SRFM

Surf Air Mobility Announces Plan to Form New Venture, Surf Air Technologies LLC, and Enters Agreement with Palantir Technologies Inc. to Power Operating System for the Advanced Air Mobility Industry

SRFM generated ~$60.5 million in revenue in 2023 and has an exclusive relationship agreement with American general aviation manufacturer, Textron Aviation (NYSE: TXT)

SRFM was the largest commuter airline in the US by scheduled departures, flying over 450,000 passengers on ~75,000 flights to 48 destinations in the US in 2022

READ THE LATEST STAT SHEET HERE

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Hello Everyone,

We have SRFM back on our radar for tomorrow’s session.

This is one that we profiled back in January when we saw it run double digits on the day we had you watch it.

Surf Air Mobility is a Los Angeles-based regional air mobility platform expanding the category of regional air travel to transform flying through the power of electrification. In an effort to substantially reduce the cost and environmental impact of flying and as the owner of the largest commuter airline in the US, Surf Air Mobility intends to develop powertrain technology with its commercial partners to electrify existing fleets and bring electrified aircraft to market at scale. The management team has deep experience and expertise across aviation, electrification, and consumer technology.

A lot has happened with the company since the last time we put it in front of you.

Just today the company came out with massive news regarding an agrement with AI giant Palantir.

This news was well received on the street, shooting it up all the way to .42 on well above average interest.

It has pulled back a bit off of the highs, giving investors another shot at looking at this one with this massive news still in play.

Earlier this morning Surf Air Mobility filed an 8-K that outlined plans to form a new venture, Surf Air Technologies LLC, and an agreement with Palantir Technologies, Inc. Pursuant to the Agreement, Surf Air Mobility will establish Surf Air Technologies LLC, a subsidiary of Surf Air Mobility to develop, market, sell, maintain, and support an artificial intelligence-powered software platform for the advanced air mobility industry, which will be powered by Palantir, to provide operators of all types of aircraft, amongst other software products and solutions, with systems for the management of planes, airline operations, and customer facing applications.

Palantir logo (PRNewsfoto/Palantir Technologies)

Surf Air Mobility will contribute its software, intellectual property, and operational data, along with its development team, to support the creation and operation of the new AI-powered platform, SurfOS. Palantir, in turn, will provide implementation engineering services through its platforms, including Foundry and AIP.

Surf Air Technologies LLC will also seek not less than $5 million in initial funding from third-party investors, sourced by both Surf Air Mobility and Palantir. The transactions under the JV Agreement are anticipated to close by November 30, 2024, pending several conditions: the formal establishment of Surf Air Technologies as a Delaware LLC, the signing of its operating agreement, contributions from both parties, securing outside capital, and internal approvals from both companies.

Under the terms of the agreement, Surf Air Mobility will have the right to designate four of the five members on the board of Surf Air Technologies, including the Chair, legal representative, and General Manager, while Palantir will appoint one board member. The agreement also provides both companies with strategic rights, including pre-emptive rights on capital increases, first refusal rights on equity transfers, and options for equity exchanges in various scenarios.

This agreement with Palantir is a significant move for Surf Air Mobility, potentially setting the stage for a major disruption in the advanced air mobility sector. Since their collaboration began in 2021, SRFM has been focused on creating a cutting-edge solution to address the fragmented and outdated software currently available to regional air operators. With the development of SurfOS, the two companies are poised to deliver a comprehensive, AI-powered platform that could revolutionize regional air operations.

Given Palantir’s stellar reputation and the strategic importance of this collaboration, the potential impact on Surf Air Mobility is enormous.

Surf Air Mobility’s release of Q2 2024 financial results, scheduled for Wednesday after the market close, will be closely watched, especially in the wake of this major announcement.

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Read the Full Release From Tuesday Here:

Surf Air Mobility Announces Plan to Form New Venture, Surf Air Technologies LLC, and Enters Agreement with Palantir Technologies Inc. to Power Operating System for the Advanced Air Mobility Industry

The companies have been working together since 2021 deploying operator software used by Surf Air Mobility. Surf Air will leverage Palantir’s AIP to build a unique and transformative set of software tools for regional air operators and electrified aircraft OEMs.

LOS ANGELES–(BUSINESS WIRE)– Surf Air Mobility (NYSE: SRFM) (“Surf Air Mobility”, “Surf Air”), a leading regional air mobility platform, has announced that it intends to form Surf Air Technologies LLC (“Surf Air Technologies”), a new venture that will develop, market, and sell AI-powered software tools to create a category-defining operating system for the advanced air mobility industry. Surf Air Technologies’ core platform, “SurfOS”, will be powered by Palantir Technologies (NYSE: PLTR) (“Palantir”), a global leader in artificial intelligence, enterprise data analytics, and business intelligence.

Surf Air Technologies intends to sell and deploy software tools across the market consisting of thousands of Part 135 regional air operators (small aircrafts limited to under 30 seats with a 7,500 pound maximum payload), of which Surf Air Mobility’s Southern Airways subsidiary is the largest by scheduled departures. Palantir and Surf Air will engage their enterprise teams to make this technology broadly available.

Surf Air Technologies will build on the successful work Palantir and Surf Air began in 2021, in which the companies have been deploying software and analytics tools for use across Surf Air’s three air travel brands. The tools the companies have developed to date have focused on the most important needs for Part 135 operators and includes crew scheduling, business intelligence, distribution and pricing. Surf Air has already seen improvements to its own operations and business across these categories. For instance, since the start of our partnership, by leveraging deeper insights into customer behavior, preferences, and travel patterns, Surf Air has seen an approximate 25% increase in revenue per trip1 within its On Demand charter division. This work with Palantir has laid the foundation for Surf Air’s platform to be able to host and provide the tools for multiple brands beyond just Surf Air.

Surf Air will be the first customer and consumer for SurfOS, and it plans to use these tools to enhance deployment and utilization of its own electrified aircraft, once certified.

Surf Air is considering bringing in outside investors to capitalize the Surf Air Technologies venture.

“SurfOS powered by Palantir’s Foundry and AI platforms will provide cutting edge AI-powered software infrastructure to operators of scheduled service and charter services, consumers, and aircraft manufacturers not existing today. SurfOS AI-powered operating systems will enable operators across the ecosystem to run their businesses more efficiently with access to more data with all types of aircraft including new electrified aircraft. SurfOS will provide disruptive software services and an operating platform to the advanced air mobility space to manage distribution and operations, enabling new businesses to flourish,” said Sudhin Shahani, Co-founder of Surf Air Mobility.

Surf Air believes that artificial intelligence, machine learning, and big data will transform advanced air mobility and will require a new set of tools to support the growth of this market segment. Surf Air Technologies is focused on addressing the largest opportunities across advanced air mobility, such as dynamic pricing, revenue management, and optimal aircraft and crew utilization.

The software tools will enable more accurate decision-making to improve operational efficiency and drive revenue, and will be categorized across dimensions that include revenue operations, distribution & monetization, and passenger operations.

The potential market opportunity is large, with the FAA reporting 1,818 Part 135 operators with 11,702 aircraft in the U.S. alone. The introduction of new electrified vehicles for passenger and cargo use are anticipated to create a new form of mass transportation with low cost, low emission, point-to-point flying on short-haul, regional routes.

Reports from McKinsey & Co. and NASA estimate that the size of the regional air mobility market could reach between $75 billion and $115 billion by 2035, and a report from Morgan Stanley estimates that the TAM for urban air mobility could reach $1 trillion by 2040 and $9 trillion by 2050.

“We’re excited to offer these software tools to over 300 of the air operator partners we work with most often to empower their businesses and meet the growing demand for more efficient regional connectivity,” said Jamie Strecker, VP of Business Development for Surf Air Mobility.

Q1 2024 Performance

Top Reasons to Research This One

Game-Changing Collaboration: The recent agreement with a leading tech giant is a significant step forward for Surf Air Mobility Inc.. By harnessing cutting-edge AI and data analytics, this collaboration will enable the company to deliver unparalleled operational efficiencies, setting a new standard in the air mobility market.

Massive Market Potential: The regional air mobility market is expected to grow exponentially, with projections suggesting it could reach $115B by 2035. With Surf Air Mobility Inc.’s strategic positioning, they appear well-prepared to capitalize on this immense growth potential.

Optimizing Key Operations: Part 135 operations, which account for over 2.8 Million flight hours in the US in 2023, are a crucial segment of the air mobility industry. Surf Air Mobility Inc.’s new AI-powered software platform is designed to optimize these operations, driving efficiency and innovation across the sector.

Pioneering Sustainable Aviation: Surf Air Mobility Inc. is not only focused on improving operational efficiency but also on sustainability. By developing powertrain technology to electrify smaller existing aircraft, the company is taking significant steps toward decarbonizing air travel. Imagine a future where flying between 50 to 500 miles is not only eco-friendly but also cost-effective—a vision that Surf Air Mobility Inc. is actively working to make a reality.

Strategic Partnerships and Global Reach: Surf Air Mobility Inc. continues to expand its global footprint through strategic deals in places like East Africa and Brazil

Revenue Streams

Surf Air Mobility Inc. (NYSE:SRFM) is revamping travel. They’re not just changing the game; they’re rewriting the playbook with a diverse revenue mix.

Scheduled flights linked 48 US cities in 2022, making travel a breeze. Whether it’s a single seat or a private charter, Surf Air Mobility (with their subsidiary brands, Surf Air, Southern Airways, and Mokulele Airlines) is the go-to for fast, convenient journeys.

Their role in essential air services (EAS) adds consistent, subsidized revenue.

A groundbreaking partnership with Purdue University: subsidized flights between Purdue and Chicago O’Hare were just launched in Q2 2024, transforming travel for Purdue’s community.

In May 2024, Surf Air (NYSE:SRFM) launched another subsidized route connecting Williamsport with Washington Dulles, injecting new life into the regional airport.

Beyond passenger services, Surf Air intends for its Aircraft-as-a-Service (ACaaS) program they’re developing to be a revolution in the skies.

Electric planes and ACaaS are just the beginning

NEWS

Surf Air Mobility Announces Plan to Form New Venture, Surf Air Technologies LLC, and Enters Agreement with Palantir Technologies Inc. to Power Operating System for the Advanced Air Mobility Industry8 hours agoSurf Air Mobility Announces Terms of Reverse Stock Split4 days agoSurf Air Mobility Announces Closing of $35.2 Million Mandatory Convertible Security with GEM Global Yield LLC4 days agoSurf Air Mobility to Provide Second Quarter 2024 Financial Results on August 14, 20247 days agoLouis Saint-Cyr to Become President of Hawai’i Operations for Surf Air MobilityJul 2, 2024Jim Sullivan, Airline Executive, to Become President of Air Mobility for Surf Air MobilityJun 13, 2024Surf Air Mobility Enters Agreement to Supply Electric Powertrains to Asta, a Brazilian Cessna Caravan OperatorJun 11, 2024Surf Air Mobility Presents at Palantir Technologies AIPCon June 2024Jun 6, 2024Surf Air Mobility and Williamsport, Pennsylvania, Officially Begin Subsidized Commuter Air Service Between Williamsport Regional Airport (IPT) and Washington Dulles International Airport (IAD)May 28, 2024Surf Air Mobility Receives Continued Listing Standard Notice from NYSE

May 24, 2024

MANAGEMENT TEAM

Deanna White – Incoming Interim CEO and COO

‍Deanna White brings years of aviation experience and commitment to transforming flight. She served as COO at Kitty Hawk, where she led the business operations and commercialization of an R&D eVTOL aircraft program. She also served as CFO and CEO of Bombardier Flexjet. She holds a BS in accounting from the University of Tampa, and and MBA and MA in Cybersecurity from the University of Dallas.

Sudhin Shahani – Co-Founder

‍Shahani is a seasoned entrepreneur and venture capital investor with a diverse portfolio in aviation, media, technology, and education. He is the co-founder of Surf Air Mobility, where he has been steering the company’s vision, fundraising, and M&A activities since 2014. Under his leadership, Surf Air has raised over $400M and pioneered sustainable flight technologies. Before this, he was an Entrepreneur in Residence at Anthem Ventures, managing over $450M and serving on various boards. Shahani also co-founded Musicane and RTG Animate.

Fred Reid – Head of Global Business Development

A global aviation leader, Fred Reid has built products and services enjoyed by consumers around the world. As the founding CEO of Virgin America, America’s top airline for nearly 10 years, Fred helped create the “next generation airline”. Fred has also served as President of Lufthansa, Delta, Kitty Hawk, and Flexjet, and served as the Global Head of Transportation at Airbnb.

Carl Albert – Chairman

‍Albert boasts extensive experience in aviation, formerly serving as principal investor and Chairman & CEO of Wings West Airlines, acquired by AMR, and later of Fairchild Aircraft for a decade. Under his leadership, Fairchild acquired German manufacturer Dornier Luftfahrt, both companies producing regional aircraft and Dornier supplying Airbus with key components for multiple models. Albert also oversaw Merlin Express, a cargo service for UPS and FedEX. He has managed engineering programs to obtain various aircraft certifications from regulatory bodies like FAA and EASA.

Oliver Reeves – Chief Financial Officer

Oliver Reeves is a seasoned financial executive with a proven track record at both the strategic and operational levels. He will lead Surf Air Mobility’s financial and capital markets strategies, leveraging nearly two decades of experience in the investment management, enterprise technology, and insurance industries. Prior roles include serving as Chief Strategy Officer at Xinuos, Inc. since 2019.

SINCERELY,

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