All right, good morning, everyone. Welcome again to day three of Barclays' 43rd annual industrial select conference. I'm Brandon Oglenski, airline and transport analyst, and very excited actually to have Wheels Up here for the first time at the conference, I believe, and we're joined by George Mattson, CEO of the company. So appreciate everyone here. George, thank you for coming. Thanks for having us. Joe Greer's here as well, and we've known Joe a long time, too. I'm excited to have you guys back in Miami. I don't know, George, can we talk about the company? It's something that I don't cover, but obviously, we cover Delta. And can you talk to the evolution of the business, maybe for those that don't know the business that well? Sure. So Wheels Up has been around for about 15 years and started as a U.S.-based membership-based business. We've evolved a lot, and when you look at sort of where we sit today in the industry, we're a global company. We have two sides to our business. We have an on-fleet programmatic membership business here in the United States, which we're in the midst of changing quite a bit, and we have a global charter business. We're the largest global charter broker in the world, and then, of course, we have this unique, one-of-a-kind partnership, strategic partnership with Delta Air Lines, which spans across private and commercial. If you think about it, private aviation has always existed kind of in its own silo, separate from commercial aviation, and what we and Delta are doing together is creating a two-way partnership to really integrate commercial, premium commercial and private aviation into one solution set, one, one set of offerings. So in the U.S., you have your own fleet and own operations, is that right? Can you- That's right. Give us some context on the scale of that? Sure. So the fleet initially started as a turboprop-only King Air fleet. It evolved eventually into a series of different categories of private jets. We made a very significant announcement in late 2024 that we were gonna be modernizing and replacing all of our legacy jet fleet types, and so we are a fleet of Phenom 300s manufactured by Embraer, and Challenger 300s, 350s, manufactured by Bombardier. And that fleet is replacing a set of Citation jets that we've historically flown, and we're gonna be completed with that. We're about 40% done with that fleet transition now, and we're gonna be finished with that this year, by the end of 2026. Which will give us a best-in-class fleet to offer our customers and really reposition us into, I'd say, the more premium and the more corporate-centric side of the market. Okay, can you talk to the way the revenue model worked previously and where you're headed? Sure -the U.S. side? So, the revenue model programmatic membership revenue business, people sign membership agreements. We earn a small membership fee, $500 a month, $6,000 a year, and that gives our customers on the membership side access to our fleet on a guaranteed availability, guaranteed priced basis. We receive a deposit when they join, which is then used as credit to fund future flights, and it can be used for membership flights, charter flights, or Delta Air Lines flights at discounts. We really are trying to create this holistic solution. That's how the membership side works. We also, as I mentioned, are the largest global charter broker in the world. That is an asset-light asset... It's, it's a brokerage business, and it enables us to deliver to our customers any aircraft that's requested anywhere in the world, and really expands our reach globally without it having to necessarily be on our fleet, and that is a business that we acquired four years ago, called Air Partner, that 65-year operating history, you know, best-in-class safety and operational standards, and, and really extends our reach with the premium customer. Well, how big is the membership business from a revenue perspective? It's around $600 million of annual revenues. Okay. And the charter business, which we report on a net revenue basis, so basically gross profit, if you will, or the commission, is on a gross revenue basis about the same size, $600 million. Okay. So 1.2 all in? Yes. What's your cost base here in the U.S. with the operations? So, our cost base here in the U.S. is—we have, we're running in the programmatic fleet side of our business right now at about—we just reported our quarter this morning, a 19% gross margin. Okay. And, you know, approaching break-even, if you will, if you looked at that segment on its own, from a financial point of view, our charter business is profitable and growing. So we've been in an evolution around profitability that started with the Delta investment and the revamp of our strategy two years ago. When we got here, we were losing north of $200 million of EBITDA per year, about $50 million a quarter, and we announced this morning a positive EBITDA result for the company for the first time in history. And so we're on this progression. We reported 19% contribution margins this quarter, we think impaired by 3.5 points, roughly, of headwinds from this fleet transition we're in the midst of. We think about the end state of where this model can go. You know, we think 30%+ contribution margins are certainly attainable as we complete this transition over the next couple of years. Okay, and on the cost side, do you guys have a pilots' union, or is it all non-union? We have all of our pilots work for the company. They're one of our greatest assets. We have a fantastic pilot group, but they're not. No, they're not unionized. Okay, and what are you seeing on the inflation side, for costs? ... Look, I think inflation continues to be present in a lot of parts of our business: labor, input costs, parts costs, fuel costs, depending on obviously, there's a lot of volatility there, but we're able to pass that largely through. We have seen escalation in costs, but we've also seen a very robust backdrop, demand backdrop, where, you know, we're able to largely price that in as we look at matching it up. Okay, and can you talk to the relationship with Delta and how you're able to market to Delta's customers? Sure. Look, our strategic partnership with Delta is really unique. And it goes across a number of areas, but the area we've spent the most time together in the first couple of years is around the corporate customer, the common corporate customer. And we're really going to market together with Delta. You know, Delta has north of 40,000 corporate customers. They have sales agreements, corporate sales agreements with those customers, and we are really now going to those customers together through a joint sales effort, and offering private aviation as an extension of what Delta is offering them already, a really, an additional feature, an additional sleeve, if you want to call it that, of their existing Delta agreement. And, you know, look, the power of going in together and really offering a set of holistic aviation solutions that sits on top of Delta's premium offerings. And look, if this is a two-way partnership, I think Delta sees a lot of value in Wheels Up being an extension of their, you know, critical premium strategy. And that's how we're going in and pitching it to corporate customers and getting a lot of traction. Our corporate initiative and our corporate sales segment has been the fastest-growing segment of our customer base since we started. It's been growing at 25% compound for the last couple of years. It was up 35% this quarter. So we're seeing really strong traction, and I think we're only in the very initial stages of that on this corporate sales initiative. There are many other things we are doing and will be doing with Delta Air Lines. You think about, for example, the SkyMiles loyalty program. You know, Delta has over 20 million active SkyMiles members, and even if 0.5% of those folks are able to fly private, that's 100,000 prospective customers. We're starting to do a lot of work with the SkyMiles team around loyalty and how to offer a Wheels Up solution to those customers to whom it makes sense on the individual side. You think about Delta partners, you think about American Express, you think about international JV partners. They all have the same types of customers as well. You think about digital integration, right? You think about the ability to, as a customer, go onto the Delta app and look at options that span across private, commercial, and hybrids of the two. You think about first-mile and last-mile solutions. An example, last summer with Delta, we ran a little pilot in Europe for anyone who booked a Delta One itinerary to one of five cities, Nice, Naples, Barcelona, Rome, and Athens, they would get a notification when they got their purchase confirmation, saying, "If Rome isn't your final destination and you want to fly private to your final destination on a Wheels Up, click here." Thousands of people clicking, really for the first time, seeing an option that had never really been presented to them before. You know, if you think about private and commercial aviation having existed entirely separately, and you look at private aviation, where it's been very much of a product-driven, you know, company-centric business models, not particularly customer-friendly, we're trying to create this solutions platform that really allows people to think about, "What's the optimal way for me to travel for this segment of this trip?" Not every trip, not one type of aircraft, not one rigid model, but really a solution set that they can flexibly move within to optimize how they're going to travel that day, that week, that next trip. Right. And it's interesting because there's such a divide between just the cost of private and then obviously, like a first-class ticket. Mm-hmm. But there's a lot of folks in that income spectrum that fall in between. Can you just speak to the way that the market worked before? Because it was kind of hard to access, right? And that's what- Mm is really being unlocked with Delta. Yeah. Well, first of all, I, I'd say, look, there definitely is a significant cost differential, but depending on the trip, and depending on how you value your time, depending on how many people are going, right? If you have five or six people traveling, you know, in first class from, you know, New York to Miami over President's Day weekend, you know, those tickets could cost you commercially $1,500 or $2,000 each. Times six is $12,000. You know, you're now talking about a private aircraft for your family or your colleagues costing more, but not multiples more. Right. You know, you start thinking about first and last-mile solutions. You know, if you're buying five or six Delta One tickets to Europe, you know, for $50,000, and then you need to fly a one- or two-hour flight on a private jet to not spend the whole day sitting in an airport and getting on some other less premium experience, it's not gonna be multiples of, it's actually gonna be a fraction of what you spent on the commercial piece of your itinerary, when you start thinking about this last leg element. But, you know, on the model itself, I think you bring up a really important point. If you think about the choices that customers have had, private aviation customers have had to this point, you know, simplistically speaking, you had, you know, you could own your own plane, you could own a fraction of a plane, which is really a timeshare model, through one of the fractional providers as an alternative to owning your own plane. Or you were sort of working with a charter company, a jet card company, something different that you weren't sure what exactly whether it could meet all your needs and whether you wanted to ultimately do that. Which is why studies have suggested that the vast majority of people who can afford to fly private have actually still never flown private, and so the industry has been inaccessible. We're trying to fit into that white space and basically make a best-in-class global offering, flexible and accessible, right? Ask people to join or charter, because we have two sides to our business. Whether you're a frequent flyer in private or an occasional flyer in private, tied into the Delta partnership and into the Delta loyalty system and into the Delta brand. And really knock down the barriers that have caused people to not think of this as an element of their travel. It doesn't have to be one or the other, but sort of a when you, when you need it, sensible private aviation, if I can use that term. That's kind of the space we're trying to fit into. And really encourage adoption and use of the private aviation option when it makes sense. I think that's great, but the, I think the challenge historically for private aviation has been peak and trough, right? Mm-hmm. 'Cause right now, on the weekend, everyone wants to go to Aspen. Mm-hmm. But what do you do with the jet on Wednesdays? Yep. So how are you guys solving for that? So that certainly was a challenge for Wheels Up historically, which had a much more leisure-centric business model. But I think the way you solve for that is two things. One, you want an optimal balance, if you will, between your leisure customer who's traveling to Miami on a weekend, and your corporate customer who's traveling Monday through Thursday. And we had a very imbalanced portfolio of customers when we started. When we look at our performance now, 40% of our customers are corporate customers. So we're getting to that, what I think would be an optimal mix at, like, 50/50. You want your planes flying for corporate customers on Monday through Thursday, and you want them flying for your leisure customers on the weekends. The other element to our strategy is, you know, the ability to manage capacity to demand. We're adding to our fleet with mid-life cycle aircraft, and we're really acquiring aircraft to meet demand as demand builds. And so we don't have this kind of rigid structure, and we have an off-ramp, which is the ability to put our customers on third-party aircraft as needed. So we have a bit of a buffer in our system to make sure that we're optimizing the utilization of our fleet. The utilization of our fleet has really moved in a very positive direction since we started, partly on the back of operational reliability of our new aircraft as compared to our legacy aircraft, and partly on just, you know, really improving on this model for how to create the right amount of demand tension around capacity. And again, the operations are really only domestic U.S., is that right? Our on-fleet operations- Yes ... are domestic U.S., which includes parts of Canada and Mexico and the Caribbean, so broadly defined. But again, our charter business is global, so, you know, today we could have planes flying in for our customers in any, any continent, anywhere in the world. Can you talk to the charter space then, in the business that you acquired, and is that predominantly U.S. customer base or European or both? It's both. It's global. It's U.S., European, and rest of world. And the size of our charter business roughly mirrors the size of those markets, so we're present, I'd say, representatively present in all the markets. The U.S. is the biggest private aviation market, so we're biggest here, but we have a big business in Europe, big business in the Middle East, Africa, Latin America, and Asia. And, you know, people think charter brokerage, and they're not quite sure. Is that just sort of a guy calling around asking for an airplane? It's a very complex business, right? There's all sorts of. Well, first of all, you need to know that you're working with the best, safest operators in all these regions. So we have a list of folks we've worked with around the world for years and years who are safety-vetted and verified operators. There's a myriad of regulatory complexity around permits and international travel with private aircraft that we're quite expert in. And when you look at our list of clients who rely on us, you know, it's some of the very biggest companies in the world who have their own fleets of jets, but when they're traveling internationally, often look to us. It's governments, it's high-net-worth individuals. Some folks just want the flexibility of choosing the aircraft they want for the mission they want on a by-the-drink or, you know, flight-by-flight basis. As a charter customer, we have some very big charter customers who aren't programmatic members. And that's great. We love that. Again, thinking about our model, we want to offer customers what they want to buy, as opposed to what we want to sell. We're really trying to create that customer centricity, our sales folks as trusted advisors, to help a specific customer tailor a specific set of aviation solutions across private, commercial, across our programs and our fleet or not, across their span of travel around the world. I guess, how big is the brokerage staff or your employees, and how are they incentivized? Yeah. So our brokerage team consists of a few hundred people around the world. We just very recently, in the last couple of weeks, actually took a very important step in really delivering this holistic aviation solutions approach to the market, which is we took our previously separate Wheels Up membership sales team and account management team and our charter brokerage team and put them together. And then we organized that team around regions and industries aligned with the way the Delta sales team is organized. And so now we have a really tight level of connection, not only internally selling the whole set of solutions, so one sales team walking in and asking themselves: "Is this a member customer? Is this a charter customer? How do I use my tools and my toolkit of aviation solutions to deliver the best for this customer, what they need, within the framework of what they already have as well," right? Because folks already have some elements of what they need covered. And so that trusted advisor consultative approach, and we've got that organized now by region, by industry, and really starting to dive deep in some areas that are heavy users of private aviation. Examples, sports and universities, travel agencies, financial services, et cetera, entertainment and production, some examples. And- Sorry, this was just recent then? Two weeks ago, we sort of put the two sales forces together, and we unified under the Wheels Up brand. Air Partner was the name of the charter company that became part of Wheels Up four years ago. It's now all under a unified brand and a unified sales and service structure. All the elements of the customer journey are sort of contained within that team. We've really reduced a lot of the handoffs. We're looking to elevate the concierge level of service, and we're already hearing feedback just in the first two weeks from customers who are seeing a difference in the experience, which is what we're looking for. Okay. The fleet's great, all this stuff is great, but what customers are actually looking for is an end-to-end experience, and I think we're now set up in a way where we can start to deliver that at an even higher level. Who do you view as your biggest competitor, natural competitor? Yeah, it's a good question. Look, I think what's interesting about our approach and our model is it is very distinctive. There's no one else doing exactly what we're doing. You know, there are other membership-based companies who also have charter businesses, but they are not running them on an integrated basis. They're running them kind of in silos, so, you know, you might be a, I'll pick a name, you might be a VistaJet customer or an XO customer, and those are all owned by the same entity, but they're really run separately. We're putting this into one solution. Who's our competitor? Look, I think over the span of the first phase of the Wheels Up history and journey, it was more of an entry-level private aviation offering, and they built a tremendous brand and a tremendous community around that. You know, we are clearly now, I think, more squarely in the premium segment. You know, the folks who are flying the types of aircraft that we are flying are the Netjets and Flexjet and Vistajet of the world. They are the top. The four of us are the largest four companies in private aviation, and so those are the folks that we're looking at, but again, with a very different business model. And so, you know, where do we see growth coming from? Yeah, roughly 70% by tails of private aircraft are still wholly owned. By hours, it's less, which is kind of the whole point. These aircraft aren't really being fully utilized. And so over time, the percentage of aircraft or of hours that are being flown by wholly owned aircraft should continue to diminish and operators should continue to grow. Within the operator space, the fractional model is the dominant model, and I think when you look at the fractional model, there are opportunities for us to gain share there with our much more customer-centric, flexible offering with a like product as far as the level of quality. Right, and can you just talk to maybe the cost of that? 'Cause to get into fractional- Yeah. It's a pretty sizable upfront commitment, right? Yeah, it's a very different cost and level of commitment proposition for the customer. It's also much more rigid and inflexible. So basically, when you look at the fractional model, there are four elements to the cost. First is the capital cost upfront. You're buying X% share of a new airplane, which is, you know, can be $millions upfront. Ironically, you then are a part owner in this new airplane. You're never likely to fly on that airplane because it's now part of a big fleet of airplanes, and you're going to fly on that fleet. The second big cost is depreciation of the asset, right? So you're gonna at the end of five years, it's going to be worth less than you paid for it. The third big element is a management fee. Whether you fly or not, you pay an X management fee every month, and then the variable cost per hour. And, you know, when you add all those costs up, you get to a big number. And actually, for the very same aircraft in our model, you're gonna not only pay a lot less, not only have a more flexible set of options, which is beyond that one aircraft that you owned a fraction of, it's our whole fleet, it's the global charter universe and Delta to customize your solutions, but it's a much lower level of commitment. You know, it's an upfront deposit of $200,000 that doesn't expire, which you can use for a charter, membership, Delta. It's just a very different proposition for a customer to think about. Okay, can you speak to the Delta recapitalization, I think, was what, 2 years ago? 2.5 years ago. Yeah. Yeah. Can you speak to the capital structure of your company and maybe where you see growth and earnings in the future? Sure. So, back in October of 2023, Delta, along with three other investors, private equity investors, acquired 95% of the company via a term loan investment into the company that provided liquidity to the company, that, you know, that we have been using since the investment to execute on our plan. So you look at the debt side of the equation now, we have a Bank of America credit facility to acquire aircraft that we've been using to execute the fleet transition, and we have some unsecured senior debt or some second lien debt that was the original term loan that the investors put in of $390 million. And then the equity is owned, 90%-ish percent is owned by this core group of initial investors at Delta and the others, and the remainder is publicly traded on the New York Stock Exchange. Okay, and what is the long-term goal of the business? Sure. Have you guys put out any financial targets? We haven't put out any financial targets, specifically, but what we will say and what we are talking about is sort of what does the end state profile of this business look like? On the membership side, we have consciously shifted our customer base to a customer base and a set of programs that we can consistently earn profits with. And we're seeing that progression of operating and financial performance demonstrate that. The business cases that underwrote our fleet transition are proving out largely as expected. And we're in the midst of that transition. You know, we've gone from sort of 0% contribution or gross margins to 20% now, and as I mentioned earlier, we can get that into the 30s, just through what we've done with, I'd say, no real expectation or need for growth to execute against that. We do think we're going to begin to see growth... as we look forward, we had to shed a significant amount of, I'd say, unprofitable customers and unprofitable flying and replace it with profitable customers. We are now, I think, at a baseline from which we should expect that to—that has stabilized and should continue to grow. We have a... Look, there's some KPIs we look at in the membership business and the fleet business that are really important. What are, what is our utility? How many hours per month are we flying? What is our efficiency, repose versus live legs? What's our maintenance availability that supports that utilization? And all those numbers are pointing in the right direction. When we started, we were running the fleet at about 40 hours of revenue per month, per plane. We think in the end state, that number is 70 or more. Wow! We're running the business at, you know, mid-60s efficiency. It's actually come down a little as we've been through this, working through this fleet transition, but that number we also think is gonna be, you know, 70 or higher. Those are very significant changes, right? When you're putting more than 50% more revenue hours on an airplane, and your costs have essentially remained the same, and yes, we can charge a little bit more for newer and nicer aircraft, huge multiples of change in gross profit per tail, which drives the economic model on the membership side. On the charter side, we, you know, it's a profitable and growing business. We've been growing it, and it's been continuing to deliver higher and higher earnings each quarter, each year, and we don't see that changing. So, look, in an end state where we started losing north of $200 million a year of EBITDA, you know, we think we flip that around, and we see the ability to earn more than $200 million of EBITDA in this business as we execute on this plan over the next couple of years. With just about a minute left- Yeah. I guess, what's the long-term goal then, from a liquidity perspective in public markets with equity? Yeah, look, over time, I think our equity shareholder base should migrate to being a more traditional public company equity base. I think the Delta investment is a very much a strategic investment, no different than their investments in their international JV partners, so they don't view that as investment capital. They view that as permanent strategic capital. But over time, we'll have the ability to attract equity investors, allow some of our investors who have been in the story liquidity when they want it and need it, and to really, you know, reintroduce ourselves to the equity markets as we, you know, get to the later stages of this transformation plan. Well, George, thank you so much for coming. Thank you. I'm glad we spent the time, and hopefully, first of many. Thank you. Appreciate it very much. Thank you.