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How Delta’s stake in the private jet industry could be a lifeline for the airline

Oct. 17, 2020
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3 min read
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How Delta’s stake in the private jet industry could be a lifeline for the airline
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There’s no doubt that airlines are struggling and recent earnings reports have only reaffirmed that. Many airlines are now leaning on ancillary businesses to help navigate through these challenging times.

While loyalty programs are a popular one, for Delta, its stake in the private jet industry might become another big revenue source.

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In January 2020, Delta sold its Private Jets division to Wheels Up. Terms were not disclosed at the time — all we knew was that the airline would retain an unspecified equity stake in the privately held company. However, as pointed out by Private Jet Card Comparisons, the airline released a number of details relating to the deal for the first time in its 10-Q filing for the quarter ended Sept. 30, 2020.

According to Delta CEO Ed Bastian, the private jet unit was “marginally profitable” before the acquisition. “We’ve never been able to leverage and garner the type of marketing power and brand that a Wheels Up will provide,” he explained.

Delta's recent filing reveals that the airline received a 27% equity stake in Wheels Up. It was recorded as a gain of $240 million, inferring a $890 million value for the combined business.

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This has since been adjusted to a 25% stake and carrying value of $234 million due to additional share issuances to Wheels Up employees. Still, this stake is worth nearly double its 9% holding in Air France-KLM, which is valued at $130 million. It's also more valuable than its stake in China Eastern, valued at $199 million.

Related: Flying private with Wheels Up as Delta Air Lines makes key change

The newly combined company, which has since also acquired Gama Aviation, now has a total fleet size of over 300 aircraft, ranging from the King Air 350i to large-cabin jets. Wheels Up is now the second-biggest private aviation company in the U.S.

And Delta's stake in the company is only going to get more valuable.

Private jet companies have seen an unprecedented surge in business in recent months amid coronavirus fears. “Wheels Up’s individual demand, corporate demand, and interest in our program has gone up since the start of reporting on Corona,” Kenny Dichter, CEO of Wheels Up, said in a statement to Yahoo Finance.

Related: Yes, you can fly private — here’s the secret that will help you do it

As a part of the current partnership, Wheels Up members have the opportunity to fast-track Delta Medallion status, earn Delta SkyMiles, get discounts on select Delta fares and more. However, experts suggest that this partnership may grow and Delta may one day begin selling seats on shared Wheels Up flights on its own platforms. This could result in cheaper private jet flights.

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Terms & restrictions apply. See rates & fees
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  • Intro Offer

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  • Annual Fee

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  • Recommended Credit

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Why We Chose It

There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)

Pros

  • 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
  • 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
  • Packed with credits foodies will enjoy
  • Solid welcome bonus

Cons

  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber and other dining credits
  • You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
  • Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
  • Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
  • Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
  • $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
  • $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
  • $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
  • Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
  • No Foreign Transaction Fees.
  • Annual Fee is $325.
  • Terms Apply.