Surf Air Mobility Inc.

Thank you for standing by. My name is Eric and I will be a conference operator today. At this time, I would like to welcome everyone to the SURF Air Mobility fourth quarter and full year 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Sam Levinson. Please go ahead.

Thank you, operator. Welcome to Surf Air Mobility's fourth quarter 2024 earnings call. I'm joined today by Deanna White, Chief Executive Officer and Chief Operating Officer, and Oliver Reeves, Chief Financial Officer. Our earnings release can be found on the SEC Edgar website and on our Surf Air Mobility investor relations page at investors.surfare.com. During this call, we will discuss our outlook and expectations for future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate, or other similar 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 in our periodic reports following the SEC. During today's call, we will present both GAAP and non-GAAP measures, Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, are included in the earnings release we issued earlier today, posted on the Surfer and Mobility Investor Relations website, and in our findings with the SEC. I'll now turn the call over to Surfer and Mobility's CEO, Deanna White. Deanna?

Thank you, Sam, and thank you to everyone who has joined our call today. I would like to start by saying that I am very pleased with what our team accomplished in the fourth quarter and for the full year of 2024, despite being capital constrained for much of the year. In November of 2024, we successfully raised a $50 million term loan at attractive rates, lowering our cost of capital and positioning us for strong execution of our transformation plan. Turning to our results, Revenues for the fourth quarter exceeded the upper end of our guidance range, coming in at $28.05 million for the period. During the quarter, we continued to focus on the bottom line by capturing efficiencies and driving costs out of our business. As a result, adjusted EBITDA loss improved by $11.5 million, or 63%. to $6.9 million for the fourth quarter of 2024 and within the guidance range of $5 million to $8 million. For the full year, revenue rose $6.5 million or 6% year-over-year to $119.4 million and our adjusted EBITDA loss improved by $6.8 million or 13% to $44.1 million for the full year of 2024. We achieved several other financial accomplishments during 2024, including a substantial improvement in our capital structure through both new financing and reduced liabilities, as well as a reduction in potential delusion from our share subscription agreement. Oliver will share more detail on these significant accomplishments in a few moments. During 2024, we designed and implemented our transformation plan, which is comprised of four phases, transformation, optimization, expansion, and acceleration. During 2024, we completed the transformation phase. In our earnings release issued today, we provide detail on all the milestones achieved in 2024. across each phase of our transformation plan. If you have not yet reviewed the release, I urge you to do so, as well as the videos we have made available on our IR website regarding our transformation plan and our air mobility business. We are intensely focused and currently executing on phase two of the plan, which we call optimization. It is within this phase that we plan for our airline operations to be profitable, defined as positive adjusted EBITDA for the full year of 2025. Through a disciplined data-driven approach to rationalize every route we fly, we're ensuring our entire network consists only of those routes we can profitably scale. As a result, we have exited several unprofitable routes in 2024. These operational savings allow us to focus on driving more revenue and expanding margins on our most successful routes. For our essential air service, or EAS business, which makes up a large portion of our network, we believe we have a major tailwind by incorporating the recent FAA Reauthorization Act into our EIS bidding strategy, which now requires equal weighting of total costs in air carrier proposals. We believe we can create an edge for Surfer's low-cost caravan fleet, which has lower operating costs when compared to jet engine counterparts. The company was recently awarded a renewal in Du Bois, Pennsylvania, that incorporates the updated passenger subsidy economics. We've intensely focused on fleet management, which is expected to have a significant positive impact on the fundamental performance of our airline operations, including completion factor, on-time departures and arrivals, and lower operating costs. Specifically, we have developed a fleet lifecycle management program that better ensures our aircraft are maintained, upgraded, and replaced as needed to meet safety, performance, and financial targets. In the fourth quarter of 2024, we accepted four brand new Cessna Caravan aircraft and deployed them into our operations. These new aircraft enable us to remove older, inefficient, or high operating cost aircraft from our fleet. We disposed of our SAW fleet and replaced the capacity with lower operating cost Cessna caravans. In addition, in Q1 of 2025, we returned five older caravans to their lessor. We optimized our schedule to reflect this reef leading without impact to reliability. We are continually working on the optimization of our in-house maintenance facilities and third-party networks. Improving the reliability of our aircraft keeps assets available for services on a more predictable basis. Within our SURF OS operator tool, we launch direct integrations with CAMP and VIRON software to streamline airline maintenance processes. Finally, we announced the relocation of our operations center to a central location in Dallas, Texas. This relocation will help us attract and retain high-quality aviation talent and reduce costs. For example, we recently announced the appointment of Bob Waltz as VP of Flight Operations and Linda McCaskill as Director of our System Operations Center, or SOC, two executives with extensive aviation experience from their tenure at Southwest, Sun Country, FlexJet, jet suites, and transmedic aviation. Additionally, we are centralizing flight operations and maintenance control functions at our Texas-based SOC, staffed with licensed dispatchers and aircraft mechanics. We are also using the implementation of our transformation plan and relocation of the SOC as a catalyst to redesign our operating procedures to state-of-the-art practices aided by Surf OS tools. For example, we launched a self-service chat feature that assists with flight changes and cancellations, reducing the company's call center traffic by approximately 20%. To streamline our flight operations, we introduced a mobile crew app, which improves pilot workflows and time management, and designed a weight and balance tool in compliance with FAA regulations. Additionally, we created financial and operational business intelligence dashboards, providing real-time operations data for decision-making. We're in the process of recalibrating our on-demand business, and I believe there's a lot of opportunity to optimize and profitably scale this business. We're expanding our client base from short-haul turboprop charters into midsize and heavy jet aircraft types, and expect revenues per trip to increase and margins to expand as our mix shifts. In 2025, we exited several charter products to focus on profitability rather than near-term market penetration. We realigned our salary and commission structures to reduce both fixed and variable costs. We are currently rebranding our most profitable membership program into an industry-standard, easily marketable product, the Surf On-Demand Jet Card. To accelerate achieving profitability in the on-demand business, we are moving to secure inventory with volume purchase agreements, and we are working to further rationalize our cost structure. We will continue to invest in the differentiated customer experience that SURF Air has been known for. We completed the incorporation of the SURF OS broker module, laying the foundation to optimally recalibrate the business, which allowed us to reduce the on-demand sales team by 50%. We launched direct integrations with charter supply partners, including Fly Easy and Avanos, which allowed for improved real-time pricing and aircraft availability. We launched Surfer on-demand sales and sourcing toolkit, including quote generation, pricing, and automated payment options. We will continue to expand the number of operators we work with in order to form relationships with as many high-quality partners as possible. In the first quarter of 2025, we began rolling out Surf OS to six data users, and for certain users, We designed their white label apps and front-end websites to improve direct-to-consumer distribution. Once we've achieved scalable economics in our on-demand business, we'll return to executing on growth through bringing even more operators onto the platform and expanding into new U.S. and international markets. As you can see, the proprietary software we're developing with Palantir has rapidly begun to impact every part of our business. SurfOS is an all-in-one AI-enhanced software platform designed to support the growth and operations of the regional air mobility industry. As the first users of SurfOS, we're gaining an intimate understanding of what solutions are necessary to advance the emergence of regional air mobility. Our expertise and scale as one of the largest commuter airlines, positions us to identify and address the most pressing needs for operators like us, as well as brokers, charter operators, and aircraft owners. With every new feature and tool we successfully roll out, we expect the efficiency and productivity gains from SURF OS to positively impact our top and bottom line. SRF-OS applies leverage to our commercial initiatives by streamlining our sales, sourcing, and distribution. Revenue management features such as dynamic pricing, predictive demand, and flight distribution are key to maximizing revenue. Additionally, the software improves critical functions of the airline operation, such as crew scheduling, maintenance, and resource planning. ensuring that planes, pilots, and airport staff are exactly where they need to be when they need to be there. In 2025, we established multilingual and multi-currency marketplace capabilities within Surf OS. Moreover, Surf OS is being built to expand the concept of connected aircraft, a physical bridge between the aircraft and the software that will allow for near real-time insight into airplane health, maintenance needs, pilot performance, and flight tracking. Now let me take a moment to discuss our electrification initiatives. The company's electrification project spans multiple years. During 2024, we engaged with the FAA on certification planning for our Cessna Caravan Supplemental Type Certificate. or STC, which remains on track for completion in 2027. We finalized the selection of key suppliers and completed major system architecture and integration for electric and hybrid powertrains, including proprietary system performance modeling tools and battery cell testing protocols to optimize performance and cost. We established a Cessna Electrification Customer Advisory Board comprised of representatives from Textron Aviation and key electrification customers from four continents. The Customer Advisory Board's purpose is to facilitate the sharing of use cases and data that will guide the setting of requirements for the electrification program. In addition, we also signed MOUs with seven customers to upgrade approximately 100 Cessna Caravan aircraft once the STC is approved. We entered into a bilateral agreement with ElectroAero to bring Eastall to market, incorporate Surfer technology into joint systems, and create a leasing partnership. The agreement with ElectroAero illustrates the company's ambition to leverage its platform to support through direct-to-consumer distribution, to scale through its flight network, and to accelerate with SURF-OS tools the sales trajectory of third-party electrified aircraft. Let me now turn back to what you should expect to see from SURF Air Mobility during 2025. We are entering 2025 from a position of strength, and we expect to achieve explicit goals. we will achieve profitability in our airline operations for the year, driven by further process improvements, exiting unprofitable routes, terminating leases on aging aircraft, improving route completion factors, retooling our on-demand business, and capturing efficiencies driven by SERP OS. Second, we will continue the development and rollout of our SurfOS operating system platform to beta users over the course of the year, in advance of the planned commercial rollout in 2026. Finally, we will continue to strengthen our investor engagement, and you will begin seeing our team participate in bank-sponsored conferences and non-deal roadshows. We are entering 2025 with a strengthened balance sheet, strong operating momentum, a broader and deeper operational team, state of the art technology tools, and an unwavering commitment to improve operations and profitability in our airline operations. It's an exciting year ahead for us, and we look forward to keeping you apprised of our progress. With that, Let me now turn the call over to Oliver to discuss our results and outlook in a little more detail. Oliver?