Surf Air (URF, Santa Monica) parent Surf Air Mobility Inc (SAM) is confident it will achieve its financial targets this year following its recent merger with US commuter carrier Southern Airways Express (9X, Memphis International) and listing on the New York Stock Exchange.

"We believe our vision for electrified powertrains will unlock additional revenue growth opportunities, including recurring revenue channels, reduce direct operating costs, and further drive profitability over time. We are confident that the combination of our mid-term targets, network expansion plans, and Aircraft as a Service (ACaaS) offering on traditional and future electric engines will drive revenue growth and profitability and that we have a clear path to achieve our financial targets this year and beyond," said SAM Chief Financial Officer Deanna White.

She responded to a query from ch-aviation about a continued "going concern" risk warning in a prospectus filed on September 19, 2023, with the US Securities Exchange Commission (SEC). The wording, ch-aviation was told, reflected previous SEC S-1 registration forms and had not been updated for several reasons, mainly because the merged companies had not yet announced full combined financials for a quarter.

Surf Air is a virtual regional carrier providing scheduled routes and on-demand charter flights operated by third parties under Part 135. It intends to develop electric powertrain technology with commercial partners to electrify existing fleets, starting with hybrid-electric and fully electric variants of the Cessna (twin turboprop) 208B Grand Caravan EX. SAM merged with Southern immediately before announcing its listing on the NYSE on July 27, 2023.

In its latest filing, SAM announced it has registered for resale on the NYSE 1,983,333 shares of some of its stockholders. SAM will not receive any proceeds from the sale of shares by the stockholders, which include:

  • up to 635,000 shares issued to Tuscan;
  • up to 1,333,333 shares issued in connection with a convertible note purchase agreement; and
  • up to 15,000 shares that were issued to certain advisors.

On September 18, SAM announced that its co-founder, Sudhin Shahani, and chairman, Carl Albert, had purchased 140,145 shares and 75,585 shares, respectively, in an open market transaction, reaffirming their commitment to the company.

A day later, the company registered up to 25 million shares to be placed in an escrow account and only to be drawn as needed. The move relates to a previously disclosed share subscription agreement with Luxembourg-based investment fund Gem Global Yield LLC SCS (GGY).

Under the agreement, SAM has the option to direct GGY to purchase a maximum of USD400 million worth of its common stock over a specified period, with an initial advance of USD7.5 million and the possibility of requesting additional advances of up to USD25 million, up to a total of USD100 million. Each advance reduces the available amount for future drawdowns.

SAM plans to use the registered shares to request advances under the share subscription agreement and meet other obligations related to shares previously issued to GGY. Any unused registered shares will remain available for future advances aligned with the company's long-term business growth.

Before the merger with Southern, SAM had incurred net losses of USD65.1 million and USD29.4 million for the six months ended June 30, 2,023 and 2022, respectively, and USD74.4 million and USD35.8 million for the years ended December 31, 2,022 and 2021, respectively.

Similarly, ahead of the merger, Southern said it incurred greater than expected operating losses and negative cash flows from operating activities during the second quarter of 2023 due to inefficient aircraft utilisation, primarily caused by an under-utilisation of pilots, a shortage of maintenance staff, and critical aircraft components, which challenged its ability to cover expenses.