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

Oct 17, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

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.

For more TPG news and deals delivered each morning to your inbox, sign up for our daily newsletter.

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.

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.

Featured image courtesy of Delta.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.