The newly reorganized Beechcraft Corp. said Thursday it has secured the largest propeller aircraft order in general aviation history – up to 105 King Air 350i aircraft from Wheels Up, a new private aviation company.
Beechcraft will also provide maintenance for the planes in a package valued at $1.4 billion.
The Wheels Up order includes 35 firm orders for King Airs with options for 70 more. At list prices, the aircraft are valued at $788 million with maintenance services valued at more than $600 million.
Beechcraft plans to deliver the first nine planes this year. The remainder of the 35 aircraft are to be delivered by mid-2015.
The order is a big boost for Beechcraft, which emerged from Chapter 11 bankruptcy in February.
“This has a very positive impact for us in our core business,” CEO Beechcraft Bill Boisture said. “It gives us a large order of King Airs around which to plan our future. It gives us a growing maintenance business as this fleet is deployed nationwide. ”
Wheels Up, based in Times Square in New York City, was formed by former Marquis Jet founder Kenny Dichter and a group of investors. The company launches Thursday.
“We are very committed to making Wheels Up successful,” Boisture said. “That means we will deliver high-quality airplanes to the venture on time, and we will deliver flawless maintenance for the in-service airplanes.”
Marquis Jet, founded in 2001, offered prepaid flight hours on private jets to customers. It was bought by Berkshire Hathaway, the parent company of fractional ownership company NetJets, in 2010.
Boisture and Dichter have known one another for more than a decade.
“Bill and I have talked about the King Air since the days he (Boisture) was president of NetJets,” Dichter said. “The management team at Beechcraft, led by Bill and Shawn (Vick, executive vice president of sales and marketing) were a big reason that we were able to come together and put this groundbreaking order together.
“I’m really proud that this order will provide jobs in Wichita,” he said. “For every membership that we sell, there’s work that’s executed in Wichita.”
Boisture said the order will increase King Air production at Beechcraft.
“We’ll move up the rates above what we are today gradually and very conservatively,” Boisture said. “As the total demand for the airplane grows over the next few years, and Wheels Up will be a significant part of that growth, then we’ll gradually add the necessary people to build the airplane and deliver it to them on time as a high-quality airplane.”
Wheels Up offers memberships for customers wanting private air travel. The company charges a membership initiation fee and annual dues. Members then pay hourly fees for on-demand travel.
“We can really change the game to redefine the private aviation pyramid with this program,” Dichter said.
The King Airs – which typically hold up to nine passengers – are perfect for flights of two hours or less, 600 to 700 nautical miles or less, and for people looking to pay a lower rate than a comparable jet, he said. King Airs built for Wheels Up will include several special enhancements, including state-of-the-art interiors, Wi-Fi and a luxury lavatory vanity, the company said.
“The private aviation business is a robust marketplace,” Dichter said. “And there’s a tremendous amount of latent demand out there.”
The company will start in the Northeast. It plans to expand first to the Southeast, then the Southwest. When all 105 King Airs are in operation, the company should generate $400 million to $500 million a year from the King Air business, it said.
Dichter predicts that in five years, Wheels Up will have 10,000 to 15,000 members, each of whom will fly an average of 20 to 30 hours a year with about 35 to 45 percent of those hours flown on the King Air.
When it grows to that many members, the company will need to order more.
“If we execute on our current business plan, we will definitely need to extend the order beyond 105 airplanes,” Dichter said.
Wheels Up also is in the final stages of talks with business jet operators to form a partnership and provide jet services for members. Dichter declined to name the operators.
Wheels Up plans to market its services to individuals from the “millionaire next door” to corporations with more than $25 million in gross sales. There are more than 1million individuals and businesses that could afford to join the program, Dichter said.