Summary of Surf Air Mobility Conference Call Company Overview - **Company**: Surf Air Mobility (SRFM) - **Industry**: Regional Air Mobility - **Location**: Los Angeles, California - **Key Operations**: One of the largest commuter airlines in the US by scheduled departures, and the largest US passenger operator of Cessna Caravans [1][2] Core Business Model and Strategy - **Business Segments**: - Air Mobility Business: Scheduled service and charter flight operations - Air Technology Business: Development of Surf OS (software platform) and electrification initiatives [7][11] - **Partnerships**: Collaboration with Palantir for AI-powered software and Textron for electrified aircraft technology [2][12] Industry Insights - **Market Growth**: The global regional air mobility market is projected to grow to between $75 billion and $115 billion by 2035, with the US market accounting for $15 billion to $22 billion [14] - **Electrification Impact**: Anticipated reduction in direct flying costs by 50% for all-electric powertrains and 25% for hybrid powertrains [15][40] Growth Catalysts 1. **Transformation Plan**: A four-phase plan initiated to reposition the company, with the first phase completed in 2024 [18][19] 2. **Scheduled Service Profitability**: Expected profitability in scheduled airline services by 2025 [22] 3. **Launch of Surf OS**: Commercial launch planned for 2026, targeting third-party operators [20] 4. **Electrification Initiative**: Completion of electrified powertrain certification expected by 2027 [21] Competitive Advantages - **Scale**: One of the largest commuter airlines in the US [24] - **Experience**: Over a decade in the aviation industry with extensive operational experience [24] - **Strategic Partnerships**: Exclusive relationships with Textron and Palantir [25] - **Operational Reach**: Interline agreements with major airlines, extending reach to over 430 million customers [27] Operational Performance - **Improved Metrics**: Achieved a 10% increase in controllable completion factor and a 20% increase in on-time departures and arrivals compared to fiscal year 2024 [43] - **Revenue from EAS**: Essential Air Service contracts represent 43% of total revenue, providing recurring government revenues [32] Financial Position - **Capital Structure**: Raised $50 million in a term loan and over $30 million in a registered direct offering to support transformation [48] - **Cost Management**: Streamlined operations by exiting unprofitable routes and addressing deferred maintenance [46] Future Outlook - **Market Positioning**: Positioned at the epicenter of the regional air mobility market with sustainable competitive advantages [53] - **Investment Opportunity**: Unique investment opportunity due to the company's transformation, operational improvements, and market growth potential [52][53]

Core Viewpoint - Horizon Aircraft has achieved a significant technical milestone by successfully completing the full wing transition of its Cavorite X7 eVTOL aircraft, marking it as the first aircraft in the world to do so using a novel fan-in-wing design [1][2]. Company Overview - Horizon Aircraft (NASDAQ: HOVR) is an advanced aerospace engineering company focused on developing one of the world's first hybrid eVTOL aircraft, which aims to operate like a conventional aircraft while providing superior speed, range, and operational utility [4]. - The company intends to complete testing and certification of the Cavorite X7 eVTOL and scale production to meet anticipated demand from regional operators, emergency service providers, and military customers [4]. Technical Achievements - The Cavorite X7 utilizes patented fan-in-wing technology, which simplifies the transition phase of flight, enhancing safety and stability compared to competitors that face challenges in this area [2]. - The aircraft is projected to achieve enroute speeds of up to 250 mph and operational ranges exceeding 500 miles with fuel reserves, positioning it as a potential disruptor in the Regional Air Mobility (RAM) market [2]. Future Plans - Horizon Aircraft is currently constructing a full-scale, piloted technical demonstrator to further validate its innovative approach and technology [2].

Financial Data and Key Metrics Changes - First quarter revenue was $23,500,000, at the high end of the expected range of $21,000,000 to $24,000,000, keeping the company on track to meet the full year expectation of over $100,000,000 in revenue [8][26] - Adjusted EBITDA loss in Q1 was $14,400,000, within the expected range provided in the last earnings release [8][27] - Scheduled service revenue decreased by 23% year over year, primarily due to the elimination of unprofitable routes and a brief interruption of service in January [27] - On-demand service revenue decreased by 25% year over year, driven by lower sales and flight completions [27] Business Line Data and Key Metrics Changes - The Essential Air Service (EAS) Program represents approximately 40% of revenue, with long-term subsidized contracts providing connectivity to underserved domestic markets [21] - The company is focusing on profitability in the on-demand business and has exited several unprofitable charter products [13][27] - The company returned five older aircraft to lessors during Q1, simplifying the fleet to focus on the operationally efficient Cessna Grand Caravan [10] Market Data and Key Metrics Changes - The company operates almost exclusively in the U.S., primarily flying aircraft manufactured domestically, which mitigates the impact of tariffs [4][20] - The current economic environment has benefited the company, particularly with lower fuel costs [22] Company Strategy and Development Direction - The company aims to become a premier regional air mobility platform, focusing on three growth vectors: expansion of air mobility operations, commercial rollout of the regional air mobility software platform, and sale of electrified powertrains for the Cessna Caravan [29] - The company is in late-stage discussions with key partners to advance its electrification initiative [18][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging economic, regulatory, and funding environment but emphasizes proactive management of operations and cost structure [29] - The company expects to achieve positive adjusted EBITDA in airline operations by 2025 [19][28] Other Important Information - The company raised an incremental $5,000,000 in funding subsequent to the end of Q1 [9] - The interline agreement with Japan Airlines allows for expanded access to over 435 million customers [12] Q&A Session Summary Question: Impact of changes to the essential air service budget - Management believes that being a low-cost operator provides a competitive advantage, especially if higher-cost operators face subsidy reductions [33][36] Question: Core versus non-core scheduled and charter flights - Hawaii is identified as a core area, with a focus on profitability and operational efficiency in route selection [37][38] Question: Adding new profitable routes - The company is currently focused on exiting unprofitable routes and plans to enter new tier one routes next year [41] Question: Progress on Surf OS product - The company is integrating feedback from beta users and plans a full commercial rollout of Surf OS in 2026 [44][46] Question: Service interruption details - The service interruption in January was unplanned and related to maintenance issues, which have since been resolved [48] Question: Future partnerships and geographic targets - The company is open to expanding partnerships beyond the U.S., following the successful agreement with Japan Airlines [50]

Financial Data and Key Metrics Changes - Revenues for Q4 2024 reached $28,050,000, exceeding the upper end of guidance [5][22] - Adjusted EBITDA loss improved by $11,500,000 or 63% to $6,900,000 for Q4 2024 [6][22] - Full year revenue rose by $6,500,000 or 6% year over year to $119,400,000 [6][23] - Full year adjusted EBITDA loss improved by $6,800,000 or 13% to $44,100,000 [6][23] Business Line Data and Key Metrics Changes - Scheduled service revenue decreased by 6% due to the elimination of unprofitable routes [22] - On-demand service revenue increased by 58% driven by higher sales and flight completions [22] - Full year on-demand service revenue increased by 28% primarily due to improved charter sales [23] Market Data and Key Metrics Changes - The company has exited several unprofitable routes, focusing on profitable operations [9][24] - The Essential Air Service (EAS) business is expected to benefit from the FAA Reauthorization Act, enhancing competitive positioning [9] Company Strategy and Development Direction - The transformation plan consists of four phases: transformation, optimization, expansion, and acceleration, with the transformation phase completed in 2024 [7][8] - The company aims for profitable airline operations defined as positive adjusted EBITDA for the full year of 2025 [8][20] - The relocation of the operations center to Dallas, Texas is intended to attract talent and reduce costs [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in airline operations for 2025, driven by process improvements and exiting unprofitable routes [20][25] - The company anticipates achieving at least $100,000,000 in revenue and profitability in airline operations for the full year 2025 [26] - Management highlighted strong momentum entering 2025 with a focus on executing the transformation plan and electrification initiatives [33] Other Important Information - A $50,000,000 term loan was secured in November 2024 to support the transformation plan [5][25] - The company has reduced liabilities by over $42,000,000, exceeding the targeted reduction [25] Q&A Session Summary Question: Does a full year continuing resolution being passed by Congress impact when you can receive new contracts or renewals on the essential air service flights? - Management indicated that the DOT has several awards and bids pending, which could positively impact revenue through higher subsidy rates [34][36] Question: Do you plan to shift more of the fleet's airframes over to flying on-demand flights from scheduled air service? - Management clarified that the current fleet is primarily used for scheduled service, with operators servicing most on-demand business [37] Question: Could you provide additional color on the recently announced SurfOS customers and monetization? - Management stated that the offerings are currently in pre-revenue testing with beta customers [41] Question: Should we assume operating costs will be roughly flat in 2025 compared to 2024? - Management confirmed a focus on reducing operating costs to achieve profitability in airline operations [44] Question: Are you comfortable with the balance sheet to execute this plan and initiate growth strategies in 2025 and 2026? - Management expressed intent to be strategic with capital raises to create shareholder value [45] Question: Any early feedback on the SurfOS beta launch? - Management reported positive early feedback from beta customers regarding the unique offerings of SurfOS [50][51] Question: Is there any runway or cadence for addressing the maintenance backlog? - Management indicated that a substantial amount of the maintenance backlog is expected to be resolved in the first quarter [54]

Core Viewpoint - Surf Air Mobility Inc. is positioned for a significant turnaround due to a revamped management team and transformation of its regional air business, with a Buy rating and a price forecast of $12 from H.C. Wainwright analyst Amit Dayal [1][2]. Company Overview - The company has a unique approach to electric aviation, differentiating itself from eVTOLs, and is strategically focused on consolidating technology and services in the regional air travel industry [2]. - Surf Air Mobility is expected to become a leading player in the U.S. regional air mobility (RAM) market, with improving financials that position its aviation segment for profitability by 2025 [2]. Financial Projections - Revenue projections for Surf Air Mobility include $99.7 million in 2025 and $112 million in 2026 [3]. - The company is expected to announce its fourth-quarter results on March 18, 2025 [4]. Strategic Partnerships - A strategic partnership with Palantir Technologies Inc., which holds a 19.9% stake, is anticipated to help bridge the technology gap in the industry [3]. Market Positioning - The company is leading in electrifying conventional take-off and landing aircraft, positioning itself to sustainably meet the growing demand in the RAM market [3].