2021 LTIP related to Wheels Up stock options as of ~~September 30, 2023:~~March 31, 2024:


		Number of Wheels Up Stock Options	Weighted- Average Exercise Price		Weighted-Average Grant Date Fair Value
		(in thousands)
Outstanding Wheels Up stock options as of January 1, 2023		77	$	100.00	$	47.52
	Number of Wheels Up Stock Options						Number of Wheels Up Stock Options	Weighted- Average Exercise Price	Weighted-Average Grant Date Fair Value
	(in thousands)
Outstanding Wheels Up stock options as of January 1, 2024
Outstanding Wheels Up stock options as of January 1, 2024
Outstanding Wheels Up stock options as of January 1, 2024
Granted	Granted	—	—		—
Exercised	Exercised	—	—		—
Forfeited	Forfeited	—	—		—
Expired	Expired	—	—		—
Outstanding Wheels Up stock options as of September 30, 2023		77	$	100.00	$	47.52
Exercisable Wheels Up stock options as of September 30, 2023		77	$	100.00	$	47.52
Outstanding Wheels Up stock options as of March 31, 2024
Exercisable Wheels Up stock options as of March 31, 2024

The aggregate intrinsic value as of ~~September 30, 2023,~~March 31, 2024, for Wheels Up stock options that were outstanding and exercisable was nil.

The weighted-average remaining contractual term as of ~~September 30, 2023,~~March 31, 2024, for Wheels Up stock options that were outstanding and exercisable was approximately ~~4.1~~3.6 years. ~~All Wheels Up stock options~~

Executive Performance Awards

The Compensation Committee approved the CEO Performance Award granted to George Mattson, the Company’s Chief Executive Officer, and CFO Performance Award granted to Todd Smith, the Company’s Chief Financial Officer, on November 30, 2023 and March 3, 2024, respectively. Except as set forth in Section III.A of the Amended and Restated 2021 LTIP, the Executive Performance Awards incorporate the terms of the existing Amended and Restated 2021 LTIP, as it may be amended from time-to-time. Each Executive Performance Award is intended to constitute a standalone equity incentive plan and any shares of Common Stock issued under such awards will not be issued under, or count against the number of shares of Common Stock reserved pursuant to, any of the Company’s other equity-based compensation plans or awards. The issuance of any shares under the Executive Performance Awards upon vesting is contingent upon receipt of the approval of each award by the Company’s stockholders. If either Executive Performance Award is not approved by the Company’s stockholders at a future annual or special meeting of the Company’s stockholders or by written consent of the Company’s stockholders, or if on any Determination Date (as defined below) there is not a sufficient amount of shares authorized by the Company's stockholders to deliver the number of shares due under the Executive Performance Awards, then upon vesting, if at all, any amounts payable under such Executive Performance Awards will not be paid in the form of the issuance of new shares of Common Stock and instead will be payable in cash.

The Executive Performance Awards are one-time performance awards granted to our Chief Executive Officer and Chief Financial Officer in lieu of future annual equity compensation grants and are intended to provide each of them with the opportunity to share in the long-term growth of the value of the Company. The Executive Performance Awards consist of a contingent right to receive a number of newly issued shares of Common Stock upon: (i) repayment of the Company’s borrowings under the $390.0 million Term Loan, if at all; and (ii) satisfaction of service-based vesting conditions, which provide that 25% of each Executive Performance Award will be eligible to vest on each of September 20, 2024, 2025, 2026 and 2027, so long as such officer remains employed with the Company as of such dates. A “Repayment Event” includes certain refinancings of the Term Loan on or before September 20, 2028, the scheduled maturity date of the Term Loan. Subject to the satisfaction of the applicable performance- and service-based vesting conditions described above, the number of shares of Common Stock that may vest and be issued to our Chief Executive Officer or Chief Financial Officer, as applicable, will first be determined on December 31st of the year in which a Repayment Event occurs, and then on December 31st of each

subsequent year (each such date, a “Determination Date”) until December 31, 2028 (the “Final Determination Date”). At any Determination Date following a Repayment Event, the number of shares of Common Stock issuable to our Chief Executive Officer or Chief Financial Officer, as applicable, in connection with such Determination Date, if any, will be determined using the then applicable percentage associated with the service-based vesting condition (the “Service Vested Percentage”).

The number of shares of Common Stock subject to vesting and issuance, if any, to our Chief Executive Officer or Chief Financial Officer, as applicable, on each Determination Date following a Repayment Event is based on a formula that aligns the number of shares of Common Stock issuable to such officers with the repayment or refinancing of the Term Loan and Revolving Credit Facility, the then applicable dollar value of the shares of Common Stock issued to the Lenders under the Investor Rights Agreement and the volume weighted average price per share of Common Stock during the 60 trading day period prior to the applicable Determination Date. The number of shares of Common Stock, if any, issuable under the Executive Performance Awards will vary depending on, among other things: (i) the occurrence and timing of a Repayment Event; (ii) the Lenders’ Total Investor Return (as defined in the Executive Performance Awards) as a multiple of the aggregate principal amount of the Term Loan and any borrowings under the Revolving Credit Facility as of the applicable Determination Date, if any; and (iii) the Service Vested Percentage as of the applicable Determination Date. There can be no assurance that the vesting conditions will be satisfied or that the foregoing variables will result in the vesting and issuance of any shares of Common Stock or payments of cash pursuant to the Executive Performance Awards.

The performance-based vesting conditions for the Executive Performance Awards were not met and no shares vested as of March 31, 2024. As of March 31, 2024, the achievement of the related performance objective was deemed probable of being achieved on September 20, 2028, the scheduled maturity date of the Term Loan. The grant-date fair values of the CEO Performance Award as of November 30, 2023 and the CFO Performance Award as of March 3, 2024, in ~~prior periods.~~each case using a Monte Carlo simulation model, were $148.4 million and $50.9 million, respectively. The derived service period for the CEO Performance Award began on November 30, 2023, and is 5.2 years. The derived service period for the CFO Performance Award began on March 3, 2024, and is 4.8 years.

We recognized compensation expense of $8.0 million associated with the Executive Performance Awards during the three months ended March 31, 2024. The remaining $188.7 million outstanding expense is expected to be recognized over 4.8 years. As of March 31, 2024, since we have not obtained authorization from the Company’s stockholders for the issuance of any shares of Common Stock to satisfy settlement of the award, the carrying amount of award has been classified as mezzanine equity in the condensed consolidated balance sheet under Contingent performance awards.

Fair Value Estimates

We estimated fair value to measure compensation cost of the Executive Performance Awards on the date of grant using techniques that are considered to be consistent with the objective of measuring fair value. In selecting the appropriate technique, management considered, among other factors, the nature of the instrument, the market risks that it embodies, and the expected means of settlement.

Estimating fair values of the Executive Performance Award requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external factors. In addition, option-pricing models are highly volatile and sensitive to changes.

The following table summarizes the significant assumptions used to estimate the fair value on the date of grant:


	2024(1)		2023(2)
Expected term (in years)	4.9		5.2
Volatility	65	%	60	%
Risk-free rate	4.1	%	4.3	%
Expected dividend rate	0	%	0	%

(1) Assumptions used in the Monte Carlo simulation related to the CFO Performance Award, which was granted on March 3, 2024.

(2) Assumptions used in the Monte Carlo simulation related to the CEO Performance Award, which was granted on November 30, 2023.

Equity-Based Compensation Expense

Compensation expense for WUP profits interests recognized in the condensed consolidated statements of operations was ~~nominal~~nil and ~~$0.2~~$0.1 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and September 30, 2022, respectively, and $0.1 million and~~ ~~$1.1 million~~ ~~for the nine months ended September 30, 2023 and 2022, respectively.~~

Compensation expense for WUP restricted interests recognized in the condensed consolidated statements of operations was nil for each of the three months ended September 30, 2023 and 2022, and nil and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Compensation expense for WUP stock options under the WUP Option Plan and Wheels Up stock options under the Amended and Restated 2021 LTIP recognized in the condensed consolidated statements of operations was ~~$0.2 million~~nil and ~~$1.3~~$0.5 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $1.1 million and $5.5 million for the nine months ended September 30, 2023 and 2022,~~ respectively.

Compensation expense for RSUs and PSUs recognized in the condensed consolidated statements of operations was ~~$3.3~~$3.2 million and ~~$11.2~~$5.7 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $15.2~~respectively.

Compensation expense for the Executive Performance Awards recognized in the condensed consolidated statements of operations was $8.0 million and ~~$29.9 million~~nil for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

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


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Cost of revenue
Cost of revenue
Cost of revenue	Cost of revenue	$	826	$	3,581	$	3,097	$	11,320
Technology and development	Technology and development	620		751		1,777		2,047
Technology and development
Technology and development
Sales and marketing
Sales and marketing
Sales and marketing	Sales and marketing	440		2,756		1,781		8,314
General and administrative	General and administrative	1,622		15,416		14,995		44,158
General and administrative
General and administrative
Total equity-based compensation expense	Total equity-based compensation expense	$	3,508	$	22,504	$	21,650	$	65,839
Total equity-based compensation expense
Total equity-based compensation expense

Earnout Shares

On July 13, 2021 (the “Business Combination Closing Date”), we consummated the transactions contained in the Agreement and Plan of Merger with Aspirational Consumer Lifestyle Corp. (“Aspirational”), a blank check company, dated as of February 1, 2021, as amended on May 6, 2021 (the “Business Combination”). As part of the Business Combination, certain existing holders of WUP equity, including ~~certain~~ holders of WUP profits interests and restricted interests under the WUP Management Incentive Plan, but excluding holders of WUP stock options, have the right to receive up to ~~an aggregate of~~ 0.9 million additional shares of ~~our~~ Common Stock ~~in three equal tranches, which are issuable~~(the “Earnout Shares”) that will vest, if at all, upon the achievement of ~~share~~separate market conditions. One-third of the Earnout Shares will meet the market condition when the closing Common Stock price ~~thresholds of~~is greater than or equal to $125.00 ~~$150.00 and $175.00~~ for any 20 trading days within a period of 30 consecutive trading days on or before July 13, ~~2026, respectively (the “Earnout Shares”). Earnout Shares are not attributable~~2026. An additional one-third will vest when the Common Stock is greater than or equal to ~~any equity-based compensation plan.~~$150.00 over the same measurement period. The final one-third will vest when the Common Stock is greater than or equal to $175.00 over the same measurement period.

Earnout Shares are attributable to vested WUP profits interests and restricted interests as of the date each of the ~~Earnout~~applicable Share market conditions are met. No Earnout Shares ~~have~~had been issued as of ~~September 30, 2023.~~March 31, 2024.

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 Business Combination Closing Date and had a weighted-average period of 1.7 years.

Based on the Common Stock trading price, the market conditions were not met, and no Earnout Shares vested or were issuable as of ~~September 30, 2023.~~March 31, 2024. Compensation expense for Earnout Shares recognized in the condensed consolidated statements of operations was nil and ~~$9.7~~$1.4 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $1.4 million and $28.8 million for the nine months ended September 30, 2023 and 2022,~~ respectively.

Treasury Stock

As of ~~September 30, 2023,~~March 31, 2024, we had ~~275,707~~368,471 shares of treasury stock. The increase in treasury stock during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 reflects shares of Common Stock withheld to settle employee taxes due upon the vesting of ~~RSUs as well as~~RSUs. During the three months ended March 31, 2024, we did not cancel or reissue any shares of Common Stock ~~acquired from stockholders who would otherwise have~~ held fractional shares because the number of shares of Common Stock they held before the Reverse Stock Split was not evenly divisible by the reverse stock split ratio, which the Company acquired for cash (without interest, and subject to any required tax withholding applicable to a holder) in lieu of issuance of such fractional shares of Common Stock.

as treasury stock.

11.WARRANTS

Prior to the Business Combination, Aspirational issued 7,991,544 redeemable public warrants (“Public Warrants”) and 4,529,950 redeemable private warrants (“Private Warrants” and together with the Public Warrants, the “Warrants”). On the Business Combination Closing Date, Wheels Up assumed the ~~Warrants.~~Warrants, none of which had been exercised as of March 31, 2024. Each whole Warrant entitles the holder to purchase 1/10th share of Common Stock at a price of $115.00 per whole share of Common Stock. 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 1,252,149 shares of Common Stock underlying the Public Warrants and Private Warrants. As of September 30, 2023, there have not been any warrants exercised and 12,521,494 remain outstanding. The Public Warrants were delisted from trading on the NYSE on ~~July 17, 2023~~ ~~and deregistered under the~~ ~~Exchange Act effective October 5, 2023.~~

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 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 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 shares of 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~~is as follows:


		September 30, 2023			December 31, 2022
	March 31, 2024											March 31, 2024				December 31, 2023
Number of WUP common units held by Wheels Up(1)	Number of WUP common units held by Wheels Up(1)	166,804,743	100.0	%	24,933,857	100.0	%	Number of WUP common units held by Wheels Up(1)	697,321,492	100.0	100.0		%	696,856,131	100.0		100.0	%
Number of vested WUP profits interests attributable to non-controlling interests(2)	Number of vested WUP profits interests attributable to non-controlling interests(2)	—	—	%	—	—	%	Number of vested WUP profits interests attributable to non-controlling interests(2)	—	—	—		%	—	—		—	%
Total WUP common units and vested WUP profits interests outstanding	Total WUP common units and vested WUP profits interests outstanding	166,804,743	100.0	%	24,933,857	100.0	%	Total WUP common units and vested WUP profits interests outstanding	697,321,492	100.0	100.0		%	696,856,131	100.0		100.0	%

(1) WUP common units represent an equivalent ownership of Common Stock outstanding.

(2) Based on the closing price of Common Stock on the last trading day of the period covered by this Quarterly Report, there would be no WUP common units issuable upon conversion of vested and unvested WUP profits interests outstanding as of ~~September 30, 2023.~~March 31, 2024.

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%~~nil for each of the three ~~and nine~~ months ended ~~ended September 30, 2023~~March 31, 2024 and ~~2022.~~

2023.

3228

13.COMMITMENTS AND CONTINGENCIES

The Company has contractual obligations and commitments, primarily in the form of obligations to provide services for which we have already received deferred revenue (see Note 2), lease arrangements (see Note 9), repayment of long-term debt (see Note 7), legal proceedings and sales and use tax liability.

Legal Proceedings

WeFrom time to time, we are ~~party~~subject to various legal ~~actions arising~~proceedings and claims, either asserted or unasserted, which arise in the ~~normal~~ordinary course of business. While the outcome of these matters cannot be predicted with certainty, as of the date of this Quarterly Report we do not ~~expect~~believe that the ~~ultimate resolution~~outcome of any of these ~~pending actions~~matters, individually or in the aggregate, will have a material adverse effect on our ~~consolidated~~financial condition, results of operations ~~financial position,~~ or cash ~~flows, litigation is subject~~flows.

GRP Litigation

On July 5, 2023, we filed a lawsuit against Exclusive Jets, LLC d/b/a flyExclusive, a subsidiary of flyExclusive, Inc. (“FE”), in the United States District Court for the Southern District of New York, which was re-filed against FE in the Supreme Court of the State of New York in New York County on August 23, 2023. We instituted the action to ~~inherent uncertainties. As~~enforce our rights and remedies for wrongful termination by FE of that certain Fleet Guaranteed Revenue Program Agreement, dated November 1, 2021, between WUP and FE (the “GRP Agreement”). On June 30, 2023, FE notified us in writing of its immediate termination of the GRP Agreement. We believe that FE wrongfully terminated such agreement in breach thereof. We are seeking compensatory damages, including the return of material deposits held by FE under the GRP Agreement that were recorded in Other non-current assets on our consolidated balance sheets as of March 31, 2024 and December 31, 2023, as well as attorneys’ fees and costs. We intend to vigorously pursue the action to recover the outstanding deposits and other damages from FE, but there can be no assurance ~~that any pending legal action, which we believe~~as to ~~be immaterial as~~the outcome of ~~September 30, 2023, does not become material~~the lawsuit against FE. Our success in recovering the amounts from FE will depend upon several factors including the availability of funds by FE for the recoverable amounts. We are in the ~~future.~~process of evaluating the effects of the foregoing events and we cannot make a reasonable estimate of any outcome, recovery or loss at this time.

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 ~~September 30, 2023~~each of March 31, 2024 and December 31, ~~2022,~~2023, we estimated the potential exposure to such tax liability was ~~$10.6~~$10.5 million ~~and $10.4 million, respectively,~~ the expense for which was included in accrued expenses on the condensed consolidated balance sheets and in 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, and their purchases of flights and flight-related services.

We incurred expenses of ~~$0.4 million and $1.5~~$0.1 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, and ~~$0.1 million and $1.5~~$0.6 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, from transactions related to the CCA with Delta. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $0.4~~2023, $1.6 million and ~~$2.4~~$0.4 million, respectively, were included in Accrued expenses on the condensed consolidated balance sheets, and ~~$4.6~~$2.7 million and ~~nil,~~$3.6 million, respectively, were included in Other non-current liabilities on the condensed consolidated balance sheets, in each case related to transactions ~~associated with~~related to the CCA with Delta.

The Company completed certain financing transactions with Delta during the three months ended September 30, 2023, including the Amended Note, the Term Loan and the issuance of a portion of the Initial Shares to Delta, in each case in amounts equal to the amount of the Term Loan funded by Delta in relation to the total Term Loan funded on the Credit Agreement Closing Date. See Note 7, Long-Term Debt and Note 10, Stockholders Equity and Equity-Based Compensation Expense, for additional information about the Term Loan, Revolving Credit Facility and issuance of a portion of the Initial Shares to Delta during the three months ended September 30, 2023.

15.RESTRUCTURING AND RELATED CHARGES

On March 1, 2023, we 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 equity-based compensation.

~~As of September 30, 2023, we have~~We incurred $17.7 million of charges associated with the Restructuring Plan during the fourth quarter of 2022 and first quarter of 2023, which primarily consisted of cash and non-cash expenses related to severance payments, employee benefits and equity-based ~~compensation, which represents all cash and non-cash charges expected under the Restructuring Plan.~~compensation. During the three months ended ~~December~~March 31, ~~2022,~~2023, we ~~recorded $7.2 million of expenses related to actions taken in the fourth quarter of 2022 and in connection with the Restructuring Plan. During the six months ended June 30, 2023, the remaining~~recognized approximately $10.5 million of expenses related to the Restructuring Plan which were ~~incurred and~~ recorded in the ~~Company’s~~ condensed consolidated statement of ~~operations,~~net income, as follows (in thousands):



Cost of revenue	$	755
Technology and development	2,299
Sales and marketing	2,058
General and administrative	5,408
Total restructuring expenses	$	10,520

~~As of September 30, 2023, all~~All charges associated with the Restructuring Plan ~~have been paid.~~

were paid as of December 31, 2023.

16.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 WUP, as well as any standalone income or loss Wheels Up generates. WUP 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 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 recorded income tax ~~expense~~benefit of ~~$0.6~~$0.1 million ~~and $0.8 million for the three and nine months ended September 30, 2023, respectively,~~ and income tax expense of $0.2 million ~~and $0.5 million~~ for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2024 and March 31, 2023, respectively. The effective tax rate was ~~(0.4)%~~0.1% and (0.2)% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~respectively, and (0.1)% and (0.2)% for the three and nine months ended September 30, 2022,~~ respectively. Our effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 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 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 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 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 ~~September 30, 2023,~~March 31, 2024, we concluded, based on the weight of all available positive and negative evidence, that it is 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.

In general, under Section 382 of the Internal Revenue Code of 1986 (as amended, the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating

losses or tax credits to offset future taxable income or taxes. As a result of the Initial Issuance, the Company experienced an ownership change for the purpose of Section 382 of the Code during the third quarter of 2023 that will limit the availability of our tax attributes offset future income. A formal Section 382 analysis is being performed to determine the extent of the limitations. Our net operating losses and tax attributes are currently subject to a full valuation allowance. Accordingly, we do not believe it will have a material impact on our consolidated financial statements.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world have implemented the legislation, including jurisdictions in which certain of Wheels Up’s subsidiaries operate, and many other jurisdictions are in the process of implementing it. The Company is currently monitoring these developments and is in the process of evaluating the potential impact on its consolidated financial statements.

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.

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 September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Numerator:
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	$	(144,813)	$	(148,838)	$	(406,272)	$	(330,250)
Net loss attributable to Wheels Up Experience Inc. - basic and diluted
Net loss attributable to Wheels Up Experience Inc. - basic and diluted
Denominator:
Denominator:
Denominator:	Denominator:
Weighted-average shares of Common Stock outstanding - basic and diluted	Weighted-average shares of Common Stock outstanding - basic and diluted	41,261,003		24,435,096		30,737,324		24,434,787
Weighted-average shares of Common Stock outstanding - basic and diluted
Weighted-average shares of Common Stock outstanding - basic and diluted
Basic and diluted net loss per share of Common Stock	Basic and diluted net loss per share of Common Stock	$	(3.51)	$	(6.09)	$	(13.22)	$	(13.52)
Basic and diluted net loss per share of Common Stock
Basic and diluted net loss per share of Common Stock

There were no dividends declared or paid during each of the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

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 Common Stock outstanding for all periods presented. WUP restricted interests were converted into shares of restricted stock as of the Business Combination Closing Date (see Note 10).

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 Common Stock.

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

September 30,
2023 2022
Warrants(1)
1,252,149 1,252,149
Earnout Shares 900,000 900,000
RSUs(2)
3,109,823 2,432,789
Stock options 1,268,584 1,415,066
Total anti-dilutive securities 6,530,556 6,000,003


	March 31,
	2024	2023
Warrants(1)	1,252,149	1,252,149
Earnout Shares	900,000	900,000
RSUs and PSUs(2)	3,790,537	2,785,266
Stock options	1,181,652	1,366,515
Total anti-dilutive securities	7,124,338	6,303,930

(1) Each Warrant entitles the holder to purchase 1/10th of one share of Common Stock at a price of $115.00 per whole share of Common Stock.

(2) Includes total RSUs and PSUs outstanding as of ~~September 30, 2023~~March 31, 2024 and total RSUs, PSUs and ~~Market-Based~~market-based RSUs outstanding as of ~~September~~March 31, 2023, which market-based RSUs were subsequently forfeited during the three months ended June 30, ~~2022.~~

2023.

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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 condensed consolidated financial statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (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, ~~2022.~~2023 (“Annual Report”). 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~~is a leading provider of on-demand private aviation in the United States (“U.S.”) and one of the largest companies in the industry. Wheels Up offers a complete global private aviation solution with a large and diverse aircraft fleet, backed by ~~delivering innovative, accessible, travel through simple-to-use proprietary technology~~an uncompromising commitment to safety and ~~mobile applications. We have become a recognized market leader and are redefining private flying by leveraging our unique technology-enabled marketplace platform.~~ service. We connect private flyers to ~~private~~ aircraft, and to one another, ~~creating memorable lifestyle~~through an open platform that enables life’s most important experiences.Our offering is delivered through a mix of programmatic and charter options that strategically utilize our owned and leased aircraft fleet and an “asset-light” charter model to deliver a greater range of global travel alternatives. In addition, our unique partnership with Delta Air Lines, Inc. (“Delta”) provides our members and customers with a seamless offering across both private and premium commercial travel. We continue to enhance the experiences of our members and customers by offering a mix of programmatic and “pay as you fly” charter options that strategically utilize our owned aircraft fleet and an asset-light charter model to deliver a greater range of global travel alternatives.

We ~~have an evolving business model generating~~generate revenue through flights, membership fees and other services. While we offer numerous products and services to our customers and industry partners, we generate the majority of our revenue from flight activity through our member programs and charter solutions. We have historically provided the majority of our private aviation services through our membership program, which allows members to select the membership level best tailored for their flying needs and receive additional benefits from the purchase of dollar-denominated credits that can be applied to future costs, including flight services, annual dues, and other incidental costs such as catering and ground transportation (“Prepaid Blocks”). We also provide global charter solutions to members and non-member customers through our subsidiary, Air Partner Limited (“Air Partner”). Air Partner’s charter capabilities allow us to source additional aircraft to fit the exact needs of our members and customers. We believe that Air Partner’s global reach and vast network of third-party aviation providers allows us to best serve the needs of our members, as well as individual, small and medium enterprise, and large corporate customers. Due to the nature of the services that we provide, we have determined that we operate as one reportable segment, which is private aviation services.

Our Member Programs

We generate revenue from our member programs in two main categories—Flight revenue ~~includes both retail~~ and ~~wholesale charter. Wheels Up has one of the largest~~Membership revenue. We provide private aviation services through our innovative membership program, offering three membership tiers — Connect, Core and most diverse mixes of available aircraft in the industry. As of September 30, 2023, we had approximately 200 aircraft in our owned and leased fleet that includes Turboprops, Light, Midsize, Super-Midsize and Large-Cabin jets, approximately half ofUP for Business — which are ~~Wheels Up branded aircraft. We also offer our members and customers~~collectively designed to address a ~~variety~~spectrum of ~~global charter options by leveraging~~private aviation consumers, from those with occasional usage to the ~~capabilities~~most frequent of ~~Air Partner, which uses an asset-light model to service customers globally. Wholesale customers, such as charter flight brokers and third-party operators, primarily pay a fixed rate for flights.~~

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. Members are also able to purchase dollar-denominated credits 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 (“Prepaid Blocks”). Prepaid Block sales allow us to have a certain amount of revenue visibility into future flight and travel 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 shortly after their flights based on then-current market rates.

flyers. Membership revenue is generated from initiation fees and annual ~~renewal fees across three different annual subscription tiers — Connect, Core~~dues, which provide members with access to one of the world’s largest combined fleets of owned, leased and ~~Business — each of which is~~third-party aircraft. Our member programs are designed to provide the varying services required across a range of existing and potential private flyers. Our 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. Our 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; however, our most recent member program changes announced, which became effective on June 26, 2023, limit aircraft availability at

~~fixed rates to certain geographic service regions (see “Member Program Changes & Up for Business Enhancements~~”below). The Connect membership, our introductory 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 and website to on-demand charter flights and dynamic ~~pricing,~~pricing. Additional details about our member programs are below:

•Our Core membership is designed for private flyers who place a ~~variety~~premium on the convenience and flexibility of ~~Shared Flights, empty-leg Hot Flights, Shuttles~~guaranteed aircraft availability on all aircraft types on short notice, want price protection through capped or fixed rates on the busiest industry days and ~~The Community,~~want to participate in an ~~online platform~~enhanced lifestyle program of ~~members-only forums~~events, experiences and member benefits. Core members can also use Prepaid Blocks to ~~facilitate flight sharing, enabling members to reduce their cost of flying private. In addition, customers can qualify~~

seamlessly pay for Delta ~~miles~~flights and upon signing up or renewing their membership, receive Delta SkyMiles® and/or Delta Medallion® Status.

•The UP for Business membership is designed to serve a broad spectrum of demands for small and medium enterprise, and large corporate customers, including those for whom we are the primary provider of private flights and others for whom we may be a supplementary solution to their own aircraft operations. We create custom enterprise solutions to streamline corporate travel needs. The flexibility of our offering provides our UP for Business members with the ability to book, purchase and manage their private travel needs and book commercial travel through Delta, all from a single source. As with Core members, UP for Business members that purchase Prepaid Blocks receive tailored benefits, including, among others, guaranteed aircraft availability and capped or fixed rates.

Core and UP for Business members can prepay for future flights with the purchase of a Prepaid Blocks. Prepaid Blocks afford members with preferential terms and conditions that may include greater aircraft availability, access across cabin class categories, extended capped or fixed rate price protection and other member benefits. We have generally experienced greater purchases of Prepaid Blocks from our members during the third and fourth quarters of the calendar year. Prepaid Blocks are accounted for as Deferred revenue until the time at which they are used by members or business customers in accordance with the ~~Delta SkyMiles Program~~terms applicable to such Prepaid Block.

Flight revenue includes revenue earned from member and customer flights, whether as part of ~~their membership.~~our programmatic or charter offerings. Wheels Up has one of the largest and most diverse mix of available aircraft in the industry. As of March 31, 2024, we had 175 aircraft in our owned and leased fleet that includes Turboprops, Light, Midsize, Super-Midsize and Large-Cabin jets. We also have access to approximately 1,500 aircraft in all private aircraft cabin classes through our network of third-party operators, which must satisfy our rigorous and stringent safety standards for aircraft, crew and operations.

Charter Flight Solutions

We also help fulfill certain member and customer flights through our global charter solutions. Our acquisition of Air Partner has allowed us to expand our charter flight solutions by offering options to suit virtually every charter need through its international network of trusted partners. Our charter offerings customize the member and non-member experience for short- or long-haul flights with bespoke private jet arrangements or group charters, including for commercial-size charters with large passenger groups of 15 or more, sports teams, global corporate events and tour operations. Our expanded charter flight solutions are complementary to our historical programmatic offering by providing a leading solution for members and customers wishing to fly globally through attractive market-based pricing and personalized alternatives. We have an extensive network of third-party operators that are required to meet our stringent safety requirements. Flight revenue also includes revenue earned from charter brokerage services provided to our members and customers.

Additional Sources of Revenue

In addition ~~non-member~~to our member programs and global charter solutions, we provide wholesale charter services to customers ~~have access to a full-scale marketplace of private aircraft through the Wheels Up mobile app, available on the iOS~~such as charter flight brokers and Android platforms, 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.

third-party operators. We ~~have historically managed aircraft for owners~~also engage in exchange for a recurring contractual fee. Under the terms of the management agreements from which we derived revenue, in addition to owners utilizing their own aircraft, we had the ability to use the managed aircraft to fulfill member and non-member flights on a revenue sharing arrangement with the owner. Revenue associated with the management of aircraft included the recovery of owner incurred expenses, as well as the recharging of certain incurred aircraft operating costs. As described under “~~Sale of Aircraft Management Business~~” below, we sold our non-core aircraft management business to an unrelated third-party effective September 30, 2023. Our results for the three months ended September 30, 2023 include the results of the aircraft management business, but due to the divestiture, we do not expect to realize any significant revenue or expenses associated with aircraft management activities in future periods.

~~We earn other revenue from sales of whole aircraft, group charter, cargo,~~ maintenance, repair and operations (“MRO”) ~~and ground services and~~, fixed-base operator (“FBO”) ~~activities. In addition, other revenue includes~~services, safety and security ~~revenue, flight management software subscription fees from third-party operators for access to our proprietary cloud-based flight management system, UP FMS, sponsorships and partnership fees,~~services, and special missions, ~~revenue,~~ including government, defense, emergency and medical transport. We believe that these primarily non-member facing activities and services complement our core private aviation business and provide additional sources of revenue.

Recent Developments

~~Liquidity Initiatives~~

~~Term Loan and Revolving Credit Facility~~

On September 20, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”) and Cox Investment Holdings, Inc. (collectively with Delta and CK Wheels, the “Lenders”), and U.S. Bank Trust Company, N.A., as administrative agent for the Lenders and as collateral agent for the secured parties, pursuant to which (i) the Lenders provided a $350.0 million term loan facility (the “Term Loan”), the net proceeds of which were received by the Company on September 20, 2023, and (ii) Delta provided commitments for a $100.0 million revolving loan facility (the “Revolving Credit Facility” and collectively with the Term Loan and Incremental Term Loan (as defined below), the “Credit Facility”). The maturity date for the Term Loan is September 20, 2028 and for the Revolving Credit Facility, is the earlier of September 20, 2028 and the first date after September 20, 2025 on which all borrowings thereunder have been repaid. The Term Loan and any borrowings under the Revolving Credit Facility accrues interest at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding, which is payable in kind as compounded interest and capitalized to the principal amount of the applicable loan on the last day of each of March, June, September and December and the applicable maturity date. The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding certain assets), and a junior lien on the Equipment Note Collateral (as defined “Liquidity and Capital Resources” below). The Credit Agreement is initially guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company.

The Company, with the consent of Delta and CK Wheels, may request the establishment of up to $50.0 million in new term loan commitments (collectively, the “Incremental Term Loan”) and any new lender(s) providing an Incremental Term Loan will join the Credit Agreement and generally have all of the rights and obligations of a Lender thereunder. As of the date of this Quarterly Report, the Company is in active discussions with additional parties to provide an Incremental Term Loan as permitted under the Credit Agreement. See “~~Liquidity and Capital Resources” below and Note 7, Long-Term Debt in the Notes to Financial Statements included herein for additional information about the Term Loan and Revolving Credit Facility.~~

~~Payoff of Delta Promissory Note~~

As previously disclosed, the Company entered into a Secured Promissory Note, dated August 8, 2023 (the “Note”), with Delta, as payee, which was subsequently amended pursuant to the First Amendment thereto, dated August 15, 2023, the Second Amendment thereto, dated August 21, 2023, the Third Amendment thereto, dated September 6, 2023, and the Fourth Amendment thereto, dated September 14, 2023 (collectively with the Note, the “Amended Note”), pursuant to which Delta provided $70.0 million aggregate principal amount of short-term funding to the Company at an interest rate of 10% per annum, which was payable in kind and capitalized to the outstanding principal amount of the Amended Note on a quarterly basis. In connection with the initial funding of the Term Loan, on September 20, 2023, the Company repaid all amounts due and owing under the Amended Note using a portion of the proceeds from the Term Loan and the Amended Note was terminated upon repayment in-full.

~~Amendment to Certain Equipment Note Documents~~

In connection with the initial funding of the Term Loan, on September 20, 2023, the Company, Wheels Up Partners LLC, an indirect subsidiary of the Company (“WUP LLC”), and certain other subsidiaries of the Company that guaranteed and/or granted collateral to secure WUP LLC’s obligations under the outstanding Equipment Notes (as defined under “~~Liquidity and Capital Resources~~” below), entered into Omnibus Amendment No. 1, dated as of September 20, 2023 (the “Omnibus Amendment”), with Wilmington Trust, National Association and the lenders under the Equipment Notes, pursuant to which amendments were made to certain documents governing the Equipment Notes to, among other things, (i) reduce the minimum liquidity covenant under the guarantee related to the Equipment Notes with respect to the Company and its subsidiaries from $125.0 million at the end of each calendar quarter to $75.0 million on any date, (ii) permit the execution of the Credit Agreement and (iii) reflect the consent of the lenders under the Equipment Notes that will allow the Company to effect a sale of certain guarantors under the guarantee related to the Equipment Notes from time to time. See “~~Liquidity and Capital Resources” below for additional information about the Omnibus Amendment.~~

~~Common Stock Issuance~~

In connection with the initial funding of the Term Loan, the Company entered into an Investment and Investor Rights Agreement, dated as of September 20, 2023 (the “Investor Rights Agreement”), by and among the Company and the Lenders. Pursuant to the Investor Rights Agreement, the Company issued to the Lenders 141,313,671 shares in the aggregate (the “Initial Shares”) of the Company’s Class A common stock, $0.0001 par value per share (“Common Stock”), in a private placement that closed on September 20, 2023, which represented approximately 80% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis as of September 15, 2023 (the “Initial Issuance”). The Initial Issuance was consummated without the approval of the Company’s stockholders based on the Financial Distress Exception provided for in the Shareholder Approval Policy of the New York Stock Exchange. In addition, the Company agreed to issue an additional 529,926,270 shares in the aggregate (the “Deferred Shares” and, together with the Initial Shares, the “Investor Shares”) of Common Stock, which together with the Initial Shares will represent approximately 95% of the Company’s issued and outstanding shares of Common Stock on a fully diluted basis as of September 15, 2023 (the “Deferred Issuance” and together with the Initial Issuance, the “Investor Issuances”). The Deferred Issuance is contingent upon, and are expected to be issued to the Lenders (and any additional lender permitted pursuant to the Credit Agreement) after, the receipt of stockholder approval of an amendment to the Company’s Certificate of Incorporation to increase the number of shares of Common Stock authorized for issuance thereunder at a special meeting of the Company’s stockholders expected to be held on November 9, 2023 (the “Special Meeting”). The Investor Shares will be issued in a private placement such that upon completion of the Deferred Issuance, if at all, each Lender (or any additional lender

permitted pursuant to the Credit Agreement) will have been issued a pro rata portion of the Investor Shares equal the proportion of its participation in the Term Loan, together with any additional term loan issued prior to, or concurrently with, the completion of the Investor Issuances.

The Investor Rights Agreement also contains certain other terms and conditions related to the Lenders’ ownership of Common Stock, including, among other things, that the Lenders have the right to designate certain members of the Board depending on the level of Common Stock ownership and certain transfer restrictions and liquidity rights. In addition, the Company and the Lenders entered into a customary Registration Rights Agreement, dated as of September 20, 2023 (the “Registration Rights Agreement”), pursuant to which, among other things, the Company agreed to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended, the Investor Shares on or before October 20, 2024 and certain other demand and piggyback registration rights in favor of the Lenders.

The issuance, offer and/or sale of any securities described herein has not been registered under any federal or state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the applicable federal and state laws. This Quarterly Report shall not constitute an offer to sell or a solicitation of an offer to purchase any securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

~~Divestiture of Aircraft Management Business~~

On September 30, 2023, the Company completed the previously announced sale of the equity interests of a Company subsidiary which held its non-core aircraft management business to Executive AirShare LLC (“AirShare”). The total maximum transaction consideration of $19.1 million consists of $13.2 million of cash received on the closing date, contingent consideration with an estimated fair value of $4.8 million, all or a portion of which will be earned, if at all, upon the timely satisfaction of certain conditions, an escrow receivable of up to $0.6 million and non-contingent consideration receivable of $0.5 million. Concurrently with the closing of the transaction, certain subsidiaries of the Company and AirShare entered into short-term transition services, aircraft operating and fleet management agreements to facilitate the transition of remaining assets and services that comprise the aircraft management business to AirShare. The transaction was part of the Company’s efforts to divest non-core assets as we focus on our operational efficiency and other cost reduction initiatives.

~~Operational Efficiency~~Network Optimization and Cost Reduction Initiatives

~~Member Program Changes & Up for Business Enhancements~~

~~On May 9,~~In June 2023, we announced changes to our member ~~program~~programs that ~~we expect will better serve members and customers, while also improving~~were designed to focus our ~~operational efficiency and flight margins. These member program changes took effect on June 26, 2023, and included, among others, the creation of two primary service~~controlled fleet into specific regions ~~– one East of the Mississippi River and one focused~~ in the ~~Western region of~~U.S. along the ~~country –~~east coast, west coast, and travel in between. We believe these changes will allow us to better utilize our King Air and Light, Mid and Super-Midsize jet fleets to enhance flight experience and member service in our primary operating areas. We continue to provide flight services to all regions in the United States. Areas outside of our primary service regions will be dynamically priced at competitive market rates. These member program changes took immediate effect with respect to new Prepaid Block purchases. However, these changes generally do not apply to Prepaid Blocks purchased prior to effectiveness (the “historical funds”), which members may continue to utilize under prior rule-sets until the historical funds are exhausted. We expect that as historical funds are consumed and our members transition to the latest member programs, both the Company and its members will begin to more fully realize the benefits of our latest member program changes. However, during the period of transition, the Company may continue to experience short-term financial variability, as well as fluctuation in the number of Active Members (as defined below). We believe that these program changes are necessary to support our sustained operations and financial goals.

In addition, we are further integrating our corporate sales teams with Delta to yield additional profitable flying opportunities that complement the flying habits of our existing base of customers. On November 1, 2023, we launched a new Up for Business corporate program designed to better serve our small and medium-sized enterpriseBy concentrating on those

3934

~~members~~primary service areas, we expect to benefit from improved network density with significant cost and operating advantages for us, and attractive pricing and leading service levels for our customers.

The announcement of those member program changes was the first step in our efforts to transition our business to areas where we expect to generate sustainable profits. Over the past year, we have continued to deliver on our customer commitments and legacy Prepaid Block rule sets, and all new Prepaid Block sales are under the new programmatic rule sets. Today, with the vast majority of Prepaid Blocks on the newer rule sets, we are taking the steps to more fully consolidate our operations and maintenance activities within our primary service area, which is where we expect to concentrate our controlled fleet flying going forward.

We are also devoting significant resources to growing our global charter offerings alongside our member programs. We believe there is a ~~tailored~~significant opportunity to increase the mix of revenue attributable to our charter offerings, the growth of which is expected to be an important contributor to our future profitability goals.

The private aviation ~~solution~~industry experienced lower demand in the first quarter of 2024 relative to the prior year, which was a contributing factor to the decrease in our Live Flight Legs (as defined below) and Flight revenue. However, we experienced a 14% increase in Prepaid Blocks versus the first quarter 2023, which we believe is a result of our improved operating performance and continued momentum from our partnership with Delta. The increase in Prepaid Blocks was in-part attributable to improved sales to corporate customers during the first quarter of 2024. We expect that ~~features industry-leading pricing, discounts~~increased flight activity from corporate customers will lead to an increase in weekday travel to complement the weekend and ~~benefits designed specifically~~holiday travel that we have historically experienced from individual leisure travelers. We believe that increasing the mix of corporate customers is a key component of the Company’s plan to improve asset utilization and achieve our positive Adjusted EBITDA (as defined below) goal.

New PBI Maintenance Facility

We continue to implement changes to our aircraft fleet management and maintenance operations that are intended to improve the efficiency of our operations and the availability of our aircraft, as well as reduce our operating costs. In April 2024, we announced that we expect to open a new flagship maintenance facility at Palm Beach International Airport (the “PBI Maintenance Facility”) by the end of 2024. In preparation for ~~such businesses.~~the opening of the PBI Maintenance Facility, we are reallocating resources from existing underutilized facilities as a result of, among others: the closure of existing maintenance operations in Cincinnati, Ohio and Broomfield, Colorado; the relocation of mobile service units in Sacramento, California, Las Vegas, Nevada, and Salt Lake City, Utah, and certain service units in Burbank, California, to the Eastern U.S.; and the forthcoming relocation of resources currently stationed at the Company’s Fort Lauderdale facility to the PBI Maintenance Facility. We believe these actions will better align our maintenance resources to the Company’s geographic network and flight demand density.

Certificate Consolidation ~~and Operational Efficiency Efforts~~

We continue to pursue the consolidation of our U.S. Federal Aviation Administration (“FAA”) operating certificates, which is intended to simplify our flight operations by harmonizing our procedures across the entire ~~company versus the multiple operating silos that exist today.~~company. In February 2023, we consolidated the legacy Alante Air Charter operations and our Cessna CJ3 aircraft ~~onto~~into one FAA operating certificate. OnIn September ~~30,~~ 2023, we completed the sale of ~~the~~our non-core aircraft management business, which included the disposition of the two related FAA operating certificates. In March 2024, the FAA issued operational authority that allowed us to begin transitioning our King Air 350i, Cessna CJ3 and Cessna Citation X aircraft fleets to a single FAA operating certificate held by Wheels Up Private Jets LLC, our subsidiary. We expect ~~our~~continued certificate consolidation and related operational efficiency efforts will contribute meaningfully to our service delivery and financial results in future periods. ~~We continue to pursue~~

Additional Operational Efficiency Initiatives

Since the ~~consolidation~~beginning of ~~our remaining operating certificates.~~

We2023, we have ~~also implemented changes to our aircraft fleet management and maintenance operations~~taken numerous actions intended to improve our operating efficiency and reduce our fixed costs, including the ~~efficiency~~opening of our ~~operations~~Member Operations Center located in the Atlanta, Georgia area (the “Atlanta Member Operations Center”) in May 2023 and strategically reducing the ~~availability~~number of owned and leased aircraft in our ~~aircraft.~~fleet. We expect to continue to take actions to simplify our business, drive our asset utilization, and focus on our core charter ~~operations, which could include strategic~~operations. We also expect to strategically adjust our controlled aircraft ~~sales~~fleet to match

demand as we ~~optimize our fleet~~focus on improved asset utilization, and ~~divesting non-core assets. We have also taken~~implement discrete cost ~~cutting actions related to~~reduction initiatives that do not adversely impact the customer experience or our ~~vendors and are actively rationalizing our leased real estate portfolio.~~service offerings. We believe these actions are important to achieving operational excellence and ~~more~~supporting future profitable flying.

~~Restructuring Plan~~

In March 2023, we announced the adoption of a restructuring plan (the “Restructuring Plan”), which was 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.

~~Atlanta Member Operations Center~~

On May 15, 2023, we began operating our Member Operations Center in the Atlanta, Georgia area (the “Atlanta Member Operations Center”). Establishment of the Atlanta Member Operations Center centralizes our critical functions with the goal of better serving our members and customers.

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) 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:

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

•To provide useful information for historical period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and other items not indicative of our ongoing operating performance.

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


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Net loss
Net loss
Net loss	Net loss	$	(144,813)	$	(148,838)	$	(406,272)	$	(330,637)
Add back (deduct)	Add back (deduct)
Add back (deduct)
Add back (deduct)
Interest expense
Interest expense
Interest expense	Interest expense	11,258		—		27,035		—
Interest income	Interest income	(404)		(1,130)		(6,090)		(1,612)
Interest income
Interest income
Income tax expense
Income tax expense
Income tax expense	Income tax expense	579		185		751		505
Other expense, net	Other expense, net	(613)		625		822		1,505
Other expense, net
Other expense, net
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	15,459		16,500		45,027		46,862
Change in fair value of warrant liability	Change in fair value of warrant liability	61		(2,504)		(685)		(8,265)
Loss on divestiture		2,991		—		2,991		—
Change in fair value of warrant liability
Change in fair value of warrant liability
Gain on disposal of assets, net
Gain on disposal of assets, net
Gain on disposal of assets, net
Equity-based compensation expense	Equity-based compensation expense	3,508		22,504		21,650		65,839
Acquisition and integration expenses(1)		—		4,747		2,108		16,092
Equity-based compensation expense
Equity-based compensation expense
Acquisition and integration expense(1)
Acquisition and integration expense(1)
Acquisition and integration expense(1)
Restructuring charges(2)
Restructuring charges(2)
Restructuring charges(2)	Restructuring charges(2)	22,213		682		40,905		6,165
Atlanta Member Operations Center set-up expense(3)	Atlanta Member Operations Center set-up expense(3)	10,765		—		26,895		—
Atlanta Member Operations Center set-up expense(3)
Atlanta Member Operations Center set-up expense(3)
Certificate consolidation expense(4)	Certificate consolidation expense(4)	3,279		—		10,799		—
Impairment of goodwill(5)		56,200		62,000		126,200		62,000
Other(6)		988		—		117		—
Certificate consolidation expense(4)
Certificate consolidation expense(4)

Other(5)

Other(5)

Other(5)
Adjusted EBITDA	Adjusted EBITDA	$	(18,529)	$	(45,229)	$	(107,747)	$	(141,546)
Adjusted EBITDA
Adjusted EBITDA

__________________

(1)Consists of expenses incurred associated with acquisitions, as well as integration-related charges incurred within one year of acquisition date primarily related to system conversions, re-branding costs and fees paid to external advisors.

(2)For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, primarily includes charges for contract termination charges and employee separation programs as part of our ongoing cost reduction initiatives. For the three months ended March 31, 2023, includes restructuring charges related to the ~~Restructuring Plan~~restructuring plan that we announced on March 1, 2023 (the “Restructuring Plan”) and ~~related~~other strategic business expenses incurred to support significant changes to our member programs and certain aspects of our operations, primarily consisting of consultancy fees associated with designing and implementing changes to our member programs and obtaining financing, and severance and recruiting expenses associated with executive transitions and other employee separation programs as part of our cost reduction initiatives. ~~For the three and nine months ended September 30, 2022, 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 primarily including redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees. The Atlanta Member Operations Center began operating on May 15, 2023.

(4)Consists of expenses incurred to execute the consolidation of our FAA operating certificates primarily including pilot training, ~~and~~ retention programs and consultancy fees associated with planning and implementing the consolidation process.

(5)Represents non-cash impairment charge related to goodwill recognized in the second and third quarters of 2023. See Note 1, Summary of Business and Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements included herein.

~~(6)~~Includes (i) collections of certain aged receivables which were added back to Net Loss in the reconciliation presented for the twelve months ended December 31, 2022, ~~as well as recognition~~(ii) reserves and/or write-off of ~~charges related to an individually immaterial~~certain aged receivables associated with the aircraft management business which was divested on September 30, 2023, and (iii) expenses incurred associated with ongoing litigation ~~settlement.~~matters.

Adjusted Contribution and Adjusted Contribution Margin

We calculate Adjusted Contribution as gross profit (loss) excluding depreciation and amortization and adjusted further for equity-based compensation included in cost of revenue and 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

•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):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Revenue
Revenue
Revenue	Revenue	$	320,063	$	420,356	$	1,006,937	$	1,171,503
Less: Cost of revenue	Less: Cost of revenue	(299,887)		(403,042)		(981,581)		(1,144,698)
Less: Cost of revenue
Less: Cost of revenue
Less: Depreciation and amortization
Less: Depreciation and amortization
Less: Depreciation and amortization	Less: Depreciation and amortization	(15,459)		(16,500)		(45,027)		(46,862)
Gross profit (loss)	Gross profit (loss)	4,717		814		(19,671)		(20,057)
Gross profit (loss)
Gross profit (loss)
Gross margin
Gross margin
Gross margin	Gross margin	1.5%		0.2%		(2.0)%		(1.7)%
Add back:	Add back:
Add back:
Add back:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	15,459		16,500		45,027		46,862
Equity-based compensation expense in cost of revenue	Equity-based compensation expense in cost of revenue	826		3,581		3,097		11,320
Acquisition and integration expense in cost of revenue(1)		—		650		—		650
Restructuring expense in cost of revenue(2)		320		—		1,075		—
Atlanta Member Operations Center set-up expense in cost of revenue(3)		10,642		—		22,440		—
Certificate consolidation expense in cost of revenue(4)		3,279		—		7,720		—
Equity-based compensation expense in cost of revenue
Equity-based compensation expense in cost of revenue
Restructuring expense in cost of revenue(1)
Restructuring expense in cost of revenue(1)
Restructuring expense in cost of revenue(1)
Atlanta Member Operations Center set-up expense in cost of revenue(2)
Atlanta Member Operations Center set-up expense in cost of revenue(2)
Atlanta Member Operations Center set-up expense in cost of revenue(2)
Certificate consolidation expense in cost of revenue(3)
Certificate consolidation expense in cost of revenue(3)
Certificate consolidation expense in cost of revenue(3)
Adjusted Contribution
Adjusted Contribution
Adjusted Contribution	Adjusted Contribution	$	35,243	$	21,545	$	59,688	$	38,775
Adjusted Contribution Margin	Adjusted Contribution Margin	11.0%		5.1%		5.9%		3.3%
Adjusted Contribution Margin
Adjusted Contribution Margin

__________________

(1)~~Consists of expenses incurred associated with acquisitions, as well as integration-related charges incurred within one year of acquisition date~~

~~(2)For the three and nine months ended September 30, 2023, includes~~Includes restructuring charges related to the Restructuring Plan and other employee separation programs as part of our cost reduction initiatives.

~~(3)~~(2)Consists of expenses associated with establishing the Atlanta Member Operations Center and its operations primarily including redundant operating expenses during the transition period, relocation expenses for employees and costs associated with onboarding new employees. The Atlanta Member Operations Center began operating on May 15, 2023.

~~(4)~~(3)Consists of expenses incurred to execute the consolidation of our FAA operating certificates primarily including pilot training, ~~and~~ retention programs and consultancy fees associated with planning and implementing the consolidation process.

Total Private Jet Flight Transaction Value and Total Flight Transaction Value

We calculate Total Private Jet Flight Transaction Value as the sum of total gross spend by members and customers on all private jet flight services, which excludes all group charter flights with 15 or more passengers and cargo flight services. Total Private Jet Flight Transaction Value reflects the Flight revenue recognized from Programmatic Flights (as defined below) and private, on-demand charter flights by members and customers. “Programmatic Flights” are all flights that were flown subject to a Wheels Up Member Flight Service Agreement, Custom Corporate Agreement or other similar agreement (excluding jet cards) that provides for guaranteed aircraft availability, shorter call-out periods, capped rate protection or fixed rates, and other benefits.

We include Total Private Jet Flight Transaction Value and Total Flight Transaction Value as supplemental measures for assessing the size of the markets which we serve.

The following table reconciles each of Total Private Jet Flight Transaction Value and Total Flight Transaction Value to Flight revenue, which is the most directly comparable GAAP measure (in thousands):


	Three Months Ended March 31,
	2024		2023
Flight revenue	$	150,929	$	231,762
Add back (deduct):
Private Jet Charter Revenue in Flight revenue(1)	(47,854)		(40,181)
Private Jet Charter FTV(2)	88,688		66,528
Total Private Jet Flight Transaction Value	191,763		258,109
Other Charter FTV(2)	32,911		31,083
Total Flight Transaction Value	$	224,674	$	289,192

__________________

(1) Represents the portion of Flight revenue not attributable to Programmatic Flights.

(2) See “Key Operating Metrics” below for more information about Private Jet Charter FTV and Other Charter FTV.

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 March 31,
		2024
		2024
		2024										2023			% Change
Active Members								Active Members	9,155			12,285			(25)	%

		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024										2023			% Change
Active Users								Active Users	10,218			13,336			(23)	%

Live Flight Legs
Live Flight Legs
Live Flight Legs									11,754			15,389			(24)	%

Total Private Jet Flight Transaction Value per Live Flight Leg
Total Private Jet Flight Transaction Value per Live Flight Leg
Total Private Jet Flight Transaction Value per Live Flight Leg									$	16,315		$	16,772		(3)	%

Private Jet Charter FTV(1)
Private Jet Charter FTV(1)
Private Jet Charter FTV(1)									$	88,688		$	66,528		33	%
Other Charter FTV(1)								Other Charter FTV(1)	32,911			31,083			6	%
Total Charter FTV(1)								Total Charter FTV(1)	$	121,599		$	97,611		25	%

On-Time Performance (D-60)
On-Time Performance (D-60)
On-Time Performance (D-60)									87		%	86		%	1	%

Completion Rate
Completion Rate
Completion Rate									98		%	98		%	—	%

		As of September 30,
		2023		2022		% Change
Active Members		10,775		12,688		(15)	%

		Three Months Ended September 30,
		2023		2022		% Change
Active Users		11,988		13,339		(10)	%

Live Flight Legs		16,581		21,025		(21)	%

Flight revenue per Live Flight Leg		$	12,945	$	13,266	(2)	%

		Nine Months Ended September 30,
		2023		2022		% Change
Live Flight Legs		50,107		60,356		(17)	%

Flight revenue per Live Flight Leg		$	13,605	$	13,244	3	%

__________________

(1) Amount shown in thousands.

Active Members

We define Active Members as the number of Connect, Core and UP for Business membership accounts that generated membership revenue in the applicable 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 as of the reporting date plus unique non-member consumers who completed a revenue generating flight at least once in the applicable period and excluding wholesale flight activity. While a unique ~~non-member~~ consumer can complete multiple revenue generating flights on our platform in a given period, that unique ~~non-member~~ 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 private jet flight legs in ~~a given~~the applicable period. The metric excludes empty repositioning legs and owner legs related to aircraft under management. We believe Live Flight Legs ~~are~~is a useful metric to measure the scale and usage of our platform, and our growth in flight revenue.

Total Private Jet Flight Transaction Value per Live Flight Leg

We use Total Private Jet Flight Transaction Value per Live Flight Leg to measure the average gross spend by members and customers for each Live Flight Leg. See “Non-GAAP Financial Measures” above for more information regarding our use and definition of Total Private Jet Flight Transaction Value.

Private Jet Charter FTV

We define Private Jet Charter FTV as the sum of total gross spend by members and customers on all private, on-demand charter flights that are at market-based rates and are not Programmatic Flights. Private Jet Charter FTV excludes customer gross spend attributable to all group charter flights with 15 or more passengers and cargo flight services. We use Private Jet Charter FTV to measure the size of our private jet charter business relative to the overall industry. See “Non-GAAP Financial Measures” above for more information about the use of Private Jet Charter FTV in the calculation of Total Private Jet Flight Transaction Value and Total Flight Transaction Value.

Other Charter FTV

We define Other Charter FTV as the sum of total gross spend by customers on all group charter flights with 15 or more passengers and cargo flight services. We use Other Charter FTV to measure the size of our group charter and cargo charter businesses relative to the overall industry. See “Non-GAAP Financial Measures” above for more information about the use of Other Charter FTV in the calculation of Total Flight Transaction Value.

Total Charter FTV

We define Total Charter FTV as the sum of Private Jet Charter FTV and Other Charter FTV. We use Total Charter FTV to measure the size of our total charter business relative to the overall industry.

On-Time Performance (D-60)

We define On-Time Performance (D-60) as the percentage of flights that depart within 60 minutes of the scheduled time, inclusive of air traffic control, weather, maintenance and customer delays.

Completion Rate

We define Completion Rate as the percentage of scheduled flights operated and completed.

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~~including through the use of Prepaid ~~Block.~~

Blocks.

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 member relationship period, which is estimated to be three years. 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~~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. We sold our aircraft management business to an unrelated third-party effective September 30, 2023. ~~Therefore, our results for the three months ended September 30, 2023 include the results of the aircraft management business, but due to the divestiture, we~~We do not expect to realize any significant revenue or expenses associated with aircraft management activities in future periods.

Other revenue ~~primarily consists of (i)~~includes sales of whole aircraft, ~~(ii)~~ group charter revenue, ~~(iii)~~ cargo revenue, revenue sponsorships and ~~(iv) MRO~~partnership fees, safety and ~~FBO revenues.~~security revenue and special missions including government, defense, emergency and medical transport. In addition, other revenue includes ~~safety and security revenue,~~ flight management fees, software subscription fees from third-party operators for access to UP FMS, fees from third-party sponsorships and 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 management expenses incurred such as maintenance coordination, cabin crew and pilots, and certain aircraft operating costs such as maintenance, fuel, landing fees and parking.

Technology and Development

Technology and development expense primarily consists of compensation expenses for engineering, product development and design employees, including equity-based compensation and related benefits, 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 marketing.

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 any other

cost or expense incurred not deemed to be related to cost of revenue, sales and marketing expense or technology and development expense.

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 previously held as property and equipment and subsequently elected to actively market for sale or aircraft purchased with the intent to sell.

~~Impairment~~Gain on disposal of ~~Goodwill~~assets, net

~~Impairment~~Gain on disposal of goodwill consists of any write-off of goodwill during the period. An impairment charge is recorded when the carrying value of a reporting unit exceeds its fair value as of the impairment assessment date. See Note 1, Summary of Business and Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements included herein.

~~Loss on Divestiture~~

~~Loss on divestiture~~assets, net consists of the ~~loss on~~net working capital adjustment received in the ~~sale~~first quarter of 2024 associated with the divestiture of the of our aircraft management ~~business.~~business on September 30, 2023, partially offset by losses on disposal of other assets during the period.

Loss on extinguishment of debt

Loss on extinguishment of debt consists of fees incurred to extinguish debt instruments in advance of the maturity date.

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 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 7,991,544 redeemable public warrants (“Public Warrants”) and 4,529,950 redeemable private warrants (the “Private Warrants” and, together with the Public Warrants, the “Warrants”)., in each case exercisable for 1/10th of one share of Common Stock at an exercise price of $115.00 per whole share of Common Stock.

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 other debt obligations.

Income Tax Expense

Income tax expense consists of income taxes 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 Operations for the Three Months Ended ~~September 30, 2023~~March 31, 2024 Compared to the Three Months Ended ~~September 30, 2022~~March 31, 2023

The following table sets forth our results of operations for each of the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands):


		Three Months Ended September 30,				Change in
		2023		2022		$		%
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Revenue
Revenue
Revenue	Revenue	$	320,063	$	420,356	$	(100,293)	(23.9)	%

Costs and expenses:	Costs and expenses:

Costs and expenses:

Costs and expenses:
Cost of revenue
Cost of revenue
Cost of revenue	Cost of revenue	299,887		403,042		(103,155)		(25.6)	%
Technology and development	Technology and development	19,962		16,639		3,323		20.0	%
Technology and development
Technology and development
Sales and marketing
Sales and marketing
Sales and marketing	Sales and marketing	22,548		30,830		(8,282)		(26.9)	%
General and administrative	General and administrative	42,853		44,323		(1,470)		(3.3)	%
General and administrative
General and administrative
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	15,459		16,500		(1,041)		(6.3)	%
Gain on sale of aircraft held for sale	Gain on sale of aircraft held for sale	(7,841)		(1,316)		(6,525)		495.8	%
Impairment of goodwill		56,200		62,000		(5,800)		(9.4)	%
Gain on sale of aircraft held for sale
Gain on sale of aircraft held for sale

Total costs and expenses

Total costs and expenses

Total costs and expenses	Total costs and expenses	449,068		572,018		(122,950)		(21.5)	%

Loss from operations	Loss from operations	(129,005)		(151,662)		22,657		(14.9)	%

Loss from operations

Loss from operations

Other income (expense):	Other income (expense):
Loss on divestiture		(2,991)		—		(2,991)		n/m

Other income (expense):

Other income (expense):
Gain on disposal of assets, net
Gain on disposal of assets, net
Gain on disposal of assets, net
Loss on extinguishment of debt
Loss on extinguishment of debt
Loss on extinguishment of debt	Loss on extinguishment of debt	(1,936)		—		(1,936)		n/m
Change in fair value of warrant liability	Change in fair value of warrant liability	(61)		2,504		(2,565)		(102.4)	%
Change in fair value of warrant liability
Change in fair value of warrant liability
Interest income
Interest income
Interest income	Interest income	404		1,130		(726)		(64.2)	%
Interest expense	Interest expense	(11,258)		—		(11,258)		n/m
Interest expense
Interest expense
Other income (expense), net
Other income (expense), net
Other income (expense), net	Other income (expense), net	613		(625)		1,238		(198.1)	%
Total other income (expense)	Total other income (expense)	(15,229)		3,009		(18,238)		(606.1)	%
Total other income (expense)
Total other income (expense)

Loss before income taxes

Loss before income taxes

Loss before income taxes	Loss before income taxes	(144,234)		(148,653)		4,419		(3.0)	%

Income tax benefit (expense)	Income tax benefit (expense)	(579)		(185)		(394)		213.0	%

Income tax benefit (expense)

Income tax benefit (expense)

Net loss

Net loss

Net loss	Net loss	(144,813)		(148,838)		4,025		(2.7)	%
Less: Net loss attributable to non-controlling interests	Less: Net loss attributable to non-controlling interests	—		—		—		—	%
Less: Net loss attributable to non-controlling interests
Less: Net loss attributable to non-controlling interests
Net loss attributable to Wheels Up Experience Inc.	Net loss attributable to Wheels Up Experience Inc.	$	(144,813)	$	(148,838)	$	4,025	(2.7)	%
Net loss attributable to Wheels Up Experience Inc.
Net loss attributable to Wheels Up Experience Inc.

n/m - not meaningful

4644

Revenue

Revenue decreased for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to the three months ended ~~September 30, 2022,~~March 31, 2023, as follows (in thousands).


		Three Months Ended September 30,				Change in
		2023		2022		$		%
	Three Months Ended March 31,															Three Months Ended March 31,								Change in
										2024						2023					$					%
Membership	Membership	$	20,622	$	22,409	$	(1,787)	(8.0)	%	Membership	$	16,854	$	$	21,680		$		$	(4,826)		(22.3)			(22.3)		%
Flight	Flight	214,645		278,917		(64,272)		(23.0)	%	Flight	150,929		231,762		231,762			(80,833)			(80,833)		(34.9)				(34.9)	%
Aircraft management	Aircraft management	53,235		58,962		(5,727)		(9.7)	%	Aircraft management	3,193		63,694		63,694			(60,501)			(60,501)		(95.0)				(95.0)	%
Other	Other	31,561		60,068		(28,507)		(47.5)	%	Other	26,125		34,676		34,676			(8,551)			(8,551)		(24.7)				(24.7)	%
Total	Total	$	320,063	$	420,356	$	(100,293)	(23.9)	%	Total	$	197,101	$	$	351,812		$		$	(154,711)		(44.0)			(44.0)		%

The decrease in Membership revenue was driven by a ~~15%~~25% decrease in Active Members ~~year-over-year.~~year-over-year, partially offset by shift to a higher percentage of Core members.

The decrease in Flight revenue was primarily driven by a ~~21%~~24% decrease in Live Flight Legs year-over-year, reflecting ~~a slowdown in the industry and~~ our efforts to focus on profitable flying. and a slowdown in the industry, which resulted in a ~~$59.0~~$54.7 million reduction to revenue during the period, and reflectinga ~~2% decrease in flight~~higher mix of charter flights, the revenue ~~per Live Flight Leg,~~from which ~~resulted in~~is generally recognized on a ~~$5.3 million decrease in revenue during the period.~~net basis.

The decrease in Aircraft management revenue ~~was primarily~~is attributable to ~~a decrease~~our divestiture of our aircraft management business on September 30, 2023. We do not expect to realize any significant revenue associated with aircraft management activities in our recovery of owner and rechargeable costs related to operating aircraft under management, both of which stemmed from a decrease in the number of aircraft under management, as well as a decrease in owner flying.future periods.

The decrease in Other revenue was primarily attributable to a ~~$33.1~~$9.5 million decrease in sales of aircraft inventory, as the Company has reduced its focus on whole aircraft ~~sales, partially offset by a $5.5 million increase in software licensing revenue.~~sales.

Cost of Revenue

Cost of revenue decreased by ~~$103.2~~$155.5 million, or ~~26%~~44%, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022.~~

March 31, 2023. The decrease in cost of revenue was primarily driven by the decrease in ~~revenue during~~Live Flight Legs, in conjunction with our fleet reduction strategy across our owned and leased fleet, and third party guaranteed rate program contracts. The decrease was also driven by the ~~period, operational efficiencies realized during the period as a result~~divestiture of the ~~initiatives discussed above, as well as a decrease in equity-based compensation expense~~aircraft management business on September 30, 2023. We do not expect to realize any significant costs of revenue associated with historical awards which vested prior to or within the current period. The decreases were partially offset by one-time expenses associated with the consolidation of our FAA operating certificates and set-up of our Atlanta Member Operations Center.

Adjusted Contribution Margin increased 590 basis points for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily attributable to the realization of cost savings as a result of the Restructuring Plan and discrete cost optimization and operational efficiency measures. 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.~~aircraft management activities in future periods.

Other Operating Expenses

Technology and Development

Technology and development expenses ~~increased~~decreased by ~~$3.3~~$4.8 million, or ~~20%~~30%, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022,~~March 31, 2023, primarily attributable to a ~~$4.7~~$1.3 million increase in enterprise software expenses, including $2.7 million of charges associated with a software implementation project abandoned during the period based on the evaluation of future business needs, and a $1.9 million increasereduction in employee compensation and benefits driven by ~~severance~~headcount reduction actions taken in fiscal year 2023, including the Restructuring Plan, a $0.9 million reduction in enterprise software and other IT-related charges, a $0.4 million reduction in equity-based compensation expense and the absence of $2.3 million of one-time charges associated with ~~a small reduction in force in~~ the ~~third~~Restructuring Plan recognized during the first quarter of 2023. ~~The increases were partially offset by a $1.9 million increase in~~

~~capitalization of costs related to the development of internal use software and a $1.1 million decrease in IT equipment spend.~~

Sales and Marketing

Sales and marketing expenses decreased by ~~$8.3~~$4.4 million, or ~~27%~~17%, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022,~~March 31, 2023, primarily attributable to a ~~$4.2~~$3.1 million decrease in sales commissions primarily driven by the decrease in year-over-year membership and whole aircraft sales revenues and the absence of $2.2 million in one-time charges associated with the Restructuring Plan recognized during the first

quarter of 2023. The decreases were partially offset by a ~~$2.3~~$1.6 million ~~decrease~~one-time charge associated with terminating a consultancy agreement in the first quarter of 2024.

General and Administrative

General and administrative expenses decreased by $3.2 million, or 8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily attributable to the absence of $5.0 million in one-time charges associated with the Restructuring Plan recognized during the first quarter of 2023, a $1.8 million reduction in consultancy expenses associated with integration-related activities in the first quarter of 2023, and a $1.2 million reduction in employee flight compensation. The decreases were partially offset by a $1.8 million increase in equity-based compensation expense primarily associated with the Executive Performance Awards (as defined in Note 10), offset by historical awards which vested prior to or within the current period, a ~~$1.4 million decrease in salaries, benefits and allocable expenses primarily associated with decrease in headcount year-over-year and a $1.0 million reduction in advertising and marketing spend.~~

~~General and Administrative~~

General and administrative expenses decreased by $1.5 million, or 3%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily attributable to a $13.9 million decrease in equity-based compensation expense associated with historical awards which vested prior to or within the current period and a $1.9 million decrease in third-party professional fees. The decrease was partially offset by a $10.8$0.7 million increase in ~~professional fees~~legal expenses associated with ~~executing the Company’s operational~~ongoing litigation matters and ~~efficiency initiatives, designing our member program changes and obtaining financing,~~ a ~~$0.9~~$0.7 million increase in legal settlement ~~charges and a $0.8 million increase in bad debt expense related to a benefit taken during the third quarter of 2022.~~charges.

Depreciation and Amortization

Depreciation and amortization expenses decreased $1.0 million, or 6%6.6%, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022, primarily attributable to~~March 31, 2023 as a ~~$2.0 million decrease in depreciation of aircraft, partially offset by a $0.5 million increase in depreciation of leasehold improvements.~~

~~Impairment of Goodwill~~

We recorded a non-cash goodwill impairment charge of $56.2 million in the third quarter of 2023, following our interim quantitative goodwill impairment test performed over WUP Legacy as of September 20, 2023. See Note 1, Summary of Business and Significant Accounting Policiesresult of the ~~Notes to Condensed Consolidated Financial Statements included herein.~~divestiture of the aircraft management business, as well as our fleet reduction strategy.

Interest Income

Interest income decreased by ~~$0.7~~$3.8 million, for the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022.~~March 31, 2023. The decrease was attributable to holding lower levels of cash equivalents in money market funds during the period.

Interest Expense

Interest expense ~~was $11.3~~increased by $6.4 million, or 79%, for the three months ended ~~September 30, 2023 with no comparable amount in the~~March 31, 2024 compared to three months ended ~~September 30, 2022.~~March 31, 2023. The increase was primarily attributable to non-cash interest expense associated with the ~~Equipment Notes~~Term Loan (as defined below) ~~issued~~entered into in ~~October 2022.~~the second half of 2023.

Other Expense, Net

Other expense, net was relatively consistent for the three months ended ~~September 30, 2023~~March 31, 2024 compared to ~~the three months ended September 30, 2022.~~

~~Results of Our Operations for the Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022~~

~~The following table sets forth our results of operations for each of the nine months ended September 30, 2023 and 2022 (in thousands):~~

Nine Months Ended September 30, Change in
2023 2022 $ %
Revenue $ 1,006,937 $ 1,171,503 $ (164,566) (14.0) %
Costs and expenses:
Cost of revenue 981,581 1,144,698 (163,117) (14.2) %
Technology and development 50,265 42,436 7,829 18.4 %
Sales and marketing 71,500 87,761 (16,261) (18.5) %
General and administrative 122,334 130,200 (7,866) (6.0) %
Depreciation and amortization 45,027 46,862 (1,835) (3.9) %
Gain on sale of aircraft held for sale (11,328) (3,950) (7,378) 186.8 %
Impairment of goodwill 126,200 62,000 64,200 103.5 %
Total costs and expenses 1,385,579 1,510,007 (124,428) (8.2) %
Loss from operations (378,642) (338,504) (40,138) 11.9 %
Other income (expense):
Loss on divestiture (2,991) — (2,991) n/m
Loss on extinguishment of debt (2,806) — (2,806) n/m
Change in fair value of warrant liability 685 8,265 (7,580) (91.7) %
Interest income 6,090 1,612 4,478 277.8 %
Interest expense (27,035) — (27,035) n/m
Other income (expense), net (822) (1,505) 683 (45.4) %
Total other income (expense) (26,879) 8,372 (35,251) (421.1) %
Loss before income taxes (405,521) (330,132) (75,389) 22.8 %
Income tax benefit (expense) (751) (505) (246) 48.7 %
Net loss (406,272) (330,637) (75,635) 22.9 %
Less: Net loss attributable to non-controlling interests — (387) 387 (100.0) %
Net loss attributable to Wheels Up Experience Inc. $ (406,272) $ (330,250) $ (76,022) 23.0 %

~~n/m - not meaningful~~

~~Revenue~~

~~Revenue decreased for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, as follows (in thousands).~~

Nine Months Ended September 30, Change in
2023 2022 $ %
Membership $ 63,780 $ 67,076 $ (3,296) (4.9) %
Flight 681,691 799,351 (117,660) (14.7) %
Aircraft management 165,431 180,186 (14,755) (8.2) %
Other 96,035 124,890 (28,855) (23.1) %
Total $ 1,006,937 $ 1,171,503 $ (164,566) (14.0) %

~~The decrease in Membership revenue was driven by a 15% decrease in Active Members year-over-year~~ ~~offset by lower incentives on memberships.~~

~~The decrease in Flight revenue wa~~s primarily driven by a 17% decrease in Live Flight Legs year-over-year, which resulted in a $135.7 million reduction to revenue during the period, partially offset by a 3% increase in flight revenue per Live Flight Leg, which drove a $18.1 million increase in revenue during the period.

The decrease in Aircraft management revenue was primarily attributable to a decrease in our recovery of owner and rechargeable costs related to operating aircraft under management, both of which resulted from a decrease in owner flying and operating costs.

The decrease in Other revenue was primarily attributable to a $45.7 million decrease in revenue from whole aircraft sales. The decrease was partially offset by a $14.3 million increase attributable to Air Partner for the three months ended March 31, 2023 and a $5.6 million increase in software licensing revenue.

~~Cost of Revenue~~

Cost of revenue decreased by $163.1 million, or 14%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The decrease in cost of revenue was primarily driven by the decrease in revenue during the period, operational efficiencies realized during the period as a result of the operational efficiency initiatives discussed above, as well as a decrease in equity-based compensation expense associated with historical awards which vested prior to or within the current period. The decreases were partially offset by one-time expenses associated with the consolidation of our FAA operating certificates and set-up of our Atlanta Member Operations Center.

Adjusted Contribution Margin increased 260 basis points for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily attributable to the operational efficiency initiatives discussed above. 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 $7.8 million, or 18%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily attributable to a $9.2 million increase in employee compensation and allocable costs due to increased headcount year-over-year as a result of converting external professionals into full-time employees, as well as $2.3 million of one-time charges incurred during the first quarter of 2023 associated with the Restructuring Plan. The increase was also driven by a $6.8 million increase in enterprise software costs, including $2.7 million of charges associated with a software

implementation abandoned during the period based on the evaluation of future business needs. The increase was partially offset by a $7.0 million increase in capitalization of costs related to the development of internal use software and a $2.0 million decrease in IT equipment spend.

~~Sales and Marketing~~

Sales and marketing expenses decreased by $16.3 million, or 19%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by a $7.7 million decrease in in sales commissions driven by the decrease in year-over-year revenues, a $6.3 million decrease in equity-based compensation associated with historical awards which vested prior to or within the current period, a $3.0 million decrease in events spend and a $1.4 million decrease in advertising spend. The decreases were partially offset by $7.2 million of expenses attributable to Air Partner for the three months ended March 31, 2023.

~~General and Administrative~~

General and administrative expenses decreased by $7.9 million, or 6%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by a $30.4 million decrease in equity-based compensation associated with historical awards which vested prior to or within the current period as well as forfeitures during the period and a $1.1 million increase in legal settlement charges. The decreases were partially offset by a $7.9 million increase in employee compensation and allocable costs, primarily attributable to severance associated with executive transitions, $7.2 million of expenses attributable to Air Partner during the three months ended March 31, 2023 and a $6.9 million increase in professional fees associated with executing the Company’s operational and efficiency initiatives, designing our member program changes and obtaining financing.

~~Depreciation and Amortization~~

~~Depreciation and amortization expenses were relatively consistent for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.~~

~~Impairment of Goodwill~~

We recorded aggregate non-cash goodwill impairment charges of $126.2 million in the second and third quarters of 2023, following our interim quantitative goodwill impairment tests performed over WUP Legacy as of June 1, 2023 and September 20, 2023, respectively. See Note 1, Summary of Business and Significant Accounting Policies to of the Notes to Condensed Consolidated Financial Statements included herein.

~~Interest Income~~

Interest income increased by $4.5 million, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase was attributable to higher rates of interest earned on cash equivalents in money market funds during the first half of 2023.

~~Interest Expense~~

Interest expense was $27.0 million for the three months ended June 30, 2023. The interest expense during the period was primarily attributable to the Equipment Notes (as defined below) issued in October 2022.

~~Other Expense, Net~~

~~Other expense, net was relatively consistent for nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.~~

Liquidity and Capital Resources

Overview and Liquidity Outlook

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 ~~September 30, 2023,~~March 31, 2024, we had ~~$244.8~~$180.9 million of cash and cash equivalents and ~~$29.3~~$32.4 million of restricted ~~cash. As of September 30, 2023,~~cash, and our long-term debt obligations consisted primarily of approximately ~~$232.6~~$192.6 million aggregate principal amount outstanding of Equipment Notes (as defined below) and the Term Loan (as defined below) in the aggregate principal amount of ~~$351.0~~$410.6 million (including capitalized paid-in-kind interest). In addition, we had a working capital deficit of $545.8 million as of March 31, 2024 and net cash used in operating activities was $73.8 million for the three months ended March 31, 2024. See Part I, Item 1A “Risk Factors—Risks Relating to Our Indebtedness and Contractual Obligations—Our obligations in connection with our contractual agreements, including operating leases and debt financing obligations, could impair our liquidity and thereby harm our business, results of operations and financial condition” in our Annual Report for more information about our contractual obligations.

Pursuant to the Credit Agreement (as defined below), Delta has provided commitments for the Revolving Credit Facility (as defined below) in the aggregate original principal amount of $100.0 million, which may be drawn under

certain circumstances and is subject to liquidity-driven repayment conditions. As of ~~September 30, 2023,~~March 31, 2024, no amounts were outstanding under the Revolving Credit Facility. ~~In addition, we had a working capital deficit of $459.3 million as of September 30, 2023~~See “Term Loan and ~~net cash used in operating activities was $661.5 million~~Revolving Credit Facility” below for more information about the ~~nine months ended September 30, 2023.~~ Revolving Credit Facility.

We expect to meet our liquidity needs for the next 12 months with a combination of cash and cash equivalents, cash flows from operations, strategic dispositions of non-core or underutilized assets and, if needed, borrowings under the Revolving Credit Facility. Our ability to satisfy our long-term liquidity needs will depend on, among others, our ability to generate cash flows from operations and enter into additional or alternate financing arrangements.

Long-Term Debt

2022-1 Equipment Notes

In October 2022, Wheels Up Partners LLC, our indirect subsidiary (“WUP ~~LLC~~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 the principal amount equal to 10% per annum and balloon payments due at each maturity date. Interest and principal payments on the Equipment Notes began on January 15, 2023 and are payable quarterly on each January 15, April 15, July 15 and October 15 ~~which began~~. The stated final expected distribution date of the Equipment Notes varies from July 15, 2025 to October 15, 2029 depending on ~~January 15, 2023.~~the type of aircraft, subject to certain prepayment requirements under the Omnibus Amendment (as defined below) and WUP LLC’s ability to redeem Equipment Notes prior to maturity. As of ~~September 30, 2023,~~March 31, 2024, the Equipment Notes were secured by first-priority liens on ~~127~~114 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 Note Collateral”).

The Equipment Notes were sold pursuant to 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”). In connection with the entering into the Credit Agreement (as defined below), the Company, WUP LLC, certain other subsidiaries of the Company that guaranteed and/or granted collateral to secure WUP LLC’s obligations under the Equipment Notes entered into ~~the~~ Omnibus Amendment No. 1, dated September 20, 2023 (the “Omnibus Amendment”), in order to amend certain of the agreements governing the Equipment Notes, including the Note Purchase Agreement, Indentures and related guarantees. The Note Purchase Agreement and the Indentures and related guarantees, as each was amended by the Omnibus Amendment, contain certain covenants, including, among ~~others,~~others: a liquidity covenant that requires the Company and its subsidiaries to maintain minimum aggregate available cash and Cash Equivalents (as defined in the Note Purchase Agreement), including ~~certain amounts~~$20.0 million held onin deposit for the benefit of the lenders that is included in Other non-current assets on our condensed consolidated balance sheet as of March 31, 2024, of $75.0 million on any ~~date,~~date; a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the ~~Company,~~Company; that if a prepayment under the Term Loan (as defined below) results in the weighted average life of the Term Loan being shorter than that of the Equipment Notes, a redemption of a portion of the Equipment Notes is required; that if an Equipment Note has a maturity date on or after the maturity of the Term Loan (as defined below), all obligations under such Equipment Note will be due 90 days prior to the maturity of the Term Loan; and restrictive covenants that provide limitations under certain circumstances on certain acquisitions, mergers or disposals of assets, making certain investments or entering into certain transactions with affiliates, prepaying, redeeming or repurchasing the Equipment Notes, subject to certain exceptions, and 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 and the Term Loan and Revolving Credit Facility. WUP LLC’s obligations under the Equipment Notes are guaranteed by the Company and certain of its ~~subsidiaries. to~~subsidiaries, and the Company also must 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~~cross collateralized by the other aircraft for which Equipment Notes were issued under the Indentures.

During the three months ended ~~September 30, 2023,~~March 31, 2024, the Company redeemed in-full the Equipment Notes for ~~five~~eight aircraft, which reduced the aggregate principal amount outstanding under the Equipment Notes by ~~$17.4~~$16.3 million. As of ~~September 30, 2023,~~March 31, 2024, approximately ~~$232.6~~$192.6 million aggregate principal amount of Equipment Notes were outstanding and the carrying value of the ~~127~~114 aircraft that were subject to first-priority liens under the Equipment Notes was ~~$300.2~~$265.8 million.

Term Loan and Revolving Credit Facility

On September 20, 2023, the Company entered into ~~the~~a Credit Agreement (the “Original Credit Agreement”), by and among the Company, as borrower, certain subsidiaries of the Company as guarantors (collectively with the Company, the “Loan Parties”), Delta, CK Wheels LLC (“CK Wheels”) and Cox Investment Holdings, Inc. (collectively with Delta and CK Wheels, the “Initial Lenders”), and U.S. Bank Trust Company, N.A., as administrative agent for the Lenders (as defined below) and as collateral agent for the secured parties (the “Agent”), which was subsequently amended by Amendment No. 1 to Credit Agreement, dated November 15, 2023 (together with the Original Credit Agreement, the “Credit Agreement”), by and among the Company, as borrower, the other Loan Parties party thereto, as guarantors, the Initial Lenders, each of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select Partners, LP, Whitebox GT Fund, LP and Kore Fund Ltd (collectively with the Initial Lenders, the “Lenders”), and the Agent, pursuant to which (i) the Lenders provided ~~the Term Loan~~a term loan facility in the aggregate original principal amount of ~~$350.0~~$390.0 million (the “Term Loan”), the net proceeds of which were received byin the ~~Company on September 20,~~third and fourth quarters of 2023, and (ii) Delta provided commitments for ~~the Revolving Credit Facility~~a revolving credit facility in the aggregate original principal amount of $100.0 ~~million. A portion of the net proceeds of~~million (the “Revolving Credit Facility” and together with the Term Loan, ~~were used to repay principal and accrued interest under~~ the ~~Amended Note, certain transaction costs, and accrued and unpaid interest under the Equipment Notes.~~ “Credit Facility”).

The scheduled maturity date for the Term Loan is September 20, 2028, and for the Revolving Credit Facility, is the earlier of September 20, 2028 and the first date after September 20, 2025 on which all borrowings under the Revolving Credit Facility have been repaid, subject in each case to earlier termination upon the occurrence and continuation of an event of default. Interest on the Term Loan and any borrowings under the Revolving Credit Facility (each, a “Loan” and collectively, the “Loans”) accrues at a rate of 10% per annum on the unpaid principal balance of the Loans then outstanding. Accrued interest on each loan is payable in kind as compounded interest and capitalized to the principal amount of the applicable ~~loan~~Loan on the last day of each of March, June, September and December and the applicable maturity date. If the Company does not consummate the Deferred Issuance by January 18, 2024, the interest rate on the Term Loan will be increased to 20% per annum until such time that such Deferred Issuance is consummated.

The Credit Agreement contains certain covenants that place limitations on, among ~~others~~other things: prepaying, redeeming, repurchasing, or issuing and selling new equity interests of the Company and its subsidiaries; paying dividends and making certain distributions; making certain investments and consummating certain acquisitions, mergers or disposals of assets; and the replacement of existing indebtedness and incurrence of new indebtedness and encumbrances. The Credit Agreement also contains customary events of default, including a cross-default provision among the Equipment Notes and other Material Indebtedness (as defined in the Credit Agreement). The obligations under the Credit Agreement are secured by a first-priority lien on unencumbered assets of the Loan Parties (excluding certain assets), and a junior lien on the Equipment Note Collateral. The Credit Agreement is ~~initially~~ guaranteed by all U.S. and certain non-U.S. direct and indirect subsidiaries of the Company. In the future, the Company may be required to add any new or after-acquired subsidiaries of the Company that meet certain criteria as guarantors. As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with the covenants under the Credit Agreement and related credit documents.

Pursuant to the Credit Agreement, the Company, with the consent of Delta and CK Wheels, may request the establishment of an Incremental Term Loan in an aggregate original principal amount up to $50.0 million, subject to certain limitations and requirements. Any additional lender providing an Incremental Term Loan in accordance with the Credit Agreement will join the Credit Agreement.

In addition, Delta has provided commitments for the Revolving Credit Facility in the aggregate original principal amount of $100.0 million under the Credit Agreement. The Company may request to make borrowings under the Revolving Credit Facility at any time until September 20, 2025 in an amount and to the extent that after giving pro forma effect to any borrowing thereunder, the Company’s Unrestricted Cash Amount (as defined in the Credit Agreement) will not exceed $100.0 million. The Company generally must promptly repay any borrowings under the Revolving Credit Facility prior to maturity as follows: (i) at any time prior to September 20, 2025, to the extent the Unrestricted Cash Amount (as defined in the Credit Agreement) is greater than $100.0 ~~million~~million; and (ii) on or after September 20, 2025 but prior to maturity, to the extent that the Unrestricted Cash Amount (as defined in the Credit Agreement) is greater than $125.0 million and if Consolidated Cash Flow (as defined in the Credit

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Agreement) has been positive for any fiscal quarter since September 20, 2023. As of ~~September 30, 2023,~~March 31, 2024, no amounts were outstanding under the Revolving Credit Facility.

Cash Flows

The following table summarizes our cash flows for each of the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ (in thousands):


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Net cash used in operating activities	Net cash used in operating activities	$	(661,494)	$	(288,341)
Net cash (used in) provided by investing activities		$	36,619	$	(171,725)
Net cash (used in) provided by financing activities		$	283,171	$	(7,347)
Net cash provided by (used in) investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(4,287)	$	(7,395)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	$	(345,991)	$	(474,808)

Cash Flow from Operating Activities

The cash outflow from operating activities consisted of our net loss, net of non-cash items of ~~$187.9~~$34.3 million and the balance ~~from~~primarily driven by a $25.4 million decrease in ~~net operating assets and liabilities.~~current deferred revenue, partially offset by a $12.4 million decrease in prepaid expenses. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, we sold ~~$274.9~~$114.0 million of Prepaid Blocks compared to ~~$658.7~~$99.9 million during the ~~nine~~three months ended ~~September 30, 2022, which resulted in a material reduction in deferred revenue.~~March 31, 2023. The year-over-year ~~decrease~~increase in Prepaid Block purchases was ~~primarily driven by~~attributable to a ~~combination~~higher volume of purchases in the year-over-year decrease in Active Members, a year-over-year decrease in Live Flight Legs, which generally extends the period over which historical Prepaid Blocks are utilized, as well as the impact of concerns surrounding our liquidity position during the thirdfirst quarter of ~~2023.~~2024 as compared to the prior year.

Cash Flow from Investing Activities

The cash inflow from investing activities was primarily attributable to ~~$53.9~~$26.0 million in proceeds from the sale of aircraft that were classified as held for sale and ~~$13.2~~$3.4 million ~~in proceeds~~ from the finalization of the working capital adjustment associated with the divestiture of the aircraft management business. The inflows were partially offset by cash outflows of ~~$28.4~~$7.6 million for capital expenditures, including ~~$16.0~~$3.5 million of capitalized software development costs and $2.3 million ~~for purchases~~ of capital expenditures on aircraft classified as held for sale.

Cash Flow from Financing Activities

The cash ~~inflow~~outflow from financing activities was primarily attributable to ~~the net proceeds from the Term Loan of $343.0 million, reduced by issuance costs of 19.6 million. The cash inflows were partially offset by the~~ payment of principal on the Equipment Notes of ~~$40.2~~$24.0 million, which included ~~$17.4~~$16.3 million associated with the redemption in-full of Equipment Notes for ~~seven~~eight aircraft.

Contractual Obligations and Commitments

As of ~~September 30, 2023,~~March 31, 2024, our principal ongoing commitments consisted of contractual cash obligations to pay principal and interest payments under the Equipment Notes, principal and accrued interest under the Credit Agreement when due at maturity, operating leases for certain controlled aircraft, leased facilities, including our corporate headquarters at the Atlanta Member Operations Center, our corporate office in New York, New York, and other operational facilities, ~~including aircraft~~such as hangars and maintenance facilities, and ordinary course arrangements involving our obligation to provide services for which we have already received deferred revenue. ~~Our obligation~~For further information about our lease obligations, see Note 9, Leases of the Notes to provide services for which we have already received deferred revenue are to our members and customers, none of which individually comprises a material amount of our deferred revenue. Certain customers have the right to demand the prompt return of certain amountsCondensed Consolidated Financial Statements included ~~in deferred revenue under certain conditions.~~ herein.

We ~~also~~ have future cash contractual obligations to make certain permitted mandatory redemptions and prepayments under the Equipment Notes and Credit Agreement, respectively, prior to maturity under certain circumstances, and to pay in full all amounts owed with respect to the Equipment Notes, Term Loan and any borrowings under the Revolving Credit Facility as they come due. For further information on the Equipment Notes, Term Loan and ~~Revolving Credit~~

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Revolving Credit Facility, 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 obligation to provide services for which we have already received deferred revenue are to our ~~lease obligations, see Note 9, Leases~~members and customers, none of which individually comprises a material amount of our deferred revenue. Certain customers have the ~~Notes~~right to ~~Condensed Consolidated Financial Statements~~demand the prompt return of certain amounts included ~~herein.~~in deferred revenue under certain conditions. For further information about deferred revenue, see Note 2, Revenue Recognition 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 Part II, Item 7 — “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, 2022.~~Report.

Recent Accounting Pronouncements

For further information on recent accounting pronouncements, see Note 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

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 and foreign currency exchange. There have not been any material changes to the market risks described in Part II, Item 7A of— “Quantitative and Qualitative Disclosures About Market Risk” included in our Annual Report.

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, that are designed to provide reasonable assurance that information required to be disclosed in our 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, to allow for timely decisions regarding required disclosure. It should be noted that, because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were ~~not~~ effective as of ~~September 30, 2023, due~~March 31, 2024, to ~~the on-going remediation efforts associated with the~~ensure that material ~~weaknesses in internal control over financial reporting described in Item 9A of~~information was accumulated and communicated to our ~~Annual Report~~management, including our Chief Executive Officer and ~~the need for impacted controls~~Chief Financial Officer, as appropriate to ~~operate for a sufficient period of time and for management to conclude, through testing, that the controls are 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 has begun, and intends to continue implementing and improving 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 fiscal year ending December 31, 2023. 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 sufficient

~~period of time and management has concluded, through testing, that these controls are designed and operating effectively.~~allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~Except for the items referred to above, there~~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 ~~September 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal 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.

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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~~The outcome of these matters cannot be predicted with ~~certainty,~~certainty. See Note 13, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements contained herein for a discussion of loss contingencies, if any. Below is a discussion of the Company’s significant pending legal proceedings:

GRP Litigation

On July 5, 2023, we ~~do not~~filed a lawsuit against Exclusive Jets, LLC d/b/a flyExclusive, a subsidiary of flyExclusive, Inc. (“FE”), in the United States District Court for the Southern District of New York, which was re-filed against FE in the Supreme Court of the State of New York in New York County on August 23, 2023. We instituted the action to enforce our rights and remedies for wrongful termination by FE of that certain Fleet Guaranteed Revenue Program Agreement, dated November 1, 2021, between WUP and FE (the “GRP Agreement”). On June 30, 2023, FE notified us in writing of its immediate termination of the GRP Agreement. We believe that FE wrongfully terminated such agreement in breach thereof. We are seeking compensatory damages, including the return of the material deposits held by FE under the GRP Agreement (collectively, the “GRP Deposit”) that were recorded in Other non-current assets on our consolidated balance sheets as of March 31, 2024 and December 31, 2023, as well as attorneys’ fees and costs.

We intend to vigorously pursue the action to recover the outstanding deposits and other damages from FE, but there can be no assurance as to the outcome of ~~any~~the lawsuit against FE. Our success in recovering the amounts from FE will depend upon several factors including the ability of ~~these matters, individually~~FE to satisfy recoverable amounts using available liquidity or other assets. In FE’s Annual Report on Form 10-K filed with the SEC on May 1, 2024, FE disclosed that upon termination of the GRP Agreement, it applied a portion of the GRP Deposit against certain receivable balances that FE claims it was owed under the GRP Agreement. In addition, FE disclosed that: (i) it “expects to incur operating losses in the ~~aggregate,~~near term as [FE] advances its fleet modernization and associated cost savings initiatives”; (ii) as of December 31, 2023, it had cash and cash equivalents of approximately $11.6 million against a working capital deficit of approximately $104.7 million; and (iii) it believes its cash and cash equivalents on hand, operating cash flows, and proceeds from possible financings, if any, will ~~have~~be sufficient to fund operations and capital expenditure requirements for at least 12 months after May 1, 2024, but it might need additional capital funding to fund growth plans or as circumstances change. We are in the process of evaluating the effects of the foregoing events and we cannot make a ~~material adverse effect~~reasonable estimate of any outcome, recovery or loss at this time. See Part I, Item 1A — “Risk Factors—Some of our business is dependent on our ~~consolidated~~third-party operators to provide flights for our members and customers. If such third-party operators do not perform adequately or terminate their relationships with us, our costs may increase and our business, operations, liquidity, financial condition, and results of operations ~~or cash flows.~~could be adversely affected” in our Annual Report for further information.

ITEM 1A. RISK FACTORS

In addition to the risks set forth below and the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the “Risk Factors” included under Item 1A. to Part I of our Annual Report on Form 10-K for the year ended December 31, 2022. 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.

Our obligations in connection with our contractual agreements, including operating leases, debt financing obligations, could impair our liquidity and thereby harm our business, results of operations and financial condition.

We have significant contractual obligations, including operating leases and debt financing obligations. We expect to incur additional obligations as we continue to develop and enhance our business and operations. We lease aircraft under long-term operating leases that include either fixed or variable rate lease payments and include certain return and similar end-of-lease conditions that we are obligated to satisfy in connection with the return of certain aircraft to their owners, which may result in substantial payments by the Company for the benefit of the aircraft owner in the event of expiration or termination of a lease. We also have contractual obligations to perform services in the future for which we have already received deferred revenue from our members and customers, which require that we have sufficient levels of working capital and liquidity on-hand in the future to perform such services. Our debt obligations include the Equipment Notes issued by WUP LLC, an indirect subsidiary of the Company, which as of September 30, 2023 were secured by 127 of the Company’s owned aircraft fleet and certain intellectual property assets of the Company and certain of its subsidiaries, and a Term Loan under the Credit Agreement, which is secured by a first-priority lien on unencumbered assets of the Company and its direct and indirect subsidiaries (excluding certain assets) and a junior lien on the Equipment Note Collateral.

As of September 30, 2023, $232.6 million aggregate principal amount of the Equipment Notes was outstanding, with a weighted average remaining maturity of 3.4 years. The Equipment Notes bear interest at the rate of 12% per annum with annual amortization of the principal amount equal to 10% per annum and balloon payments due at each maturity date, all of which are payable in cash. The Equipment Note for a given aircraft may be redeemed by WUP LLC prior to its stated maturity date for any reason or in connection with a sale of the aircraft at a redemption price that includes, among others, certain make-whole amounts and premiums. WUP LLC is also required to redeem a portion of the Equipment Notes and pay associated make-whole amounts and premiums upon an inability to meet certain loan to appraised aircraft value ratio thresholds for all aircraft financed or upon the repayment of certain junior indebtedness such that the weighted average life of such junior indebtedness is less than the weighted average life of the Equipment Notes.

As of September 30, 2023, $351.0 million aggregate principal amount of the Term Loan was outstanding, including capitalized interest. Interest on the Term Loan and any borrowings under the Revolving Credit Facility accrue at a rate of 10% per annum on the unpaid principal balance of the loans then outstanding, and is payable in kind as compounded interest and capitalized to the principal amount of the applicable loan at the end of each calendar quarter and on the applicable maturity date. The scheduled maturity date for the Term Loan is September 20, 2028. In addition, we have received commitments from Delta for the Revolving Credit Facility in the aggregate original principal amount of $100.0 million, which may be drawn under certain circumstances and is subject to certain prepayment requirements. As of September 30, 2023, no amounts were outstanding under the Revolving Credit Facility. The scheduled maturity date for the Revolving Credit Facility is the earlier of September 20, 2028

~~and the first date after September 20, 2025, on which all amounts owed with respect to borrowings under the Revolving Credit Facility~~There have been ~~repaid.~~

Our ability to timely pay our contractual obligations as they come due, including under our operating leases, the Equipment Notes, the Term Loan and the Revolving Credit Facility, or to perform our obligation to provide services for which we have already received deferred revenue, will depend on, among other things, our run-rate results of operations, cash flow, liquidity and/or ability to obtain additional financing, which will in turn depend on, among other things, the success of our current business strategy, U.S. and global economic and political conditions, the availability and cost of financing, and other factors that may be beyond our control. We cannot provide assurances that our operations will generate sufficient cash flow to make any required payments as they come due, including payments under any existing or future debt obligations, to fund our working capital needs, or to perform our obligation to provide services for which we have already received deferred revenue, or that we will be able to obtain additional financing in the future to fund our operations and pursuit of our business strategy. Any inability to satisfy our contractual obligations as they come due, including to timely refinance our debt obligations on terms we deem attractive or at all, and maintain sufficient levels of working capital could have a material adverse effect on our business, results of operations and financial condition, or require the Company to seek strategic alternatives that may not be favorable to stockholders, including under bankruptcy or insolvency laws.

Agreements governing our debt obligations include financial and other covenants that provide limitations on our business and operations under certain circumstances, and failure to comply with any of the covenants in such agreements could adversely impact us.

Our financing agreements, including those in connection with the Equipment Notes, the Term Loan and Revolving Credit Facility, and other financing agreements that we may enter into from time to time, contain certain affirmative, negative and financial covenants, and other customary events of default. For example, the governing documents for the Equipment Notes contain certain covenants and events of default, such as a liquidity covenant that requires the Company and its subsidiaries to maintain minimum aggregate available cash and Cash Equivalents (as defined in the Note Purchase Agreement), including certain amounts held in deposit for the benefit of the lenders, of $75.0 million on any date, and a covenant that limits the maximum loan to appraised value ratio of all aircraft financed, subject to certain cure rights of the Company. The governing documents for the Equipment Note also contain restrictive covenants that provide limitations under certain circumstances on, among other things, consummating certain acquisitions, mergers or disposals of assets, making certain investments or entering into certain transactions with affiliates, prepaying, redeeming or repurchasing the Equipment Notes, subject to certain exceptions, and paying dividends and making certain other specified restricted payments. In addition, the Credit Agreement contains separate events of default and covenants, such as limitations on: (i) prepaying, redeeming, repurchasing, or issuing and selling new equity interests of the Company and its subsidiaries; (ii) paying dividends and making certain distributions; (iii) making certain investments and consummating certain acquisitions, mergers or disposals of assets; and (iv) replacing existing indebtedness and incurring new indebtedness and encumbrances. In addition, under the Investor Rights Agreement, we must obtain the approval of certain Lenders to, among other things, incur capital expenditures, consummate certain acquisitions of equity interests or assets in excess of certain amounts, makeno material changes to the ~~scope of our business, or enter into certain commercial arrangements with a Lender.~~

~~Certain of the covenants in our financing agreements are subject to important exceptions, qualifications~~significant risk factors and cure rights, including, under limited circumstances, the requirement to provide additional collateral or prepay or redeem certain obligations and the ability to delay payments of interest and principal for limited periods of time. In addition, certain of our debt obligations are cross-collateralized, such that an event of default or acceleration of indebtedness under one agreement could result in an event of default under other financing agreements. If we fail to comply with such covenants, if any other events of default occur for which no amendment, consent or waiver is timely obtained, or if we are unable to timely refinance the debt obligations subject to such covenants or take other mitigating actions, the holders of our indebtedness could, among other things, declare all outstanding amounts and any premiums or penalties immediately due and payable and, subject to the terms of relevant financing agreements, repossess or foreclose on collateral, including certain of our aircraft, the equity interests of the Company’s subsidiaries or other assets used in our business. The acceleration of significant indebtedness or actions to repossess or foreclose on collateral may cause us to renegotiate, repay or refinance the affected obligations, and there is no

assurance that such efforts would be on terms we deem attractive, available in amounts sufficient to satisfy such affected obligations, or at all, or that certain holders of our indebtedness may withhold their consent to such refinancing. We may also experience a downgrade in any credit ratings then applicable to us in such circumstances. Any default, event of default, acceleration of significant indebtedness, actions to repossess or foreclose on collateral, credit downgrade or failure to obtain additional financing on terms we deem attractive, or at all, could have a material adverse effect on our business, results of operations and financial condition.

We may not realize the expected benefits of our member program changes, and operational efficiency and cost reduction initiatives on the timelines originally anticipated, which may adversely impact our business, operations, liquidity, financial condition and results of operations.

We have undertaken, and continue to undertake, actions intended to support our ongoing strategic business initiatives and previously announced financial goals, including but not limited to, instituting changes to our member programs intended to concentrate operations and leverage efficiencies by improving utilization and decreasing costs, implementing cost control measures, reducing headcount, lowering capital expenditures and working with third parties to realize additional efficiencies in our cost structure. The timely achievement of our planned operational efficiency and cost reduction initiatives, and member program changes, as well as our ability to maintain an adequate level of liquidity, are subject to various risks, many of which are outside of our control. We may not be successful in implementing these initiatives or fail to realize the expected benefits on the timelines that we anticipate, which may adversely impact our business, operations, liquidity, financial condition and results of operations.

In addition, we continue to implement changes aimed at operational excellence and are considering alternative strategies for our business and operations, including, but not limited to, selectively prioritizing our strategic initiatives and cost cutting measures, optimizing our asset base through a mix of asset sales and strategic leasing activity and evaluating other strategic transactions and/or other measures to enhance our business, operations, financial condition and results of operations. We may not be able to successfully execute changes, alternative strategies or potential transactions under consideration or that may arise, and our ability to realize the benefits from any such alternatives could be adversely affected by numerous factors, including, but not limited to, changes in the economic or business environment, consumer preferences, volatility in financial markets and the trading market for our Common Stock, the performance of our business and the impact of measures intended to increase the profitability of the Company’s operations, and other efforts we may take to maintain sufficient liquidity levels. We caution that trading in our Common Stock and other securities is highly speculative, subject to significant volatility and involves the risk of loss.

~~Certain stockholders which also serve as lenders have significant influence over the Company.~~

Certain of the Company’s stockholders, including Delta, CK Wheels and CIH, collectively own a substantial majority of the outstanding shares of our Common Stock and are lenders under our Term Loan and Revolving Credit Facility. As a result of their beneficial ownership of our Common Shares, they have sufficient voting power to significantly influence all matters requiring stockholder approval, including the election of directors and approval of strategic corporate transactions. In addition, such stockholders have the contractual right to designate a total of nine of the twelve directors on our Board of Directors. In their capacity as lenders, such stockholders must consent to certain transactions and have the ability to waive defaults or direct the agent under the Credit Agreement to exercise remedies in an event of default. As a result, such stockholders may exhibit significant influence over the Company, and the interests or objectives of these stockholders may differ from the interests or objectives of other stockholders.

~~We have a history of net losses and have not consistently generated positive cash flow from operations.~~

We have a history of net losses and have not consistently generated positive cash flow from operations, including during the nine months ended September 30, 2023. Given the significant operating and capital expenditures associated with our business plan, we anticipate continuing net losses in the near-term. If we do achieve profitability, we cannot be certain that we will be able to sustain or increase such profitability, which will require, among others, broadening and stabilizing our sources of revenue, improving our Adjusted Contribution Margin and strategically controlling non-operating expenses. Accomplishing these objectives may require actions to

optimize our asset base, make significant capital investments, enter into new markets or exit existing lines of business or implement additional member program changes. We cannot be assured that we will be able to achieve these objectives. If we cannot achieve and sustain profitability or raise additional capital, our business could be materially and adversely affected, as we may not have sufficient liquidity or be able to meet our contractual obligations, including our contractual obligations under operating leases, debt obligations and obligations to customers for which we have already received deferred revenue.

Our liquidity and financial condition may impact our ability to maintain or establish relationships with our third-party vendors and suppliers, or cause us to provide assurances, prepayments or unfavorable payment terms to our vendors and suppliers to avoid a disruption to our business and operations, which may adversely impact our business, operations, liquidity, financial condition and results of operations.

We rely on third-party vendors and suppliers for goods and services required to sustain our operations, including fuel for our aircraft, aircraft and equipment parts and maintenance, and other goods and services consumed in the ordinary course of our business. Due to our liquidity and financial condition, and concerns from our third-party vendors and suppliers regarding our ability to continue as a going concern, certain third-party vendors and suppliers have requested certain assurances, prepayments and unfavorable payment terms in order to procure the goods and services necessary to avoid a disruption to our business and operations. Certain third-party vendors and suppliers may continue to impose such requirements, which could adversely affect our relationships with such vendors, suppliers and other third parties, and impact our ability to provide our members and customers with the services and experiences that meet their expectations, each of which could adversely impact our business, operations, liquidity, financial condition and results of operations. In addition, public perception of our financial position may lead to variability in, among other things, the desire of new and existing members, customers, vendors, suppliers, employees and other third parties to enter into or continue their agreements or arrangements with us. The failure to maintain any of these important relationships could adversely affect our business, operations, liquidity, financial condition and results of operations.

Information about the Company that is available in public media or published, reported or otherwise disseminated by third parties, including articles, blogs, online forums, industry publications, message boards, social media, television or video features, and other media may include statements not attributableuncertainties known to the Company and ~~may not be reliable or accurate.~~

~~As of September 30, 2023, the Company was one of the only private aviation companies~~disclosed in the U.S. whose common stock is listed on a national securities exchange. As a result, the Company is required to comply with certain public disclosure obligations under the federal securities laws and the listing standards of the New York Stock Exchange, which has historically resulted in a greater amount of information about the Company being publicly available that must meet certain requirements. The Company has received, and expects to continue to receive, a high degree of media coverage that is published, reported or otherwise disseminated by third parties, including articles, blogs, online forums, industry publications, message boards, social media, television or video features, and other media. This includes coverage that is not attributable to statements made by the Company’s directors or officers or employees authorized to speak on behalf of the Company. Information about the Company that is available in public media or published, reported or otherwise disseminated by third parties may not be reliable or accurate, which may result in significant volatility in the trading prices for the Company’s Common Stock and other securities, cause reputational damage to the Company that adversely impacts the confidence or willingness of our members and customers to utilize our services or renew their memberships or purchase Prepaid Blocks, or otherwise adversely impact our business, operations, liquidity, financial condition or results of operations.

~~A failure~~Part I, Item 1A — “Risk Factors” included in our ~~technology or breaches of the security of our information technology infrastructure may harm our reputation and adversely affect our business and financial condition.~~

The performance and reliability of the technology that we and our third-party operators use is critical to our ability to compete effectively. A significant internal technological error or failure or large-scale external interruption in the technological infrastructures on which we and our third-party operators depend, such as power, telecommunications or the Internet, may disrupt our internal network. Any substantial, sustained or repeated failure of the technology that we or our third-party operators use could impact our ability to conduct our business, lower the

utilization of our aircraft, and result in increased costs. Our and our third-party operators’ technological systems and related data may be vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues.

In addition, as a part of our ordinary business operations, we collect and store sensitive data, including personally identifiable information of our employees and customers. Our information systems are subject to an increasing threat of continually evolving cybersecurity risks, as evidenced by a recent incident in which a cloud-based data storage system we maintain for customers was accessed by an intruder. On December 6, 2020, an unauthorized actor located outside of the U.S. gained access to certain files, some of which contained personally identifiable information regarding flight passengers, in the cloud-based storage system where certain of our flight management system customers (aircraft owners/operators) upload documents related to flights. We responded to the incident by implementing our incident response plan, remediating the vulnerability that enabled the data security breach, and engaging both internal resources as well as outside experts for ongoing mitigation of any adverse impact. Nevertheless, it is possible that individuals whose personal information was included in the documents involved could be subject to identity theft if their information is misused, which could trigger complaints and potential liability, including through class action litigation.

Methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving, and may be difficult to anticipate or to detect for long periods of time. We may not be able to prevent future data security breaches or unauthorized uses of data. Due to the nature of our operations, we rely on substantial safety and security procedures designed to ensure the safe operation of our aircraft and safety of our members and customers. A compromise of the technology systems we use resulting in the loss, disclosure, misappropriation of, or access to, employees’ or business partners’ information, or any inability to operate our information systems, could result in legal claims or proceedings, liability or regulatory penalties under FAA regulations and laws protecting the privacy of personally identifiable information, disruption to our operations and heightened safety concerns, and damage to our reputation, any, or all of which could adversely affect our business and financial condition. In addition, as an SEC registrant, we are required to publicly report certain material cybersecurity incidents without unreasonable delay after discovery. Any material cybersecurity incident for which public disclosure is required may result in additional reputational damage, identify for third parties additional security vulnerabilities or result in a loss in confidence in the Company by our current and prospective members and customers, each of which could adversely impact our business, results of operations, liquidity and financial condition.

Annual Report.

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

Issuer Purchases of Equity Securities for the Three Months Ended ~~September 30, 2023~~March 31, 2024

The table below sets forth information regarding purchases of our Common Stock during the three months ended ~~September 30, 2023:~~March 31, 2024:

Period
Total Number of Shares Purchased(1)
Average Price Paid Per Share
July 1, 2023 through July 31, 2023 — $ —
August, 1, 2023 through August 31, 2023 — $ —
September 1, 2023 through September 30, 2023 10,407 $ 2.32
Total 10,407 $ 2.32


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share
January 1, 2024 through January 31, 2024	63,295	$	3.92
February 1, 2024 through February 29, 2024	29,469	$	3.03
March 1, 2024 through March 31, 2024	—	$	—
Total	92,764	$	3.64

_________________

(1)Reflects shares of Common Stock withheld for payment of tax liability arising as a result of the vesting of restricted stock units for certain officers.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a)The disclosure set forth under “Divestiture of Aircraft Management Business” in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report is incorporated by reference into Part II, Item 5(a) of this Quarterly Report.None.

(b)As previously disclosed in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on September 21, 2023, the Company entered into the Investor Rights Agreement dated September 20, 2023 with Delta, CK Wheels and CIH (collectively, the “Lenders”), pursuant to which the Lenders have the right to designate and remove nine directors of the Board, subject to certain ownership thresholds for the Lenders as set forth in the Investor Rights Agreement.None.

(c)~~During~~On January 2, 2024, Todd Smith, the ~~three months ended September~~Company’s Chief Financial Officer, terminated a Rule 10b5-1(c) trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) that was originally adopted on November 30, ~~2023, no director or officer~~2022 for the sale of 40% of the ~~Company adopted or terminated a ‘Rule 10b5-1 trading arrangement’ or ‘non-Rule 10b5-1 trading arrangement,’ as each term is defined in Item 408(a)~~shares of ~~Regulation S-K.~~Common Stock to be issued upon settlement of restricted stock units granted to Mr. Smith on July 1, 2022, the stated purpose of which was to satisfy applicable withholding taxes.

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~~						~~Certificate of Amendment to~~Amended and Restated Certificate of Incorporation of Wheels Up Experience Inc., ~~effective as of June 7,~~filed on November 15, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on ~~June 8,~~November 16, 2023).
~~3.3~~3.2						Amended and Restated By-Laws of Wheels Up Experience Inc., effective as of November 15, 2023 (incorporated by reference to Exhibit 3.2 to the ~~Registrant's~~Registrant’s Annual Report on Form 10-K, filed with the SEC on March ~~31, 2023).~~7, 2024)
~~4.1^~~10.1†^						~~Omnibus Amendment No.~~Offer Letter, dated February 1, ~~dated as of September 20, 2023,~~2024, by and ~~among~~between David Holtz and Wheels Up Partners LLC certain Affiliates of Wheels Up Partners LLC listed on the signature pages thereof, certain Guarantors listed on the signature pages thereof, Wheels Up Class A-1 Loan Trust 2022-1, each Lender party to the Loan Agreement described therein, Wilmington Trust, National Association, not in its individual capacity but solely as mortgagee, security trustee, facility agent, loan trustee, subordination agent and trustee, as applicable (incorporated by reference to Exhibit 10.12 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.1^~~						Credit Agreement, dated as of September 20, 2023, among Wheels Up Experience Inc., as Borrower, the subsidiaries of Wheels Up Experience Inc. party thereto, as guarantors, the lenders party thereto from time to time and U.S. Bank Trust Company, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on ~~September 21, 2023).~~February 5, 2024)
~~10.2^~~10.2*†+						~~Security Agreement,~~Offer Letter, dated ~~as of September 20, 2023,~~March 18, 2024, by and ~~among U.S. Bank Trust Company, N.A., as collateral agent, Wheels Up Experience Inc., as Borrower,~~between Brian Kedzior and ~~the guarantor parties thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).~~
~~10.3^~~						Aircraft Mortgage and Security Agreement (First-Priority Lien), dated as of September 20, 2023, by Wheels Up Parents LLC, as owner, in favor of U.S. Bank Trust Company, N.A., in its capacity as Collateral Agent as mortgagee for the Secured Parties (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.4^~~						~~Aircraft Mortgage and Security Agreement (Junior Lien), dated as of September 20, 2023, by~~ Wheels Up Partners LLC as owner in favor of U.S. Bank Trust Company, N.A., in its capacity as Collateral Agent as mortgagee for the Secured Parties (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.5^~~						Investment and Investor Rights Agreement, dated as of September 20, 2023, by and among Wheels Up Experience Inc. and the entities listed on Schedule A thereto (incorporated by reference to Exhibit 10.10 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.6^~~						Registration Rights Agreement, dated as of September 20, 2023, by and among Wheels Up Experience Inc. and the equity holders set forth on Schedule 1 thereto (incorporated by reference to Exhibit 10.11 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.7~~						Amendment No. 2 to Commercial Cooperation Agreement, dated as of September 20, 2023, by and among Delta Air Lines, Inc., Wheels Up Partners LLC and Wheels Up Partners Holdings LLC (incorporated by reference to Exhibit 10.13 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).

6452


~~10.8~~10.3†						~~Secured Promissory Note,~~Wheels Up Experience Inc. Performance Award Agreement, dated as of ~~August 8, 2023,~~March 3, 2024, by and between Wheels Up Experience Inc. and ~~Delta Air Lines, Inc., as Payee~~Todd Smith (incorporated by reference to Exhibit ~~10.5~~10.29 to the Registrant’s ~~Current~~Annual Report on Form ~~8-K,~~10-K, filed with the SEC on ~~May 9, 2023).~~
~~10.9~~						First Amendment to Secured Promissory Note, dated as of August 15, 2023, between Wheels Up Experience Inc. and Delta Air Lines, Inc., as Payee (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.10~~						Second Amendment to Secured Promissory Note, dated as of August 21, 2023, between Wheels Up Experience Inc. and Delta Air Lines, Inc., as Payee (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.11~~						Third Amendment to Secured Promissory Note, dated as of September 6, 2023, between Wheels Up Experience Inc. and Delta Air Lines, Inc., as Payee (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
~~10.12~~						Fourth Amendment to Secured Promissory Note, dated as of September 14, 2023, between Wheels Up Experience Inc. and Delta Air Lines, Inc., as Payee (incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 21, 2023).
10.13*						Letter Agreement, dated as of July 31, 2023, by and among Wheels Up Partners LLC, Wheels Up Class A-1 Loan Trust 2022-1, Wilmington Trust, National Association, as facility agent, security trustee, mortgagee, subordination agent and loan trustee, and each lender listed on the signature pages thereof.
10.14*						Letter Agreement, dated as of August 4, 2023, by and among Wheels Up Partners LLC, Wheels Up Class A-1 Loan Trust 2022-1, Wilmington Trust, National Association, as facility agent, security trustee, mortgagee, subordination agent and loan trustee, and each lender listed on the signature pages thereof.
10.15*						Letter Agreement, dated as of August 9, 2023, by and among Wheels Up Partners LLC, Wheels Up Class A-1 Loan Trust 2022-1, Wilmington Trust, National Association, as facility agent, security trustee, mortgagee, subordination agent and loan trustee, and each lender listed on the signature pages thereof.March 7, 2024)
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~~herewith.
**						Furnished ~~herewith~~herewith.
^†						Identifies each management contract or compensatory plan or arrangement.
+						Certain ~~private and confidential information~~portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item ~~601(a)(5) and/or Item 601(b)~~(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.~~

6653

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: ~~November~~May 9, ~~2023~~2024		/s/ George Mattson
	Name:	George Mattson
	Title:	Chief Executive Officer
		(Principal Executive Officer)


Date: ~~November~~May 9, ~~2023~~2024		/s/ Todd Smith
	Name:	Todd Smith
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

6754


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


	WUP Legacy		Air Partner		Total
Balance as of December 31, 2022(1)	$	270,467	$	77,651	$	348,118
Acquisitions(2)	—		350		350
Impairment(3)	(126,200)		—		(126,200)
Divestitures(4)	(8,169)		—		(8,169)
Foreign currency translation adjustment	—		708		708
Balance as of September 30, 2023	$	136,098	$	78,710	$	214,808


	Number of WUP Stock Options	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested WUP stock options as of January 1, 2023	104	$	19.95
Granted	—	—
Vested	(102)	20.03
Expired	—	—
Forfeited	(2)	16.01
Non-vested WUP stock options as of September 30, 2023	—	$	—


	September 30,
	2023	2022
Warrants(1)	1,252,149	1,252,149
Earnout Shares	900,000	900,000
RSUs(2)	3,109,823	2,432,789
Stock options	1,268,584	1,415,066
Total anti-dilutive securities	6,530,556	6,000,003