SURF AIR MOBILITY INC. Q3 FY2024 earnings call

• Announced closing of a $50 million term loan agreement with Comvest Partners, strengthening balance sheet and enabling execution of transformation plans.
• Realized synergies from Southern Airways merger, streamlining operations and driving efficiencies.
• Implemented new systems and workflows, exited unprofitable routes, and will resolve deferred maintenance to improve aircraft availability and profitability.
• Announced formation of Surf Air Technologies LLC and entered agreement with Palantir to power operating system for advanced air mobility industry.
• Took first two deliveries of 116 Cessna Grand Caravan aircraft order with Textron Aviation.

In the third quarter, revenue was $28.4 million, exceeding the guidance range of $25 million to $28 million. Scheduled service revenue increased by 2% primarily driven by subsidized route revenue from Williamsport, Purdue and Lanai, partially offset by lower completion factor. On-demand service revenue decreased by 13% due to management's focus on profitability. Adjusted EBITDA loss for the third quarter was $8.9 million, outperforming expectations of $10 million to $13 million, driven by improved operating margins from on-demand, realized M&A synergies, lower compensation and professional expenses.

• Fourth quarter revenue expected in the range of $25 million to $28 million.
• Fourth quarter adjusted EBITDA loss expected in the range of $5 million to $8 million.
• Regional airline operations not expected to be profitable for full year 2024, but transformation plan aims for sustained profitability in fiscal year 2025 and beyond.

• Potential delays in the electrified caravan FTC process.
• No significant risk seen to essential air service funding with new administration as the program is bipartisan and has withstood many years, and FAA Reauthorization Act increased funds for the program on a bipartisan level.

Q: About the FTC for the electrified caravan, potential delays and milestones A: Still on track for 2027 timeframe, in active discussions with supply chain partners for separate capitalization of electrification business to reduce cost and will report more next quarter Q: Risk to essential air service funding with new administration A: No issue, program is bipartisan and funded, FAA Reauthorization Act increased funds for the program on a bipartisan level Q: Optimal passenger load factors for breakeven on routes A: When talking about breakeven, model around 70% load factor