Company: UP
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0001819516-25-000012
Chunk: 140

Company: Wheels Up Experience Inc.
Filing Date: 2025-03-11
Form: 10-K
Item: Item 7A
Chunk 140
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the ordinary course of operating our business, we are exposed to market risks. Market risk represents the risk of loss that may impact our financial position or results of operations due to adverse changes in financial market prices and rates. Our principal market risks have related to interest rates, aircraft fuel and foreign currency exchange.

Interest Rates

Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates. We are subject to market risk associated with changes in interest rates, which could lead to significant fluctuations in the required cash payments of interest or related accruals with respect to variable-rate debt, and the fair value of our indebtedness, including the Revolving Equipment Notes and Credit Facility, or our cash equivalents, which are primarily in the form of money market funds or U.S. treasury bills. Changes in interest rates may also impact payments under any additional variable-rate debt arrangements or leases that we may enter into from time to time, as well as our ability to refinance the Revolving Equipment Notes or Credit Facility or to obtain additional financing on attractive terms or at all. 

As of December 31, 2024, approximately $443.9 million of the Company’s long-term debt was at fixed interest rates, including, among others, the Term Loan, and none of the Company’s variable lease obligations utilized market interest rates as the basis for determining payments. In addition, any future borrowings under the Revolving Credit Facility accrue interest at a fixed interest rate. The remaining $317.5 million of the Company’s long-term debt was at variable interest rates based on SOFR that are adjusted at scheduled principal and interest payment dates, subject to a floor. An increase of 1% in average annual interest rates would have decreased the estimated fair value of our fixed rate debt by approximately $10.0 million as of December 31, 2024 and would have increased the interest expense on our variable rate debt by approximately $0.5 million. Conversely, a decrease of 1% in average annual interest rates would have increased the estimated fair value of our fixed rate debt by approximately $10.4 million as of December 31, 2024 and would have decreased the interest expense on our variable rate debt by approximately $0.5 million.

From time to time, we may enter into interest rate swaps or other derivative instruments that are not for speculative purposes in order to manage our exposure to changes