| Business: |
(Note: This is NOT an IPO. This is a direct listing on the NYSE. In a direct listing, there are no underwriters. Morgan Stanley is the designated market maker, a requirement under NYSE rules. In addition to Morgan Stanley, the other financial advisors are Canaccord Genuity, Moelis & Co., Baird and Sanford Bernstein. The NYSE listing date is July 27, 2023, the company says it its S-1/A dated July 12, 2023. On July 10, 2023 – the day before its original NYSE listing date of July 11, 2023 – the company said its direct listing would take place during “the week of July 24, 2023.” Note: No new stock is issued in a direct listing. Registered stockholders intend to sell 20.42 million shares of Class A common stock, according to the company’s latest S-1/A filing. The stock price shown in this profile – $11.86 – is not the NYSE reference price. The prospectus says that Surf Air Mobility’s stock changed hands in private transactions at prices ranging from $11.86 and $5.93 over the past 18 months.)
We offer a regional air travel mobility platform that shows schedules and charter flights run by third parties. (Incorporated in Delaware)
In May 2022, Surf Air Mobility agreed to merge with Southern Airways.
Surf Air Mobility is building a regional air mobility ecosystem that will aim to sustainably connect the world’s communities. Leveraging the combined operations of Surf Air and Southern, we intend to accelerate the adoption of green flying by developing, together with our commercial partners, hybrid-electric and fully-electric powertrain technology to upgrade existing fleets, and by creating a financing and services infrastructure to enable this transition on an industry-wide level. We believe bringing electrified aircraft to market at scale will substantially reduce the cost and environmental impact of regional flying, and that such reductions are achievable by the end of the decade. Additionally, we believe operating as a publicly traded company and having efficient access to growth capital will allow us to accelerate the implementation of our strategic plan.
Surf Air Inc. was incorporated in 2011. Surf Air Global Limited (formerly incorporated as Surf Airlines Inc.) was formed and became the parent company of the Surf Air group in 2016. Surf Air Mobility Inc. was incorporated in 2021.
Surf Air is expanding the category of regional air travel, connecting underutilized regional airports and private terminals to create a “shared private” customer experience and a high frequency “commercial-like” air service, using small turboprop aircraft. Surf Air currently provides a regional air mobility platform with scheduled routes and on-demand charter flights operated by third parties that operate under Part 135 of Title 14 of the U.S. Code of Federal Regulations (“Part 135”) and intends to develop powertrain technology with its commercial partners to electrify existing fleets, which it believes will reduce operating costs and emissions, starting with a hybrid-electric and a fully-electric variant of the Cessna Grand Caravan EX, which is one of the most prolific family of aircraft in the single engine turboprop category with approximately 3,000 aircraft in use worldwide.
Founded in 2013 as a Delaware corporation, as of March 31, 2023, Southern is the largest commuter airline in the United States and the largest passenger operator of Cessna Caravans in the United States by scheduled departures. As of March 31, 2023, Southern served 40 U.S. cities across six U.S. time zones and in the Mariana Islands. Southern ceased serving the Mariana Islands as of April 1, 2023. Southern has multi-year contracts with the U.S. federal government to operate Essential Air Service (“EAS”) routes, which ensures small communities in the United States can maintain a minimum level of scheduled air services.
The Southern Acquisition will result in a combined regional airline network servicing U.S. cities across the Mid-Atlantic, Gulf South, Midwest, Rocky Mountains, West Coast, New England and Hawaii. Surf Air and Southern together served over 99,000 passengers across 44 cities with over 18,000 departures for the three months ended March 31, 2023. For the three months ended March 31, 2023, Surf Air generated $5.5 million in revenue and Southern generated $22.7 million in revenue, an increase of 14.3% and an increase of 35.6%, respectively, compared to the three months ended March 31, 2022. Surf Air and Southern together served over 450,000 passengers across 48 cities with over 75,000 departures in 2022. Surf Air and Southern together served over 330,000 passengers in 2021, and over 150,000 passengers in 2020. For the year ended December 31, 2022, Surf Air generated $20.3 million in revenue and Southern generated $80.7 million in revenue, compared to $11.8 million in revenue and $57.7 million in revenue, respectively, for the year ended December 31, 2021 and $7.5 million in revenue and $38.2 million in revenue, respectively, for the year ended December 31, 2020.
SAM intends to electrify its existing fleet utilizing hybrid-electric and fully-electric powertrain technology once it is fully designed and developed, and certified by the Federal Aviation Administration (“FAA”) as part of the issuance of the Supplemental Type Certificate (“STC”). We are planning for FAA approval of our hybrid-electric and fully-electric Cessna Grand Caravan EX STCs to occur by the end of 2025, followed by the commercialization of the technology. See the section entitled “Risk Factors — Legal and Regulatory Risks Related to SAM’s Business — We may be unable to obtain or maintain relevant regulatory approvals for the commercialization of our electrification of aircraft”.
SAM has relationships with leading players across the value chain, which SAM believes provides significant competitive advantages as it pursues the scaling of its point-to-point regional air mobility ecosystem and the implementation of its aircraft electrification plans. SAM intends to be the exclusive supplier of hybrid-electric and battery electric propulsion systems for the Cessna Grand Caravan EX to Textron Aviation Inc. (“TAI”), one of the largest general aviation OEMs in the world by units sold. The effectiveness of SAM’s agreements with TAI are contingent upon SAM’s shares being publicly traded on a U.S. national securities exchange. SAM’s electrification and certification partner, AeroTEC, a leading aerospace engineering firm with experience in fully-electrified aircraft, has agreed to work exclusively with SAM to develop and obtain STCs for modified Cessna Caravans, and magniX, developer of one of the most powerful electric motors currently being certified, has agreed to exclusively sell certain electrified propulsion systems to SAM, subject to completion of conceptual design review and the execution of definitive agreements. Upon completion of conceptual design review SAM, AeroTEC and magniX have agreed to enter into further definitive agreements in relation to the remaining development steps for the STC. SAM and Jetstream Aviation Capital have entered into a Master Agreement to finance up to $450 million to fund the planned growth of SAM’s fleet of turboprop aircraft. In addition, Southern and SkyWest Airlines are partnered to provide a pilot hiring and training pathway, SAM has entered into a Memorandum of Understanding with Signature Flight Support for Fixed Base Operator (“FBO”) services and the support of SAM’s existing and future network and SAM has contracted with Palantir to leverage Palantir’s Foundry platform to support SAM’s planned growth across a range of business applications. See the sections entitled “Risk Factors — Risks Related to Surf Air’s and Southern’s Business and Industry — We are or may be subject to risks associated with strategic alliances, and our reliance on these arrangements, and the loss of any such alliances or arrangements or failure to identify future opportunities could affect our growth plans” and “Business — Key Agreements”.
We believe regional turboprop aircraft can be electrified, creating the opportunity to disrupt existing regional (50-500 mile) air and ground travel patterns. The hybrid-electric technology we are developing with our commercial partners utilizes state-of–the-art technology that exists today. Electrified regional aircraft, with reduced operating costs and emissions, are expected to be capable of connecting, directly and cost-effectively, many of the United States’ 5,000 existing and underutilized public airports, striving to create a reasonably priced and more convenient mass-market regional travel experience, which we believe will be an attractive alternative to the use of major airport hubs and connecting flight service. Electrified regional aircraft can begin the process of abating aviation’s contribution to global CO2 emissions, which, according to Mission Possible Partnership’s Making Net Zero Aviation Possible July 2022 report, totaled approximately 1.2 billion metric tons in 2019. We believe our green aviation technology will have the added benefit of aligning with consumer preference, increasing demand for lower emission travel.
**Note: Net loss and revenue figures are for the 12 months that ended March 31, 2023.
(Note: The New York Stock Exchange assigned a reference price of $20.00 to Surf Air Mobility’s stock in the NYSE direct listing, according to an NYSE statement on Wednesday (July 26, 2023) after the closing bell.)
(Note: Surf Air Mobility cut the size of its NYSE direct listing in an S-1/A filing dated July 25, 2023: Registered stockholders now intend to offer up to 20.42 shares – down about 13.6 percent from 23.63 million shares in the previous filing.)
(Background Note: Surf Air Mobility updated its NYSE direct listing plans in an S-1/A filing dated July 21, 2023, with the intent for registered stockholders to sell up to 23.63 million shares.)
(Background Note: Surf Air Mobility initially filed its NYSE direct listing plans in an S-1/A filing on June 5, 2023, with the intent for registered stockholders to sell up to 18.8 million shares. That plan was updated in an S-1/A filing dated July 12, 2023, for registered stockholders to offer up to 23.7 million shares (23,693,645 shares. Surf Air Mobility (SAM) has also registered 114.39 million shares (114,385,330 shares) “of SAM common stock, par value $0.0001 per share (“SAM Common Stock”), to be distributed to shareholders of Surf Air and Southern stockholders in connection with the Internal Reorganization and the Southern Acquisition, as described more fully below,” the prospectus says.)
|
