Surf Air Mobility’s Earnings Call: Growth Amidst Challenges

Surf Air Mobility, Inc. ((SRFM)) has held its Q4 earnings call. Read on for the main highlights of the call.

Surf Air Mobility, Inc. recently held its earnings call, revealing a mixed sentiment characterized by notable achievements and challenges. The company reported revenue growth exceeding guidance, improvements in adjusted EBITDA, successful financing efforts, and progress in strategic initiatives like SurfOS and electrification. However, it also faced challenges such as a decline in scheduled service revenue, maintenance backlog issues, and liquidity constraints, which were addressed by the end of the year.

Revenue Growth and Exceeded Guidance

Surf Air Mobility reported a 5% increase in fourth-quarter revenue, reaching $28.05 million, which surpassed the high end of their guidance range of $25 million to $28 million. For the full year, revenue rose by 6% to $119.4 million, showcasing the company’s ability to exceed expectations and deliver solid financial performance.

Improvement in Adjusted EBITDA

The company achieved a significant improvement in adjusted EBITDA, with a loss reduction of $11.5 million or 63% for the fourth quarter of 2024. For the full year, the adjusted EBITDA loss improved by $6.8 million or 13%, highlighting effective cost management and operational efficiency.

Successful Financing and Capital Structure Improvement

Surf Air Mobility successfully secured a $50 million term loan at attractive rates, extended the maturity of secured debt, and reduced liabilities by over $42 million. These efforts have strengthened the company’s capital structure and positioned it for future growth.

SurfOS Platform Development

The company made significant strides in developing its SurfOS platform, rolling it out to beta users and introducing several new features. The platform now boasts multilingual and multi-currency marketplace capabilities, enhancing its appeal and usability.

Electrification Initiatives Progress

Surf Air Mobility is actively engaging with the FAA on certification planning for the Cessna Caravan Supplemental Type Certificate and has established a Cessna Electrification Customer Advisory Board. These steps are crucial for advancing their electrification initiatives.

Scheduled Service Revenue Decline

Despite overall revenue growth, the company experienced a 6% decline in scheduled service revenue in the fourth quarter. This was primarily due to the elimination of unprofitable routes, a strategic move aimed at optimizing operations.

Maintenance Backlog and Aircraft Availability Issues

The company faced challenges with aircraft availability due to a maintenance backlog. However, capital raised in November was deployed to address these issues, focusing on clearing the backlog and resolving interior and corrosion items.

Liquidity Challenges

Throughout the year, Surf Air Mobility encountered significant financial constraints. These liquidity challenges were addressed by the end of the year, allowing the company to stabilize its financial position.

Forward-Looking Guidance

Looking ahead to 2025, Surf Air Mobility aims to achieve profitability in its airline operations, targeting positive adjusted EBITDA. The company plans to focus on process improvements, exiting unprofitable routes, and leveraging its proprietary SurfOS platform. For Q1 2025, revenue is guided between $21 million and $24 million, with an adjusted EBITDA loss of $12 million to $15 million. Additionally, the company plans to continue developing its electrification initiatives, with the Cessna Caravan Supplemental Type Certificate on track for completion in 2027, and aims to commercialize the SurfOS platform by 2026.

In summary, Surf Air Mobility’s earnings call presented a balanced view of achievements and challenges. The company demonstrated strong revenue growth and financial improvements while addressing operational hurdles. With a clear focus on strategic initiatives and future profitability, Surf Air Mobility is poised for continued progress in the coming years.