Surf Air Mobility Inc.

Good afternoon and welcome to Surf Air Mobility's third quarter 2023 earnings call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Bill Margaritas, Head of Investor Relations and Communications. Thank you. Please go ahead.

Thank you, Operator. Welcome to Surfer Mobility's third quarter 2023 earnings call. I'm joined today by Stan Little, Surfer's CEO, Deanna White, our CFO, David Anderman, our Chief Legal Officer, and Sudhir Shahani, our co-founder. We released our Q3 2023 results this afternoon, which are available in filings with the SEC and on Surfer's investor page at investors.surfer.com. I'd like to remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate, or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC. During today's call, we will also discuss both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP financial measures, including a reconciliation of GAAP to non-GAAP financial measures, are included in the earnings release we issued today, which has been posted on the Investor Relations page of Surfer Mobility's website and in our filings with the SEC. With that, I'll turn it over to Stan.

Thank you for joining us today for our first earnings call as a public company. We are pleased with our performance this quarter and we're on track to meet both our top line revenue and pro forma adjusted EBITDA guidance for 2023, despite a challenging backdrop for both our industry and the macro economy. Before we take a deeper look into our quarter, I'd like to share the three core drivers of our business model. First, We plan on expanding our air mobility network to maintain SurFair's leadership position in our scheduled airline business and our on-demand charter business. Second, we will enable independent owner-operators to join our platform and grow our off-fleet products. Core to that effort is continued investment in our software platform. I want to draw particular attention to our partnership with Palantir which will allow us to develop state-of-the-art AI software for operators. Third, we continue to work on the long-term goal of implementing electrified aircraft across our network. We're developing proprietary powertrain technology, which will drive this evolution, lowering operating costs and driving growth for the whole regional air mobility market. In the third quarter, we made meaningful progress toward these goals. Number one, we completed our public listing on the New York Stock Exchange, which allowed us to close our acquisition of Southern Airways and to solidify our contractual agreements with strategic partners Textron Aviation, Jetstream Aviation Capital, and Gem Global Yield. Two, we confirmed our order and paid the deposit with Textron on our contract for the purchase of 100 Cessna Grand Caravan EX aircraft. We're excited about the scheduled delivery of the first of these planes starting in April. As you probably know, unprecedented supply chain and vendor delay issues are impacting the industry right now, us included. We've taken several substantial steps this quarter toward mitigating these issues, including the purchase of multiple spare engines and the sourcing of critical parts from new suppliers. Ultimately, the delivery of the new Textron planes is the final fix, But until then, we do expect these actions to restore the majority of our out-of-service aircraft to revenue generation prior to the year end. In our core air mobility service, our off-fleet products, including our on-demand products, represented the fastest growing part of our business in the third quarter, with a year-over-year increase of 63%. Number four, we made significant progress on the build-out of our electrification business. From a certification perspective, we finalized our data license agreement with Textron Aviation, which will significantly de-risk our timeline. Along with our lead partner Aerotech, we're advancing our engineering and design specs and preparing to move into the next stage of development. From a commercial perspective, we finalized our exclusive sales and marketing agreement with Textron. We believe this agreement will create a viable channel to establish significant market share with our electrified powertrains across the global caravan fleet, both for new and used caravans. As part of our diversification plan to create a broader portfolio of new aircraft in our network, we forged a partnership with Regent, a company pioneering all-electric seaglider airships. Not only have we been named their launch customer in Hawaii, But we've also partnered to establish a base of operations for passenger service in South Florida, the Bahamas, and the Caribbean. And number five, we also restructured our funding facility with GEM with new terms that provide us more flexibility in how and when we take draws. This arrangement gives us ongoing access to up to $400 million of capital to help fund our growth plan. Taken together, we believe these accomplishments are a solid foundation for advancing our strategic roadmap, both near and long term. Given that this is our first earnings call, I would like to take the opportunity now to give a high-level overview of the Surf Air Mobility story for those of you who may not know us well. Our mission is crystal clear. Surf Air Mobility will transform regional flying through electrification. We firmly believe that electric airplanes will unlock a new mass transit solution. According to recent NASA and McKinsey research reports, technological advancements, coupled with increased consumer demand for low-cost and ecologically friendly short-haul travel, presents a $10 billion addressable market in the U.S. and a $100 billion market globally. The vast majority of airports today do not offer commercial service. And 70% of air travel goes through only 30 airports across the U.S. Over the next decade, the expansion of air service to the approximately 5,000 underutilized public airports in America, combined with changing consumer preferences for new alternatives to congested highways, will help drive this paradigm shift in mass transit. You might ask, why aren't the big airlines pursuing this opportunity? The answer is simple. They've migrated their fleets to larger planes and moved most of their routes to large urban airports with longer flying ranges. This creates a significant opportunity for Surfer Mobility to serve the 100 to 400 mile trip flyers with a more affordable, convenient, and ecologically friendly solution. We plan on being the first company to bring electrified aircraft to market at scale. because we've identified the most expeditious path for obtaining FAA certification of electric aircraft. This starts with our decision to modify the Cessna Grand Caravan with a new powertrain. This pathway can shave years off the FAA review and approval process as compared to a newly designed airframe, which is what our competitors are pursuing. The Caravan is a tried-and-true plane with a large install base around the world. trusted by millions, including airlines, charter companies, other commercial users, and militaries. Our business model provides a unique competitive advantage to capitalize on this opportunity. We are the largest commuter airline in the U.S., and we have a quick path to market for electrification. We have the most practical electrification solution with our partner, Textron Aviation, the largest airplane manufacturer in general aviation. This relationship also provides us with an exclusive sales and marketing agreement for Textron to distribute our electric powertrains everywhere they sell caravans today. Unlike our competitors in the electrification space, our strategy will enable us to quickly deploy new electrified aircraft into our already established network to grow market share and sustain our market leadership position in commuter air. Today, Surf Air Mobility is a combination of our consumer-facing travel brand, Surf Air, Southern Airways, and Mogilele Airlines. The company has 750 combined employees. We fly 500,000 passengers on 75,000 flights and generate over $100 million in annual revenue. Our revenue is derived from three sources. Our regional air mobility network, providing scheduled passenger service, our government contracted services, otherwise known as EAS routes, and our on-demand service, which has access to over 200 independent operators to fly our customers. It's worth noting that the biggest constraints on revenue growth at this point are the challenges in the supply chain to maintain our fleets and procure new aircraft. That's why our exclusive agreement with Textron which includes preferred order status for new caravans, is such a valuable asset to us. As I mentioned earlier, we expect the first 11 caravans from Textron to be delivered over the course of 2024. Some of these will replace older planes in our fleet to improve service reliability and lower operating costs, while others will be deployed to new routes. Beyond 2024, our agreement includes the delivery of at least 20 new caravans each year. Another major driver of our growth is the expansion of our off-fleet products. We currently have working relationships with 200 operators across the country, giving us an inside track for future product placement of our software, hardware, and leasing products. Our plan is to create long-term recurring revenue contracts with these operators, helping them to finance their aircraft and providing them with modern software tools to run their businesses. Our partner, Palantir, a leading provider of AI systems, is collaborating closely with us to develop our aircraft as a service software suite. These software tools will give the operator improved productivity and efficiencies with predictive modeling capabilities personalized customer features, and route optimization. As I mentioned previously, in the long run, we expect electrification to become a significant tailwind to overall industry growth over time. I already touched on the importance of our relationship with Textron and how it lends to these efforts, but I also wanted to highlight another key relationship that is critical to our certification process. Aerotech is a leader in the aerospace engineering certification space. Their team of 250 engineers and certification specialists have enormous experience in electric and other leading-edge propulsion technologies, especially in getting new aircraft technology through the FAA certification process. And they have already performed the world's first and only electric caravan test flight. In closing, I want to express a special thanks to our most important partners, all our team members across Southern, Mochilele, and Surfer. Without their grit, determination, and tireless dedication, none of this would be possible. I am truly grateful for their commitment and dedication to providing exceptional customer experiences. Let me now turn it over to you, Deanna, for a look into the financials and operations.