Thank you for standing by. My name is Eric and I will be your 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 1 on your telephone keypad. If you would like to withdraw your question, press star 1 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.surfair.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 follow 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 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 dilution 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 EAS bidding strategy, which now requires equal weighting of total cost in air carrier proposals. We believe we can create an edge for Surfare'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 SOB 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 network. 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, JetSuite, and Transmedic Aviation. Additionally, we are centralizing flight operations and maintenance control function 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 revenue 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-person agreements, and we are working to further rationalize our cost structure. We will continue to invest in the differentiated customer experience that Surfare 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 FlyEasy and Avanode, 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 beta 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 propriety 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 in scale, as one of the largest commuter airlines, positioned 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 SurfOS to positively impact our top and bottom line. SurfOS 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, SurfOS 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 Electra Aero to bring e-stall to market, incorporate surf air technology into joint systems, and create a leasing partnership. The agreement with ElectroAero illustrates the company's ambitions to leverage its platform to support through direct-to-consumer distribution, to scale through its flight network, and to accelerate with SurfOS 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. First, 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 SurfOS. 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 improved 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?

Thank you, Deanna, and good afternoon, everyone. Let me begin with a brief review of our fourth quarter and four-year results before touching on our Q1 and four-year outlook. For the fourth quarter of 2024, revenue rose 5% to $28.05 million, exceeding the high end of our revenue guidance of $25 to $28 million. Scheduled service revenue decreased by 4%, primarily driven by the elimination of unprofitable routes. On-demand service revenue increased by 39% over the comparable period, driven by a mix of higher sales and flight completions. Fourth quarter adjusted EBITDA loss improved by 11.5 million, or 63% to 6.9 million, within the guidance range of 5 to 8 million, as we continue to aggressively manage costs and prioritize our shift to profitability in our airline operations over top-line growth. For the four-year, revenue rose 6% to $119.4 million as compared with pro forma revenue of $112.9 million in 2023, which assumes that sudden airways have been acquired as of the beginning of 2023. Scheduled service revenue was flat with the prior year. Eliminated unprofitable routes were offset by the addition of subsidized route revenue for Williamsport, Purdue, and Lanai. On-demand service revenue increased by 28% over the comparable period, which was primarily the result of improved charter sales and increases in completed departures. Four-year adjusted EBITDA loss of $44.1 million improved by $6.8 million, or 13%, versus the prior year on a pro forma basis. As Deanna mentioned, our new and expanded management team is moving aggressively to execute our transformation plan, and we are working diligently to optimize our business including rolling out surf os across both our scheduled and our on-demand operations to drive efficiencies exiting unprofitable routes changing pilot and station staffing and compensation practices centralizing our airline operations in dallas and finally returning aging and non-caravan aircraft to lessors as the results of 2024 demonstrate we are already gaining traction in our efforts to bring the airline operations profitable in 2025. Let me now take a moment to recap developments with respect to our balance sheet and liquidity since the end of the third quarter. In November 2024, we secured a $50 million term loan with Combest Partners to accelerate our transformation and put us on a path to profitability. We continue to anticipate that the successful implementation of our transformation plan and a separate capitalization of our software and electrification initiatives will result in a company business plan that is profitable and more efficiently capitalized. Further, during the fourth quarter, we also extended the maturity of all of our other secured debt to December 31st, 2028, and we reduced liabilities by over 42 million, exceeding the targeted reduction of over 50% of $70 million of past liabilities. We have entered 2025 having addressed near-term liquidity constraints and lowered our cost of capital. As the efficiencies we are driving in our airline operations take hold, we expect to achieve profitability in that portion of our business and to substantially improve cash flows in 2025. Which brings me to our first quarter and four-year outlook. For the first quarter, we are guiding to revenue of 21 to 24 million and adjusted EBITDA loss in the range of 12 to 15 million. As noted in our press release, these estimates consider the exiting of unprofitable scheduled routes, increased focus on profitability in the on-demand business, and the deployment of capital raised in November towards clearing the aircraft maintenance backlog, as well as addressing certain interior and corrosion items which impacted aircraft availability during the quarter. As the year unfolds, we expect to see positive impacts of the transformation initiatives that Diana discussed reflected in our financial results. As noted in today's press release, we are reiterating our expectations of achieving at least $100 million in revenue, as well as achieving profitability in our airline operations for the full year of 2025. Our word to complete the Surfer technology ventures with Palantir and collaborate with industry partners on our electrification initiative continues. As previously disclosed, it is our intent to separately capitalize those ventures. Until those ventures are formed, however, we will continue funding these initiatives for which we expect to record certain expenses during the year. As always, we will keep you apprised of those developments as they unfold. Before I turn this call back to Diana, allow me to remind you of the strategic differentiators which form our competitive advantage in the regional air mobility market. Scale. We are one of the largest commuter airlines in the US by scheduled departures. Experience. We have over a decade of experience operating in the highly regulated aviation industry and we have flown millions of passengers millions of miles. Depth. We have deep and unique ties across the industry with exclusive relationship with Textron Aviation, manufacturer of the Cessna Caravan aircraft that we operate, and with Palantir, a global leader in AI, enterprise data analytics and business intelligence that we have partnered with to power the SurfOS operating system for regional airmobility. Reach. We have expansive reach and relationships with over 400 regional air operators who have provided charter flights to us and will form the initial customer base of our SurfOS platform. In addition, we have interline agreements with United, American, Alaska and Hawaiian Airlines that extend our reach to over 430 million of their customers. Technology. We are developing AI-enabled software in partnership with Palantir to drive our growth and profitability and, in the future do so for hundreds of brokers, charter operators, and aircraft owners. Execution. We have brought together leaders and experts in aviation, software, and electrification to synergistically execute our vision, drive profitable growth over time, and create shareholder value. Now let me turn the call back to Deanna for some brief closing thoughts before we take

your questions. Thank you, Oliver. The results from 2024 demonstrate that we are already achieving significant progress in our newly implemented transformation plan. The operational achievements during 2024, despite our significant financial constraints, clearly demonstrate the commitment and capabilities of the Surf Air Mobility Team. We have resolved our near-term liquidity needs. We are deploying capital where we know we can get the greatest return. We have and will continue to recruit some of the best professionals in the aviation industry, and we will make our airline operations profitable this year. In addition, we are gaining excellent traction on our SurfOS initiative with Palantir. Having already rolled out the platform to beta users in the first quarter of 2025, SurfOS has the potential to completely transform the regional air mobility sector, increasing revenues and driving efficiencies, not only for us, but also for brokers, charter operators, and aircraft owners. Finally, we also have made significant progress on our electrification initiatives. Summing this all up, we have three clear drivers of shareholder value. In 2025, we have the catalyst of profitability in our airline operations. In 2026, we will commercialize the SurfOS platform and expand our regional network. And in 2027, we expect to receive certification for the electrified powertrain on Cessna Caravan Aircraft. We have strong momentum coming into 2025 and exceptional opportunities before us that we are laser focused on executing against. With that, we would be pleased to take your questions. Operator?

at this time i would like to remind everyone in order to ask a question press star then the number one on your telephone keypad your first question comes from the line of austin moeller with can

accord genuity please go ahead hi good afternoon uh just my first question here does a full year continuing resolution being passed by congress impact when you can receive new contracts or renewals on the essential air service flights?

Deanna White, thank you for your question. Right now, the DOT has a number of awards and bids that are sitting on their desk and they have yet to act upon. There are a few that do affect routes in which we operate today. And in those cases, we have received notices from the DOT to hold us in or continue the service there past the expiration date and a new carrier potentially stepping into our place. So, it is done route by route. So, it's not a blanket specific, but we have had some held in 90 days, four months. So, we're already starting to experience that. We are able to run those routes when we do get held in at the higher subsidy rates that the FAA Reauthorization Act allows. So that is a potential upside on our revenue. Okay. And given the strong revenue

growth on the higher mix from the on-demand service, and you had mentioned that you're offering a jet card, do you plan to shift more of the fleet's airframes over to flying on-demand flights from scheduled air service or do you expect the mix to be more even no we currently

use our ensuite or a free on our certificate to mainly buy our scheduled service both in the eas program and in unsubsidized um situations we use operators to service most of our on-demand business and as we've talked about before we have roughly 400 operators that we work with on our on-demand platform to service those trips great thanks for the insights sir the next

question comes from the line of amit dayal with hc wainwright please go ahead thank you and good

afternoon everyone i'm good to see all the progress um and you know some of these results um in the financials. With respect to the recently announced SurfOS customers, could you maybe give us some additional color on what specific offerings you're providing to those customers and whether they will be monetized in 2025 or is this still sort of a pre-revenue type arrangement?

So thank you, Amit, for that question. I'll turn it over to student Shahani, who's with me,

to discuss that. Thank you, Deanna. And hi, Amit. Thank you for your question. So to answer, the areas which these customers now have are our broker OS platform and our operator OS platform. Both of those are things that we've been testing internally. We're now testing with these customers they're beta customers they've been involved kind of as we have done product development

around these areas they're currently pre-revenue okay um and you know again sort of adjacent to this the jv's for the electrification opportunity are these potentially 2025 milestones or maybe a

little further out as you said you know we've announced that we're actively engaging we've mentioned we're actively engaging with various potential jv opportunities in the supply chain to make the electrification program more efficient. As that we're still in pretty deep discussions there. We haven't yet, we haven't made any final decisions yet. And, you know, we will announce to the market as soon as we have. Okay.

From an operating cost perspective, should we assume operating costs are going to be roughly flat in 2025 to 2024? Or do you potentially, in research, you know, cost savings coming into play, you know, with the turnaround efforts underway right now?

Hi, Amit. Nice to talk to you again. I don't know if student wanted to answer some of that. You know, as you know, we have a very keen focus on reducing costs wherever we can. Diane has done a fantastic job of doing as much as is possible in the time that she's had to reduce operating costs. Going forward, as we've said, the focus, the laser focus that we have is on getting our airline profitable, as we've defined as positive adjusted even data for 2025. And so you can assume that those costs, the airline operations are going to go down to allow

that to happen. Understood. Just last one for me, with respect to liquidity, you know, Are you comfortable with, you know, the balance sheet to execute this plan and maybe even, you know, initiate any growth, you know, strategies in 2025 and maybe 2026?

I think, Ahmed, as we talked about a lot, you know, we intend to be strategic with our capital raises. We see a lot of opportunities that we would generate high returns on invested capital. And so to the extent that we do think about liquidity and raising capital, we would do so with the knowledge that we'd be creating shareholder value. So we would only do so with that in mind, and we tend to be very strategic when we think through that. Understood.

That's all I have, guys. Thank you so much for taking my questions.

Your next question comes from the line of Dave Storms with Stonegate. Please go ahead.

Good afternoon, and thank you for taking my questions. I wanted to start by circling back to the CirqOS beta launch. If there was any early feedback there now that that's in the field, maybe if there's any next milestones that we should keep an eye out for as you get closer to that.

Zudin, do you want to go ahead and take that?

Yeah, absolutely. So, look, I would say, I mean, big picture, it's early today yet. there's, as I mentioned, there's been feedback from the beta customers through kind of the development process. And this was something that we tested first ourselves and shared with beta customers. But as you may have seen, even in a, in kind of a recent press release, one of the things that we're seeing a lot of positive feedback on from the early customers are that we're actually building things that they didn't have before. Specifically, we're building something that allows operators to go direct to consumer, which is, which, you know, has been very well received and you know they're starting to see early results from it's too early to sort of share you know meaningful results given the time frame that they've been using it but early feedback has been that it's product that's valuable for them and is unique for them i'd like to additionally add

that internally as we're developing the software with palantir and using it ourselves a lot of the new talent that i brought in um is participating in that development process and has commented that these tools are more advanced and things that they've seen at their other places they've worked and are real excited about being part of developing them. So therefore, even though they're not, they're internal, they're also commenting on like the pilot crew app that we've done that allows for workflow and time management that we've rolled out. The crew when the pilots haven't seen anything like that before. And also, the weight and balance application that we developed is pretty great as far as efficiency and productivity to do a pre-flight requirement that takes a lot of time.

And I would also add to that that we've actually seen the metrics that we've seen internally, like reducing our on-demand sales team by approximately 50% and our call center volume by approximately 20%.

Understood. That's all very helpful. Thank you. And then my second question, maybe more of a modeling question. You know, you've made clear that the focus is on getting the airline business profitable. Part of that is working through the maintenance backlog. Is there any runway or cadence of going through that backlog that you're willing or able to share with us?

Okay. So, Dave, good to talk to you. I think that what you can assume is, as you can see, in the first quarter with our EBITDA guidance, that assumes that we have resolved a pretty substantial amount of the maintenance backlog in that first quarter. I think that you will see some continuation of that, but it should reduce from here.

So more weighted towards the first half. Thank you for taking my questions and good luck in Q1.

Thank you.

I will now turn the call back over to Deanna White for closing remarks. Please go ahead.

I just wanted to end with thanking everyone for joining. I appreciate all of your questions. I appreciate all of your interest in our company. And look forward to future earnings calls where we're able to demonstrate that we can clearly execute on the transformation plan the transformation phases that we're doing the optimization that we're doing this year and also all the drives we're making on our search os and our electrification initiatives so once again thank you all for for joining

ladies and gentlemen that concludes today's call thank you all for joining and you may now disconnect