Company: UP
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0001819516-25-000012
Chunk: 34

Company: Wheels Up Experience Inc.
Filing Date: 2025-03-11
Form: 10-K
Item: Item 1A
Chunk 34
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, if we fail to meet our obligations or are otherwise in default under the contractual agreements with OEMs or other third-party service providers, our access to aircraft engines and parts may become limited and we may experience adverse consequences under the agreements governing our indebtedness, each of which could adversely impact our business, results of operations and financial condition. Although we could choose to operate aircraft of other manufacturers or increase our reliance on third-party operators, such a change would involve substantial expense to us and could disrupt our business activities.

If we face problems with any of our third-party service providers, our operations could be adversely affected.

Our reliance upon third parties to provide essential services that enable us to operate may limit our ability to control the efficiency and timeliness of such services, and in turn, experience disruptions or delays in our operations. We have entered into agreements with OEMs and third-party service providers for access to various facilities and the provision of products and services required for our operations, including aircraft maintenance, ground facilities and IT services, and expect to enter into additional similar agreements in the future. Our agreements with such third-party service providers are generally subject to termination after notice or a stated period. If our third-party service providers terminate their contracts with us or do not provide timely or consistently high-quality service, we may not be able to replace them in a cost-efficient manner or in a manner timely enough to support our operational needs, which could have a material adverse effect on our business, results of operations and financial condition. We may also experience increased costs if we determine it is in our best interests to change from maintenance programs facilitated through OEMs to other third-party service providers, or vice versa.

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We may incur substantial costs in connection with our leased aircraft, including for return obligations.

We lease a significant number of aircraft and other equipment used in our operations. In addition, we intend to strategically lease Embraer Phenom 300 series and Bombardier 300 series aircraft as part of our fleet modernization strategy. Our aircraft lease agreements generally have multi-year terms, may require us to cover all or a portion of the maintenance costs associated with the aircraft, and may contain provisions that require us to return aircraft airframes and engines to the lessor in a specified condition or pay an amount to the lessor based on the actual return condition of the equipment. These lease return costs are recorded in the period in which they are incurred. We estimate the cost of maintenance lease return obligations and accrue such costs over the remaining lease term when the expense is probable and can be