Surf Air Mobility has closed funding of its new Senior Secured Term Loan from Comvest Partners, a multi-billion-dollar investment management firm. The new facility is comprised of a $44.5 million term loan, which was fully funded, and a $5.5 million delayed draw term loan to be used for interest payments over the first 18 months.

Oliver Reeves, chief financial officer, says: “We have fundamentally restructured our balance sheet, addressing our near-term liquidity constraints, lowering our cost of capital, minimising potential dilution under our equity share subscription facility and repositioning Surf Air Mobility for profitable growth. Alongside this transaction, we have reduced liabilities and, as a result, have significantly strengthened our balance sheet. We are now poised to optimise the structure of our business and capitalise on the opportunities before us.”

This financing is a catalyst for the company to initiate the next phase of its transformation. The four-phase transformation plan includes:

- Phase 1: Transformation (complete) - Improved capital structure, strengthened balance sheet, put a new management team in place and realised operational synergies from the Southern Airways merger.

- Phase 2: Optimisation (2025-2026) - Optimise airline operations, recalibrate the on demand business and drive efficiencies from SurfOS.

- Phase 3: Expansion (2026-2027) - Rapidly expand tier 1 routes by leveraging improved business infrastructure and proprietary software developed with Palantir Technologies.

- Phase 4: Acceleration (2027onwards) - Grow revenue and margins by implementing electrification technologies and expanding technology platform.

Deanna White, interim CEO and chief operating officer, comments: “As we enter the next phase of our transformation plan, we are focused on optimising operations and capital allocation to meaningfully improve profitability in the near term. As we look further ahead, phases three and four of our plan will allow us to become the technology-enabled platform best positioned to capture a significant share of the more than $75 billion global regional air mobility market.”

Of its financial results for the third quarter ended 30 September, 2024, White continues: “These demonstrate our continued progress on our transformation plan. We are rightsizing our air mobility operations, implementing new processes, driving improved efficiency and repositioning our air mobility operations for sustained profitability.”

Third quarter financial highlights:

- Revenue of $28.4 million for the third quarter 2024 as compared to $28.9 million for the same period of the prior year on a pro-forma basis.

- GAAP net loss improved to $12.2 million as compared with $74.6 million in the prior year period.

- Adjusted EBITDA loss of $8.9 million for the third quarter 2024 was unchanged.

Developments on key initiatives:

- Mobility: Revenue for the third quarter was relatively unchanged versus the prior year period on a pro-forma basis. Scheduled service revenue increased by two per cent primarily driven by the addition of subsidised route revenue for Williamsport, Purdue and Lanai, partially offset by a lower completion factor. Third quarter completion factor was negatively impacted by unplanned maintenance. On demand service revenue decreased by 13 per cent over the comparable period, which represents the impact of management’s focus on profitability rather than near-term market penetration. As of 30 September, 2024, Surf Air Mobility supported 20 communities under the EAS programme. The company took delivery of two new aircraft from Textron Aviation in November 2024.

- Software: The company continued development of SurfOS software aimed at improving operational efficiency, growing revenue and reducing costs across its airline brands (Southern, Mokulele and Surf Air) and its on demand charter service. The company has also announced a plan to form a new venture, Surf Air Technologies, and entered into an agreement with Palantir Technologies to power its operating system for the AAM industry.

- Electrification: The aircraft electrification programme remains on track to complete its Cessna Caravan STC in 2027. The company has an exclusive relationship with Textron Aviation to be its supplier of electrified powertrains for the Cessna Caravan. The company is actively pursuing the creation of one or more joint ventures or partnerships with key vendors to reduce cost and separately capitalise electrification efforts. It plans to leverage its platform to enable the launch of third-party electrified aircraft. The company will support these launches with direct consumer distribution via Surf Air’s flight network and operations software tools via SurfOS.

Financial Outlook:

Fourth quarter 2024 revenue is expected to be in the range of $25 million to $28 million.