Wheels Up Experience Inc. (NYSE:UP) Q4 2022 Earnings Call Transcript

Todd Smith: I would say it’s a combination of both things. I mean I think we certainly saw some of the broader demand start to pick-up. I think super-mid and some of the TransCon flights, in particular, really strong. And I think that’s probably some of the seasonal things you would expect as people are making longer flight East Coast out West and things of that nature. So that’s been strong. And then I think it’s been a result of some of the actions that we’re trying to drive. One of the benefits that members have enjoyed when they join our program and put down prepaid blocks is, we give them cap rates protection on pricing, but they’re also able to participate in the dynamic pricing on a regular basis. And I think as we’re looking at the environment in 2023, we think that represents a better opportunity for us to be a little bit more offensive about using that dynamic pricing to help shape demand and drive that demand, particularly in areas that work for us in terms of efficient trips and better utility shaping some of that demand off of the Friday and Sunday typical trips where there’s more compression into other days of the week.

And to the extent that we can do that and do that effectively, then that certainly helps improve our contribution margins as we go through the year. And I think, in some ways, underpins our objective to say, hey, even in an environment where the top line is relatively flat, we think we can drive meaningful margin improvement through the year. And I think, as I commented a little bit on in the prepared remarks, as we go into the second quarter where we have an outlook of a bit of a move up and sequential improvement certainly in revenue versus the first quarter profile, those actions and the things that we’ve done to reduce the cost base and other things should create real leverage for us that should push up the margins in a meaningful way, in Q2 and beyond as we go through this year.

Kenny Dichter: Marvin, this is Kenny. Just real quick to supplement what Todd said, demand shaping and having folks fly in the pockets that we need them to fly geographically and from a day in time perspective, we’ve put a lot of emphasis on our business segment. Our partnership with Delta is yielding us some great partners on the business flying, and that’s really a Monday to Thursday deal. So I think that, that balancing is also going to help us going forward. And as we know, it’s back to business as it relates to travel. So I think that’s a favorable sort of bullet there.

Marvin Fong: Okay. Great. And then, on the adjusted contribution margins, I appreciate all the detail you provided about this year. Since 2024 sort of the make or break year in terms of reaching EBITDA profitability. And I think you guys are maintaining the mid-teens target, if you’re exiting 2023 in the high-singles, could you just kind of provide us a little more detail about how you’re going to get from that high-single to the mid-teens in 2024?

Kenny Dichter: Yeah. I think a lot of that has to do with, as we described the path to profitability and the three pillars within that, which are cost pricing and program changes. And then the third bucket is that operational execution and efficiency. I think that third bucket is really what’s going to underpin that acceleration into 2024 and beyond, right? I mean, we’ve invested a lot in technology to improve our — our scheduling capability and the efficiency. We’re doing a lot of work now in terms of the planned opening of our consolidated MOC in the middle of this year that may be even more significantly as we work through the consolidation of our certificates that we’re currently working closely with the FAA on. We think that, that gives us an incredible opportunity to reduce some duplicative infrastructure, but more importantly, operate in a much more efficient way, in terms of scheduling optimization and flexibility.