Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
Mountain Aviation, LLC Acquisition
On January 5, 2021, we acquired all of the outstanding equity of Mountain Aviation, LLC (“Mountain Aviation”) for a total purchase price of $40.2 million, consisting of $30.2 million in WUP common interests and $10.0 million in cash. In addition, there is a potential incremental cash earn-out of up to $15.0 million based on achieving certain financial performance metrics related to certain special missions, which represents contingent consideration, and would be payable in the second quarter of 2023 to the extent achieved. The estimated fair value of the earn-out payment using a Monte Carlo simulation model as of the acquisition date was $0. As a result, we have not recorded a liability for the fair value of contingent consideration payable on the condensed consolidated balance sheet as of September 30, 2021. The valuation of the earn-out is based on significant inputs that are not observable in the market; therefore, it is a Level 3 financial instrument. Mountain Aviation adds to our Super-Midsize jet fleet and operations, provides full-service in-house maintenance capabilities, expands our presence in the Western United States and enhances our on-demand transcontinental charter flight capabilities. Acquisition-related costs for Mountain Aviation of $2.0 million were included in general and administrative expense in the condensed consolidated statements of operations for the nine months ended September 30, 2021. The acquisition of Mountain Aviation was determined to be a business combination.
As of the date of acquisition, the total preliminary purchase price allocated to the Mountain Aviation assets acquired and liabilities assumed according to their estimated fair values were as follows (in thousands):
Current assets $ 32,884 
Property and equipment 741 
Intangible assets 5,040 
Goodwill 37,021 
Other assets 45,874 
Total assets acquired 121,560 
Total liabilities assumed (81,388)
Net assets acquired $ 40,172 
Current assets of Mountain Aviation included $17.8 million of cash and $10.7 million of accounts receivable, including $1.5 million owed from Wheels Up that was eliminated in consolidation upon acquisition.
The above initial fair value estimates of the assets acquired and liabilities assumed were provisional based on the information that was available as of the acquisition date.
Goodwill represents the excess of the purchase price over the fair values of the acquired net tangible and intangible assets. The allocated value of goodwill primarily relates to anticipated synergies and economies of scale by combining the use of Mountain Aviation's aircraft, maintenance capabilities and existing business processes with our other acquisitions. The acquired goodwill is approximately 25.0% deductible for tax purposes.
The amounts allocated to acquired intangible assets and their associated weighted-average amortization periods, were determined based on the period the assets are expected to contribute directly or indirectly to our cash flows, consists of the following:
(In thousands)
Weighted-Average Amortization Period
Customer relationships $ 4,600  6.0
Trade name 330  1.0
Non-competition agreement 110  1.0
Total acquired intangible assets $ 5,040  5.8
The results of Mountain Aviation were included in the condensed consolidated statement of operations from the date of acquisition. Revenue for Mountain Aviation was $87.2 million, net of intercompany eliminations, and income from operations was $11.5 million from the date of acquisition through September 30, 2021.
Unaudited Pro Forma Summary of Operations
The accompanying unaudited pro forma summary represents the consolidated results of operations as if the 2020 acquisitions of Wheels Up Private Jets LLC and Gama Aviation LLC (“Gama”) had been completed as of January 1, 2020, and the 2021 acquisition of Mountain Aviation had been completed as of January 1, 2020. The unaudited pro forma financial results for 2021 reflect the results for the three and nine months ended September 30, 2021, as well as the effects of pro forma adjustments for the transaction in 2021. The unaudited pro forma financial information includes the accounting effects of the acquisition, including adjustments to the amortization of intangible assets, and professional fees associated with the transaction. The pro forma results were based on estimates and assumptions, which we believe are reasonable. The unaudited pro forma summary does not
necessarily reflect the actual results that would have been achieved had the companies been combined during the periods presented, nor is it necessarily indicative of future consolidated results (in thousands, except per share data).
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net revenue $ 301,978  $ 226,266  $ 851,330  $ 616,894 
Net income (loss) $ (59,455) $ 19,081  $ (121,564) $ (55,652)
Net income (loss) attributable to Wheels Up Experience Inc. $ (58,617) $ 17,560  $ (115,401) $ (51,372)
Net income (loss) per share $ (0.25) $ 0.11  $ (0.60) $ (0.32)