Wheels Up Experience Inc.
Q2 2021 Earnings Call Transcript

Published: 13 Aug 2021

[Operator:]

Hello, everyone. And welcome to the Wheels Up Second Quarter 2021 Earnings Call. My name is Bethany, and I’ll be coordinating your call today. I will now hand the call over to your host Keith Ferguson, Investor Relations to begin, Keith over to you.

[Keith Ferguson:]

Thank you. And welcome again to Wheels Up’s second quarter 2021 earnings conference call. Earlier today, we issued a press release announcing our financial results for the period. The release with the supporting tables as well as a copy of today’s presentation can be found on our Investor Relations website at wheelsup.com/investors. Please refer to the slide with our disclaimer. Today’s presentation contains forward-looking statements based on our current forecast and estimates of future events. These statements should be considered estimates only and actual results may differ materially. During today’s call, we will refer to non-GAAP financial measures as outlined by the SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures and definitions of non-GAAP financial measures are found within the financial tables of our earnings release and appendix to today’s presentation. And with, I’d like to turn the call over to our Chairman and Chief Executive Officer, Kenny Dichter. Kenny?

[Kenny Dichter:]

Thank you, Keith. And thanks to all of you for joining us today. We are excited to share the Wheels Up story with you. Please check out our Analyst Day materials from April 16, 2021, which you can find on our Wheels Up Investor page. We will touch on parts of that original presentation today. Building on my 20-plus years in the private aviation industry, Wheels Up is bringing the next phase of disruption with our marketplace platform. Our marketplace will efficiently connect growing demand with global aircraft supply, which over time will increase access, drive down costs, open the aperture through a much larger total addressable market and improve yields for third-party operators. Our strategy and improving yields on underutilized assets is similar to how Uber has extracted value in cars and Airbnb has done in homes. Let me share some of the highlights from this morning’s earnings release. We reported over $285 million in revenue in the second quarter, setting a quarterly record and up over 110% year-over-year. First half revenue was just under $550 million, which is up almost 90% year-over-year. Our Active Members grew almost 50% year-over-year and now exceeds 10,500 in total. Our Live Flight Legs were up almost 150% year-over-year to over 18,000 in the quarter. Private aviation has rebounded more quickly than anyone in the industry expected. We are seeing unprecedented demand for leisure travel and the beginnings of a return for business and international travel. Our strategy to increase and diversify our fleet, cultivate our brand, provide exclusive partner benefits and further develop innovative technology are key drivers to our performance. We view the combination of current market conditions and our strong customer cohort purchasing behavior as a great opportunity to increase our market share. We believe this is defining moment in private aviation, where being bold matters, and we’re building relationships with consumers new to the market is critically important. As a result, we have made the strategic decision to invest in the growth of our business, while some industry participants are pulling back. This gives us even more conviction and confidence to push forward. I’d like to take a moment to recognize our hardworking team for their tireless work and support of our customers. I’d also like to thank our loyal members and customers for their trust in us. As I mentioned, we are seeing very strong demand. Now, allow me to explain how we are managing supply this year and our plans to enhance it. We deployed advanced machine learning algorithms that have improved our demand forecasting. This improved forecasting allows us to make short and long-term commitments to secure supply from other aircraft operators through the use of Guaranteed Rate Programs, what we call GRPs. These asset-light GRPs now represent over one-third of our third-party capacity, up from nearly zero at the beginning of the year. We have expanded the number of charter hours available from our managed aircraft base. These aircraft owners allow us to use their airplanes for Wheels Up members and customers at times when these owners are not flying. We will continue to unlock the latent supply in the industry. We will use machine learning to further enhance our ability to find the right plane in the right place at the right time to drive utility and reduce repositioning hours. We are creating products and services for our aircraft management platform to drive additional asset-light lift to support our flight demand. Our managed aircraft business provides a key component of supply. We are accelerating investments in areas of the business that we had expected to develop over a longer time horizon. That includes investing in human capital, technology, infrastructure and key areas that will drive efficiency, reduce costs and most importantly, deliver world-class experiences in the air and on the ground. We believe Wheels Up has a significant first-mover advantage and that this strategy will generate strong margins and create substantial shareholder value over the long-term. Now, I’d like to recap some of our recent initiatives. We forged an exclusive partnership with American Express, a great opportunity to work with one of the most iconic brands in the world, offering unique programs and benefits to Platinum Card Members. This represents an important opportunity for lead generation. We launched UP for Business, which formalizes our offering for businesses and their private aviation needs. With our diverse fleet and commercial relationship with Delta Air Lines, we have already seen increased interest from businesses. As I like to say, CEOs like us, CFOs love us. I see a lot of opportunities with business customers. We recently integrated the Mountain Aviation fleet onto our Avianis Flight Management System. You will hear more about that in a few minutes. As part of our Meals Up initiative with Feeding America, we co-sponsored The Match with Tom Brady, Phil Mickelson, teeing off against Aaron Rodgers and Bryson DeChambeau. I’m proud to announce that to-date we have inspired funding for over 60 million meals. We continue to focus on diversity, equity and inclusion, both inside and outside our organization. Partnerships with organizations like C200, a powerful community of the most successful women in business, representing companies with more than $1.4 trillion in combined revenue and the NFL Players Association and its Community MVP program are two such examples. Next up, I want to introduce to you Vinayak Hegde, our Chief Marketplace Officer. Vinayak is the newest member of our C-suite having joined us this May. He is responsible for all of our marketplace initiatives, including the product and technology that will power it. Vinayak was previously a senior executive at Airbnb, Groupon and Amazon. Vinayak was introduced to us by the Chairman of our Marketplace and Board Advisor, Greg Greeley works when we partnered with Amazon and Airbnb. Vinayak is a force of nature and is already doing great things for us. With that, I’m now going to turn over the call to Vinayak.

[Vinayak Hegde:]

Thank you, Kenny, and great to speak with all of you. Let me start with providing a little color on my background, specifically at Airbnb, Groupon and Amazon. I led the development of their marketplaces, which included systems and processes to match demand and supply. My responsibilities also included growth. Growth of both, demand and supply, which in turn drove greater liquidity in each marketplace. My prior responsibilities were also focused on all the technology and processes that bring the marketplace platform to life, furthermore, bringing disparate systems, knocking out the best architecture, recruiting the brightest software minds and creating a simple user interface that makes it intuitive and easy for customers to transact. The systems we built used data to power machine learning algorithms needed to optimize in real time, things like dynamic pricing, personalization, impression mix management and activating. These systems enabled us to react quickly to changing conditions in the business to optimize revenue and maintain the highest standards of customer experience. I wasn’t looking for a new challenge when Greg reached out to me. I was intrigued by the opportunity to develop an innovative marketplace platform of the highest value customers in the world where there really isn’t anything competitive today. Private aviation happens to be an ideal area for disruption with analog processes largely in place, limited automation and fragmented supply. We are on a quest to create a much larger marketplace with optionality to provide more services for our high-value customers, examples of the great events, partner benefits and opportunities to expand into logical adjacencies. All this creates more demand reinforcing the strength of our platform. We believe that becoming the demand generator is the first step to building an attractive marketplace platform. Our data shows that existing customers continue to spend at attractive levels, and our newest cohorts are spending at an even faster pace. That’s extremely encouraging. It reflects our strategy of diversifying our fleet that has provided us a platform to service a lot more of our customers’ needs. The data for customer behavior allows us to predict demand in a more deterministic way, which in turn allows us to acquire the right type of aircraft supplies more efficiently in the long run. We are particularly encouraged by the fact that the vast majority of our flight demand comes directly to us, without any paid media and reflects the strength of our brand. This customer behavior is very similar to how Amazon Prime members shop at Amazon. Our industry is very complicated. Flight schedules come together with little notice. There is no technology that provides real time visibility of aircraft operators, or crew availability, maintenance schedules, or insight on where those aircraft need to be and when. There is safety vetting, trip services like catering and ground transportation, and international trip support. There’s dynamic pricing algorithms to optimize schedules. And then, there is the user interface to make it seamless and easy for customers. Today, much of the background of the entire industry is executed on analog, labor-intensive processes that are not optimized. We have to utilize technology to drive automation. And there are a lot of things we are going to do. Let me tell you about how I see the product and technology roadmap for Wheels Up. During my short tenure, I can tell you I’m increasingly excited by our assets and our technology roadmap. Wheels Up is building a service-oriented architecture for its marketplace. Wheels Up is no different from where Amazon was in its early stages. When I think about the Wheels Up platform, I think of four components

[Kenny Dichter:]

Thank you, Vinayak. Our team has accomplished a lot in our short history. We have built a strong brand and foundation, and have an experienced and diverse management team, which I believe has the vision to take us to the next level, as we create a marketplace platform for our high-value customers. Let me now turn it over to Eric Jacobs, our CFO, to run through our financials.

[Eric Jacobs:]

Thank you, Kenny. It’s great to represent Wheels Up to this group during our first public company quarterly earnings call. As Kenny noted, we’re very pleased with our strong start and the tailwinds in the first half of the year. We generated record revenue of $286 million in the quarter, up 113% year-over-year. As I comment about the second quarter, I’d like to do so in the context of providing overview of our revenue model, which is broken down across four main categories

[Operator:]

The first question comes from Sheila Kahyaoglu from Jefferies. Sheila, your line is open.

[Sheila Kahyaoglu:]

Hi. Good morning, guys. And thank you so much for the time. And congratulations on your first quarter, out of the gate very strong. Maybe I could ask about membership grew 47% year-over-year. Can you give us any color about the growth between connect and business core? And you also talked about members going from 70k to 80k annualized spend. Kind of how you think about a normalized level of spend?

[Kenny Dichter:]

Sheila, thanks for being here and thanks for that question. I would just say that we have a lot of work to do in a very good way on business, and it’s a great opportunity coming forward and the segmentation on the connect membership. Overall, we feel really good about where things are. Of course, we like the amped up spend. And I’m going to hand that to Eric to get detail there. Eric Jacobs, our CFO.

[Eric Jacobs:]

Thanks, Sheila. I appreciate it. So, as we said -- as I said in my remarks, we’re really agnostic to what kind of member we have whether it is core business or connect, or even if they’re not member, it’s really about getting people to fly. The membership has its privileges in terms of allowing, particularly for the core member, which is resonating with customers, because they essentially get the dynamically priced and cap rates as well as the scheduling certainty trans-con product that we have. That’s really helping to drive that spend per member. The new cohort, as we said, is really performing better than what we’ve seen historically. And that’s, as you think about lifetime value, that’s super exciting. And I would also add that the -- this is all happening with business and really traditional leisure travel just coming on. What we’re seeing is all in really high net worth at this moment in time, but we are seeing business and traditional travel starting to be talked about by our membership.

[Sheila Kahyaoglu:]

That’s great. And then, maybe one more on the guidance if that’s okay. Your 2021 guidance seems to imply the second half growth 27% versus 90% growth in the first half. So, are you just being conservative there? What drives that deceleration?

[Kenny Dichter:]

So, if you look at the back half guidance, it’s essentially saying, look, we’re -- right now, we want to be conservative, hopefully in terms of back half being relatively consistent with we saw the first half. So, if business and international continues to come back and that could bode well for us. But right now, given that the comps were much tighter in the back half of the year, we just want to be conservative.

[Operator:]

The next question comes from Michael Bellisario from Baird. Michael, your line is open.

[Michael Bellisario:]

Thanks. Good morning, everyone. First question relates to demand. Can you help us understand how quickly do you guys see bookings and/or new members signups increase, as you have a sponsored event or you do some sort of marketing promotion, just thinking about the golf tournament that you mentioned?

[Kenny Dichter:]

Yes. I would say that, of course, when we get the brand out there, whether it’s an event like The Match that drew over a couple of million people on the Turner networks, or you do something with an ambassador, you definitely see an influx of lead activity and demand activity. I would say, even bigger, you looking at a partnership with an iconic partner like American Express, and we announced something with their Platinum group, you immediately saw a spike in interest in people coming in. And I think we’re just getting started as it relates to the opportunities that we have with global scale partners in this area. I’m going to kick it over to Vinayak, who’s out in Seattle. Again, Vinayak came in and joined us about three months ago, spent some great time at Amazon and Airbnb, and as Chief Global Sales. So, Vinayak?

[Vinayak Hegde:]

Thank you, Kenny. I mean, the key thing that we look at is, from the time people become a member to how quickly they book. And we are very encouraged by the results. That’s the strength of how our platform is actually helping. And we actually look at burn rates. We have significant amount of people who use blocks. So, in addition to events, it’s also based on seasonality. And then, what we see here is people who become our members are actually trying our product much faster than before, which is very encouraging for us.

[Michael Bellisario:]

And I’m going to kick it over to Eric. I think he’s got a bullet here.

[Eric Jacobs:]

Yes. I think that last point that Vinayak said is interesting one. If you looked historically, people generally become a member when they had a need to fly. And what we’ve seen recently is that the timeframe between when someone joins and flies has decreased, which is nice to see.

[Michael Bellisario:]

And then, just in terms of the balance sheet and potential uses of your cash. Can you help us understand what you’re thinking about today? I know you mentioned M&A and acquisitions, but where is that on the priority list today?

[Kenny Dichter:]

Yes. I would say, look, we’re in very unique position. You talk about first-mover advantage and being the first public company in the private jet space in the history of private jet space. So, having the public ammunition, I mean the $656 million available and being in that very unique position, we have a lot of different moves on the just table but we evaluate and we kick the tires everywhere. We’re going to be focusing on aggregating supply in an asset-right way, big partnerships. And I’m going to kick it over to Eric for maybe a follow-up bullet on that.

[Eric Jacobs:]

Yes. So, look, we have a strong balance sheet, we paid off our debt, we like where we sit. We think that for our business, it’s very important to demonstrate to our customers that we have very strong balance sheet. That’s where we stand.

[Michael Bellisario:]

Got it. And just one follow-up there, any update on the Textron partnership that you guys announced recently?

[Kenny Dichter:]

Yes. We have a great relationship, a long-term relationship with Textron and Scott Donnelly and his team over there. The most recent announcement we made was in the VTOL -- possibly moving to eVTOL as that technology emerges with Scott, we believe Textron is going to be a great partner. And we think what their engineering, Mitch down at Bell Helicopter, we’ve chosen the right partner. Look for end of the fourth quarter of this year where we’re going stand on some VTOL action over there. It’s a platform where we can enable our technology on that deal. And again, Textron is an unbelievable partner for us, very proud that we were able to make that announcement with them. And there’s a lot to do. They are a big part of our fleet.

[Michael Bellisario:]

Got it. Helpful. Thank you.

[Operator:]

The next question comes from Gary Prestopino from Barrington Research. Gary, your line is open.

[Gary Prestopino:]

Hey. Good morning all. A series of questions. First of all, Eric, could you comment on maybe how much your member retention improved sequentially and year-over-year?

[Eric Jacobs:]

Yes. So, as historically -- or I guess, last year, we said that our core member retention was about 80%. It’s over 80% now. And as Kenny said, also back down at our Analyst Day, people that fly with us that are spenders are renewing it and our core membership at over 90%. So, we’ve seen very strong retention during this past six months.

[Gary Prestopino:]

Okay. And then, couple other questions here. Kind of back of the envelope, after your transaction, post Q, the end of the quarter, your net cash on the balance sheet is about $630 million. Is that right?

[Eric Jacobs:]

I think, it’s a little less than that. In July, we had some burn. So, about -- you see spending in terms of -- bigger burn in the summer months. And I’ll give you the number in a minute or two. But, it’s little bit less than that.

[Kenny Dichter:]

Yes. I would just say on that question, it’s very healthy for us to have a good burn, provided that the retention numbers that Eric stated stand. And we’re excited, again, our biggest customers, our biggest members from a spend perspective or our members that we’re retaining is over 90%. What we’re excited about is, if you look at the overall business, people putting down blocks is very important to us. So, what we’re seeing is people burning their hours off. And again, that’s good for us, very healthy, and then replacing and replenishing it. We have more block buyers than we’ve ever had.

[Eric Jacobs:]

So, Gary, if you look at page 15 in our deck that we posted on our website, to accompany presentation, you’ll see roughly $575 million pro forma summary balance sheet as of June 30th.

[Kenny Dichter:]

And again, just to double click on what Eric’s talking, he mentioned the -- very unique in our space to be debt-free and have the ability to back member assets, should an opportunity come our way.

[Gary Prestopino:]

No, I just think that’s great. I just wanted to make sure I got that clarified. So, that -- when you’re talking about these prepaid blocks, that leads to my next question here. It looks like the deferred revenue was down from the end of the year. And as I recall, that deferred revenue is a reflection of prepaid blocks and the amount of flight time people have paid for that has not been used. So, could you comment on that, considering that you said that the prepaid block purchases were pretty strong in the quarter? Does that normally happen...

[Kenny Dichter:]

Sure, Gary. Yes. So, once again, I’ll refer you back to our Analyst Day where we talked about blocks have a sort of seasonality to them and typically come down, our deferred revenue will come down during the summer months as flying picks up. And then, usually, at the end of the year, there’s a large uptick. Last year, with the federal excise tax -- flights coming back, we had over $230 million blocks I think in the quarter. So that’s -- well, I don’t want to say, it’ll be $230 million this quarter -- end of this year, because of the not having a federal excise tax situation, we do expect blocks to come up. And if you look, historically, year-over-year, deferred revenue has been up at the end of the year.

[Gary Prestopino:]

Okay. That’s just the explanation I wanted. I’ve got a couple of more if I may. It looks like your guidance on adjusted EBITDA relative to when you did the transaction, there was a negative delta of $11 million to $21 million. Can that all be explained by the fact that you’re increasing your investments in technology, people, et cetera?

[Kenny Dichter:]

I would say -- this is Kenny and I’ll let Eric give you a bullet or two here. Vinayak Hegde being on this call is a product of that. We made a decision and that decision was to take care of the member. We’re seeing a great influx of demand. We’re committed to take caring of the member today, because we think that lifetime value was -- is the way that you want to play that. And then, on top of the focus on the member, bringing in Vinayak, and him putting a team together, beginning of a team in Seattle that’s focused on technology and making investment all that going good on the top-line is really how we see it. We’re playing a long game here. And Eric, can give you a little bit more detail on how we came up with the numbers that he bundled.

[Eric Jacobs:]

Sure. Thanks, Kenny. So, as I discussed earlier, we’ve absorbed the cost pressures and supply constraints that are affecting probably aviation as well as the other industries. We have not raised cap rate to date and we do typically raise pricing annually. In terms of some of the investments, we’re investing in additional $20 million to $25 million in OpEx this year, on an annualized basis in our operations and service delivery capabilities. And that will enhance customer experiences and drive aircraft availability, scheduling optimization, and third-party supply. It also includes investing in our pilots through a series of initiatives to enhance recruitment and retention of new and existing pilots. We’re also investing an incremental $15 million this year on an annualized basis in technology and the marketplace. And that’s to generate increased long-term efficiencies.

[Kenny Dichter:]

I want to give Vinayak the microphone here. I know Vinayak, this is one that’s close to your heart and put your Amazon and Airbnb add-on. I think this play has been run and we’re committed to running it.

[Vinayak Hegde:]

Yes. Thanks, Kenny. I mean, in terms of technology, I mean, there is a lot of technology to be built here. But the thing is, the efficiencies you’re going to get out of this is going to help us in the long-term. And that’s also going to differentiate us from other companies. And it reminds me of my early days at Amazon. When we actually built, what I call -- built software for what is called the plumbing and the undifferentiated stuff that nobody actually pays attention to. Aircraft serves scheduling, trip planning, maintenance, and that takes a lot of investment, but the end result is actually it will allow us to have efficiencies in the long run that very few people can actually match up with. So, that’s why I’m very excited about the investment here that allows us. And the other thing that happens here is, if you look at the actual software available in the private aviation space, there’s no like proprietary software where you can buy and put things together. It has to be custom-built for the company. And that’s what this investment allows us to actually differentiate ourselves in the long run.

[Gary Prestopino:]

Okay. And while I have you on here, I’m just going to ask this question, because I think it’s important longer term. I mean, with the industry platform, technology you are developing the global aircraft search engine, how long is it going to take to this to get developed to where you would actually be able to employ the integrated platform in the market? And if you could give us a couple of bullets as to how this improves your operations, once this thing is in the market, that would be very helpful.

[Vinayak Hegde:]

Thank you. So, the way we think about this is we -- there’s no big bang here, right? So, what we’re going to do is launch this in stages. So, there is not going to be a big bang. What we are doing is we are ripping the monolith apart and building what I call a service-oriented architecture, which allows us when we need to make changes that we can actually do it very, very fast. As I told you, we already migrated Avianis, our integrated Avianis for our Mountain Aviation fleet. But, you’re going to see features come in stages. And we’ll start getting improvements over a period of time. As an example, once we integrated Mountain Aviation into Avianis, we can take care of automatic fleet optimization capabilities for Avianis. As we add more and more, there is going to be incremental optimization that is going to come. The same is true with the website. As we actually automate more and more of the front end, we can improve search, which would improve conversion. So, it’s a playbook that I’ve done in many other places where we are optimizing stuff across the board and continually actually improving as we go along. Doing a big bang is very risky. So, first will be the service oriented architecture, and then start actually migrating things one at a time. There’s no clear timeline. We are actually making changes as we speak. And it’s going to be coming one after the other.

[Gary Prestopino:]

Okay. Thank you. That’s very helpful. That’s all I have. Congratulations again for getting the Company public and your first quarter out of the box.

[Kenny Dichter:]

Thank you.

[Operator:]

The final question comes from Oliver Chen of Cowen. Oliver, your line is open.

[Oliver Chen:]

Hi. Thank you very much. Machine learning is a core competency at Wheels Up. What customer interaction data is really important, and what are the nature of the training sets that you’re pursuing to drive that customer experience? And as you think about ML across the organization, what’s the lower hanging fruit, and where might it have the most impact in other departments? Kenny, I would also love your take on experiential and membership, and how you see that evolving as a lifestyle brand over the customer lifetime value as well. Thank you.

[Kenny Dichter:]

I’m going to have Vinayak take the first piece. And then, Vinayak, I’ll pick up the brand and the Aspirational elements of what we’re doing on the lifestyle side.

[Vinayak Hegde:]

Thank you, Kenny. I mean, when I look at private aviation and when I took the job, I mean, there were very few places where you can apply machine learning to so many aspects of the business. Let me start with the simpler ones at the back end. One is, fleet optimization and scheduling. How do you play the right plane at the right time? That’s where we can use machine learning. Second, we can now do prediction, we already do this right now where we can actually predict demand by cabin class that allows us to secure inventory much better than before. I mean, if you think about GRP, one of the reasons we are able to do this Guaranteed Rate Programs is we have conviction and the production of demand that we are going to get. So, that helps us a lot. Search result, how we actually optimize search results, we can use machine learning. Prediction for understanding propensity to continue to work with a sort of propensity to attract from our platform, so our sales team can actually work with the customer. Machine learning can be used for actually predicting maintenance. I will give you a very simple example. Let’s say, one of our planes is coming for maintenance. So, our prediction could say this part could fail pretty soon. We could actually take the same unscheduled maintenance and add the predictive maintenance and get it done in one place, so our planes are on the sky more and are utilized more. So, pretty much every aspect of what the front end and the back end, we can start using machine learning, which is what is working very exciting about this platform. Kenny?

[Kenny Dichter:]

Thanks, Vinayak. And Oliver, as it relates to our aspiration intended on building a world-class lifestyle brand. First on, having somebody like Vinayak and Greg Greeley who help be those develop Amazon Prime, on the marketing side, we have Lee Applbaum who engineered over the last six, seven years an unbelievable outcome for Patrón, the largest standalone sale of a liquor brand to Bacardi. We’re working on that global lifestyle brand that -- we chose Ravi and Aspirational in large part because of their LVMH DNA. You’ve got Scott Dahnke and his team over in L Catterton. Ravi is now on our Broad. We have all the ingredients. And I look about -- I looked at Ed Bastian and the great thing that Delta’s done with its first class, its business class customers, and of course, its status and its programming for frequent flyers. So, we have all the makings and all the ingredients, Oliver, to have a great brand. Obviously, we’re partnered up with winners like Serena Williams and Tom Brady, Russell and Ciara, and others that really embody what we are. And we think private flying and the way that Nike says that anybody who’s exercising out there is an athlete. We think that the world, the 8.1 billion people, they’re all hard wired to be private flyers. So again, if we can create that aspirational place where if you’re wearing a Wheels Up sweatshirt and you’re one wheel away from flying private. That’s the kind of status that we want on the brand. And again, with that we want everybody to feel invited to the party. Stephanie Chung, who’s running our growth area has done a great job in making sure that everybody feels like this is a brand for them. So, inclusion, a big piece of that as well.

[Oliver Chen:]

Thank you. And Eric, the presentation mentioned tightness in supply. How would you characterize the supply versus demand dynamic? And how might tightness continue and duration? I would love your thoughts on the biggest opportunities in supply as you scale as well. And which aspects of supply and which categories you scale. And as you balance return on capital, what’s asset-right, as well as customer convenience and availability? Thank you.

[Eric Jacobs:]

Sure. Thanks, Oliver. So, a great part of our business is that we have a first-party business, the second-part and the third-party supply. And so, we are very different than most in terms of our ability to adapt to changing dynamics in the industry. And supply is tight in some ways due to just the broader situations you’re seeing across the economy. The ability to shift to get them into position is not as simple. Just labor across the board, whether it’s at FBOs, making it -- the ability to get fuel turned sooner than you would normally, so you can get the flight moving. So, that creates tightness of supply across the board. But, I think we’re not -- the whole industry is seeing that. We don’t think it’s something that’s systemic. We think it’s something that for us, we can deal with better than most. In terms of longer term, what does it mean? To strike that balance over time, we think we can do more asset-light. But there is -- as I said earlier, we probably will take a couple aircraft in the back half of the year, just to make sure we have that right balance between first-party, second-party and third-party. And the aircraft management business is key for us for the long-term. Our ability to have owners give us the access to their aircraft, so we can utilize them when they’re not using them is something that once again is a differentiator.

[Oliver Chen:]

Thank you. And last question on this dynamic environment with the Delta variant and what we’re facing with lots of change and uncertainty, what are you seeing in your data and what can you control versus uncontrollable and the environment across the world? Thank you.

[Kenny Dichter:]

I think the Delta variant, obviously, we’re monitoring that situation closely. I think that private aviation has become in certain cases essential for people. And I think you’re seeing that in the demand. I think that once this group gets on the airplanes and actually experiences what we do, the retention numbers, they tell the story on where we’re at. We’re continuing to press our safe passage. And Dr. Scott Gottlieb works closely with us on setting up those protocols. Scott’s doing a great job at the face of the crisis here. And we’re proud to be partnered with him. Looking forward to a world where medicine and vaccines and other mitigation protocols can solve this issue. But I would just say we’re uniquely positioned. We’ve been operating -- I thank our pilots and our maintenance guys who are on the ground. We have been operating every day since this crisis was sort of at its onset in March of 2020. And like I said, we’re seeing a lot of demand. We’re working around all of the different protocols to keep everybody safe. And I would say, one of the big things that came out of COVID, as it relates to Wheels Up and its brand, was the development we established at Wheels Up with Feeding America. Because I do believe that our Company needs to do good, while we’re doing good. So, over 60 million meals that have been inspired by Wheels Up, and we’re just getting started.

[Oliver Chen:]

Thank you. Best regards.

[Kenny Dichter:]

Thank you.

[Operator:]

We have no further questions today. So, I’ll hand the call back to Kenny Dichter for closing remarks.

[Kenny Dichter:]

Yes. Bethany, thank you very much for hosting. I appreciate it. And thanks, everyone, for joining us today and taking the time to better understand our vision, our business and our long-term strategy. We are building an innovative technology-enabled marketplace to optimize the fragmented and underutilized supply chain and connect it with a large and growing addressable market. And all of this is supported by a trusted and iconic brand. We firmly believe that the investments we are making in operations, technology, product development, and customer service will position Wheels Up as the undisputed leader in our industry. And we also believe we’re going to create significant shareholder values in the years to come. I look forward to continuing the journey up with all of you. Thank you.

[Operator:]

This concludes today’s conference call. Thank you for joining. You may now disconnect your lines.