Surf Air Mobility Reports Progress on Transformation Plan with Improved Operations and Capital Structure

Stonegate Capital Partners has updated its coverage on Surf Air Mobility Inc. (NYSE: SRFM) following the company's third quarter 2025 performance. SRFM reported revenue of $29.2 million with adjusted EBITDA of negative $9.9 million and adjusted EPS of negative $0.64. These results reflect continued progress on the company's Transformation Plan, driven by improved airline operations that have enhanced operational reliability through a strengthened systems operations center and more experienced aviation team.

The company made significant capital structure improvements subsequent to the quarter, refinancing higher-cost debt and reducing annual cash interest expenses. These capital actions, combined with operating improvements, position SRFM with a more sustainable capital structure and clearer path toward scale. According to Stonegate Capital Partners, the company is now better positioned to begin Phase 3 of its transformation plan, which is expected to commence in fiscal year 2026.

In air mobility operations, the company delivered another quarter of operational and commercial gains with revenue increasing modestly year-over-year and sequentially. Strong growth in On Demand services more than offset planned reductions in unprofitable scheduled flying. On Demand benefited from higher utilization, a shift toward larger-cabin aircraft, and increased international activity, while Scheduled Service saw a measured pullback as management prioritized routes with attractive unit economics. Airline operations remained profitable on an adjusted EBITDA basis, supported by higher on-time departure and arrival rates and better controllable completion factors.

The company continues to advance SurfOS, its cloud-based operating system built on Palantir's Foundry platform. During the third quarter, SRFM expanded internal deployment of SurfOS, rolling out aircraft and crew scheduling tools across key regions and enhancing the Crew App with capabilities that improve safety, maintenance visibility, and productivity. External beta usage broadened to a growing set of brokers and operators, supported by additional letters of intent that expand the future customer pipeline and validate product-market fit. A five-year agreement with Palantir further reinforces software as a core strategic pillar for the company.

SRFM remains committed to its electric powertrain program for the Cessna Grand Caravan, with management reiterating a 2027 FAA STC target for the electrified propulsion system. The company continues to evaluate partnership and joint venture structures that can share development risk while preserving upside, leveraging its scale as a leading Caravan operator and its exclusive agreement with Textron Aviation.

For the fourth quarter of 2025, the company expects revenue in the range of $25.5 million to $27.5 million and an adjusted EBITDA loss of $8.0 million to $6.5 million, reflecting the impact of exiting unprofitable scheduled routes and continued mix shift toward higher-value On Demand flying. Management continues to anticipate full-year profitability in airline operations on an adjusted EBITDA basis, supported by operational improvements. Stonegate Capital Partners' valuation analysis uses an EV/Revenue framework, with SRFM currently trading at a fiscal year 2026 EV/Revenue of 1.9x compared to comparable companies at a median of 4.1x, arriving at a valuation range of $6.11 to $7.99 with a midpoint of $7.05.