Delta Air Lines has announced a strategic partnership with investment specialists Certares Management LLC and Knighthead Capital Management LLC to acquire on-demand private aviation firm Wheels Up for $500m.

The non-binding agreement includes a $150m term loan and $100m liquidity facility from Delta; an additional $150m term loan from CK Opportunities, which is managed by Certares and Knighthead; $50m from other investors agreed in principle; and an additional $50m from other invertors that will be approved by Delta, Certares and Knighthead.

“The partnership will create new opportunities for Wheels Up to drive strategic, operational and financial improvements for its customers in the months and years ahead,” said Delta CEO Ed Bastian. “Delta’s unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability, and aircraft maintenance, combined with Certares’ and Knighthead’s experience and global reach, are expected to speed Wheels Up on its path to profitability.”

Majority ownership

As part of the agreement, Wheels Up will issue Class A common stock to the money lenders, resulting in the investors owning 95% of the private aviation company following the transaction. Under the plan, Todd Smith will remain as Wheels Up interim CEO, while Delta chief financial officer Dan Janki will replace Ravi Thakran as Wheels Up chairman.

“Wheels Up sincerely appreciates the unwavering support of so many of our members and customers,” said Smith. “Over the past few months, we have been intensely focused on taking clear steps to improve our product offering and our operational delivery. Those actions are already showing results and we look forward to continuing and accelerating that progress with the support of our new partners. Our continued close work with the Delta team will enable us to further integrate our digital experiences, member benefits and our operations. We are extremely grateful for Delta’s support and look forward to welcoming our new partners, including Certares and Knighthead, to the Wheels Up family and leveraging their expertise to further enhance our services and member experiences.”

The transaction is subject to completing definitive documentation, as well as customary closing conditions and other approvals.

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