Surf Air Mobility (SRFM) Q3 2026 earnings review
Surf Air's charter sales doubled, but it widened its loss forecast
Surf Air Mobility, a commuter airline that also sells private charter flights, now earns most of its sales from charters. Charter sales more than doubled, lifting total revenue 25% to a record. But finance chief Jason Secore widened the full-year loss forecast by about $6 million, citing fuel prices and slower software installations.
| Revenue | $36.5M +25% from a year ago; middle of the company's range |
|---|---|
| Charter revenue | $19.0M +121% from a year ago |
| Loss excluding one-offs (EBITDA) | -$6.7M -$9.9M a year ago |
| Full-year loss outlook, excluding one-offs | Widened now $32–35M, from $25–30M |
⚖️ Verdict: 🔴 Bearish
The story got worse because Surf Air now expects a bigger loss this year than it planned, and holds only $10.7 million of cash. The good news: charters earned more gross profit as they expanded, which eases the worry that their growth was unprofitable. Software still brings in almost no revenue.
The question now is whether Surf Air reaches break-even before its cash runs out. Either charters, the airline and software close the gap within a few quarters, or the company keeps selling shares to fund losses. Fourth-quarter results, due early next year, will show whether the loss lands inside the new range.
🐂 Bull Case
Charter Sales Doubled While Their Margin Improved
Surf On Demand, the charter arm, books private flights on Surf Air's own planes or on other operators' aircraft. In the second quarter its costs climbed faster than its sales, so the growth added no gross profit.
This quarter that changed. Charter revenue rose 121% from a year ago, helped by "a shift toward larger aircraft and longer trips", the company said. Joshua Lowton, who runs the unit, said its gross margin improved by more than 4 percentage points, though he gave no level.
- Departures: a record 1,417, up 86%
- Revenue per departure: up 17%
- Charters' share of revenue: 52%, from 29% a year ago
- Extra charter gross profit: about $1 million from a year ago, by our math
That matters because the group's cost of flying fell to 91.9% of revenue from 94.8%. Customer service, stations and other flight costs dropped 4.8 percentage points of revenue, by our math. One quarter eases the worry about unprofitable charters but does not settle it.
What to watch: charter gross profit in the annual filing early next year. A second quarter of gains would show that charter growth adds profit, not only revenue.
Airline Profit Rose in Every Quarter This Year
The scheduled airline flies small planes on short routes in Hawaii and the US mainland. Its EBITDA excluding one-offs reached $1.2 million and "has improved every quarter this year", president Louis Saint-Cyr said.
Saint-Cyr credited SurfOS, the software Surf Air built to run flights and crews, and the company said cost per hour flown fell 6%. The airline also won a four-year Essential Air Service award, a federal subsidy for small-town flights, to serve Lanai.
But much of the saving follows a smaller network. Pilot expenses fell to 7.2% of group revenue from 13.0%. Yet scheduled flight hours also declined 20% so far this year, after Surf Air left subsidised routes.
What to watch: fourth-quarter airline EBITDA, which Saint-Cyr expects to rise again despite costlier fuel. Another gain would show the savings outlast the route cuts.
🐻 Bear Case
Surf Air Widened Its Full-Year Loss Forecast
"When we introduced our transformation plan, we told investors what we would deliver and when, and we continue to successfully deliver against that plan," chief executive Deanna White said on the call.
In the same release, Surf Air widened its full-year loss forecast for EBITDA excluding one-offs by about $6 million. It blamed "higher fuel prices and extended implementation periods for SurfOS", the software it sells to other aviation firms.
The quarter fit a pattern: the loss sat in the weaker half of the range, as in four of the last five quarters. By our math, August's full-year plan left room for a fourth-quarter gain, and the new range has none.
This matters because cash is short, so each quarter of losses needs new shares or loans. Fuel sits in aircraft costs, which rose 7.6 percentage points of revenue, partly from charter growth. Surf Air does not hedge fuel and faces more bidders for federal small-town route subsidies, its filing says.
What to watch: the fourth-quarter loss excluding one-offs, due early next year. Another result in the weaker half would show that White's ranges still run ahead of results.
Cash Fell to $10.7 Million Despite New Loans
Surf Air's quarterly filing still says its losses and debts "raise substantial doubt" about whether it can keep operating. Finance chief Jason Secore listed "funding growth from a stronger balance sheet" among his priorities.
The quarter tested that claim. Cash dropped $7.7 million from June, by our math, even though the second loan tranche arrived in August.
- Free cash flow, first nine months: -$49.3 million, about $16 million a quarter
- Debt and convertible notes: $74.8 million, from $69.1 million in June
- Shares outstanding: 134.9 million, up 85% since December
- Cash the lenders require at all times: $5 million
So Surf Air fills the gap by selling shares, which shrinks each existing owner's stake. The operating loss barely moved, at $16.0 million, despite record sales. Park Lane, tied to a co-founder, backs the new loans with letters of credit. A firm linked to the board observer Park Lane appointed now earns $650,000 a year for advice.
What to watch: year-end cash and share count in the annual report. Another quarter of burn near $16 million would make share sales the main way to stay above the lenders' minimum.
Software Contracts Signed, but Revenue Has Not Started
SurfOS is the software Surf Air built for its own flights and now sells to other aviation firms. The company launched OperatorOS, a version for charter and private aircraft operators, and signed five customers.
But SurfOS president Barrett Brown said the "initial revenue from SurfOS was not material in the quarter". Brown also said Wheels Up, its first large customer, widened the installation, so it runs longer.
He expects "2027 to be our first year of meaningful revenue", because operators pay a share of each trip only after onboarding. Meanwhile Surf Air paid Palantir, which supplies the underlying platform, 11.5 million shares this year.
What to watch: a second large contract beyond Wheels Up, which Brown named a priority for the fourth quarter and 2027. Without one, SurfOS remains a cost rather than a business.
Risks this quarter didn't answer
Four standing risks got no new figures in the release, the filing or the call. Each stays open until Surf Air reports the item named in the list below.
- Stock exchange listing: no update on the minimum share price warning; a compliance notice would settle it, and the GEM share-sale facility needs the listing.
- BETA electric aircraft: a firm order above $90 million with deliveries from 2028; a financing deal would ease it.
- Textron licence fees for electric Caravan conversions: $9.5 million already due; a payment or settlement in the annual filing would close it.
- Independent charter brokers: no count against the year-end goal of 100; the fourth-quarter count will show progress.
👓 Other Themes
Fuel Cost per Gallon Rose About 37%
Fuel cost about 37% more per gallon than a year ago, finance chief Jason Secore said on the call. Lower fuel burn held the rise in total fuel spending to about 9%, he said. Surf Air does not hedge fuel, its filing says, so price moves reach its costs directly.
New Finance Chief and Software President Joined
Jason Secore, previously finance chief at Matternet, replaced Oliver Reeves as chief financial officer. Surf Air booked $1.7 million in overhead costs for the previous finance chief's separation. Barrett Brown, former head of Asia at Palantir, now runs SurfOS, the software unit. The company also reserved 5 million shares for awards to new hires.
💲 Other KPIs
Deferred revenue, cash customers paid for flights not yet flown, fell 26% from June as Surf Air flew part of the second-quarter jump. It still stands 40% above a year ago, down from 69% growth in June. The filing does not split tickets from charter prepayments.
Spending on aircraft and software climbed to 16.1% of revenue in the first nine months, from 7.5% a year earlier. Much of it is work on SurfOS, its aviation software, which Surf Air now records as an asset. That shift helped cut technology expense in the income statement by 39% this quarter.
Interest cost fell 31% from a year ago after Surf Air swapped expensive debt for notes that pay no interest. It rose 82% from the second quarter, though, as aircraft loans at 13.5% arrived. A term note from High Trail also starts charging 12% in January.
🔮 Guidance
New. The plan has fourth-quarter sales anywhere from flat to 27% above the third quarter. The middle of the range means about 57% growth from a year ago. By our math, the range is exactly what the full-year outlook leaves, so Surf Air has not narrowed it at all.
Held. The plan still has the loss excluding one-offs narrowing, to about $3.9 million at the middle of the range. That would be about half the year-ago fourth-quarter loss. By our math, it sits about $4.7 million below what August's full-year plan left for this quarter.
Unchanged. The plan still has 2026 sales up about 25% at the middle of the range. Surf Air has now kept the same range in four straight statements since March. Reaching the middle requires a record fourth quarter of about $41 million.
Cut. The plan now has a wider full-year loss excluding one-offs, still narrower than last year's $41.7 million. Surf Air blamed fuel and slower software installations. The middle of the range improved by $17.5 million in May, held in August and has now slipped back $6 million.
Held. Surf Air expects the airline's EBITDA excluding one-offs to rise again in the fourth quarter, even with costlier fuel. That would mean a gain in every quarter of 2026. The release gives no figure, so readers cannot check the size of the improvement.
❓ Key Questions
What is the charter business's gross margin now?
Lowton gave only the change, more than 4 points from a year ago. Without the level, readers cannot tell whether charters cover their share of overhead as they grow.
How much SurfOS revenue is in the fourth-quarter plan?
Brown called third-quarter software revenue not material and expects meaningful revenue only in 2027. The Wheels Up timing and the five new operators decide whether software adds anything this year.
How long does the cash last at today's burn?
Cash ended at $10.7 million, while burn ran near $16 million a quarter. Lenders require at least $5 million at all times, so the runway depends on share sales.
Has Surf Air regained the exchange's minimum share price?
The GEM share-sale facility, a main source of new money this year, works only while the shares stay listed. The release and the filing give no update on the warning.
What drove the deferred revenue jump and fall?
Deferred revenue rose by $11.6 million in the second quarter and gave back $7.7 million in the third. The mix of tickets, charter prepayments and software billings would show how much future revenue it holds.