Surf Air Mobility (US:SRFM)2025-05-13 22:02Financial 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]