Surf Air Mobility (NYSE:SRFM) reported record third-quarter revenue and a narrower net loss as growth in its on-demand charter business offset a decline in scheduled service revenue. The company also lowered its full-year adjusted EBITDA outlook, citing higher fuel prices and longer software implementation periods.
Revenue rose 25% year over year to $36.5 million in the third quarter of 2026, while the adjusted EBITDA loss was $6.7 million, within the company’s guidance range. Net loss narrowed to $20.4 million from $27.2 million a year earlier.
Chief Executive Officer Deanna White said the company is shifting from an airline-centric business toward a technology-powered air mobility platform. Its current priorities include commercializing its SurfOS software, growing its Surf On Demand charter business and improving airline profitability.
On-Demand Growth Offsets Scheduled Service Decline
Surf On Demand revenue more than doubled to $19 million, up 121% from a year earlier and 57% from the second quarter. The business accounted for more revenue than scheduled service, which generated $17.5 million.
Scheduled service revenue fell 15% year over year, primarily because the company exited certain Essential Air Service routes, Chief Financial Officer Jason Secore said. Productivity improvements partially offset that decline.
Surf On Demand President Joshua Lowton said departures exceeded 1,400, an 86% increase from a year earlier. Average revenue per departure rose 17% as customers flew longer trips on larger aircraft. Gross margin improved by more than four percentage points year over year and by more than 10 points from the second quarter, he said.
Lowton attributed the margin improvement to preferred agreements with aircraft operators, growth in the Powered by Surf On Demand program and the shift toward larger aircraft and longer trips. The company now has seven preferred operating partners, he said.
Software Commercialization in Early Stages
Surf Air launched OperatorOS commercially in September and has signed five operators, including two after the quarter ended. SurfOS President Barrett Brown said initial software revenue was not material in the third quarter.
Brown said the company will earn a percentage of revenue on trips operators manage through OperatorOS, with revenue beginning as customers are onboarded and run trips through the platform. The company also plans to develop and sell more advanced software modules.
Surf Air has deployed the initial phase of Enterprise BrokerOS with Wheels Up and expanded the implementation period to include additional work. Brown described the agreement as the company’s first enterprise software contract, worth up to $12 million over its term.
During the question-and-answer session, Brown said the additional implementation time reflected expanded customer scope. He said SurfOS was in the early stages of commercialization and that management expects 2027 to be its first year of meaningful software revenue. The company did not provide a 2027 revenue forecast.
Airline Posts Positive Adjusted EBITDA
The airline business generated $1.2 million in positive adjusted EBITDA for the quarter. Airline President Louis Saint-Cyr said the measure had improved each quarter this year and that he expects further improvement in the fourth quarter despite higher industry fuel prices.
Saint-Cyr attributed operating gains in part to SurfOS, which he said gives staff better visibility into flight operations, maintenance and scheduling. Year to date, direct operating cost per block hour was down 6%, fuel burn per block hour fell 9% and labor productivity rose 15%, he said.
In Hawaii, Mokulele revenue increased 9% year over year. The company also secured a four-year Essential Air Service contract to serve Lanai, worth $19.4 million in subsidies through August 2030.
Guidance and Cash Position
For the fourth quarter, Surf Air expects revenue of $36.4 million to $46.4 million and an adjusted EBITDA loss of $5.4 million to $2.4 million. It reaffirmed its full-year revenue forecast of $128 million to $138 million and modified its expected adjusted EBITDA loss to $35 million to $32 million.
Secore said fuel prices per gallon were up about 37% year over year, although lower fuel burn reduced the overall increase. The company ended the quarter with $10.7 million in cash after completing a $21.6 million asset-backed loan facility.
Secore said management was not providing a date for adjusted EBITDA or cash flow breakeven. He identified software commercialization, continued on-demand growth and further airline profitability as milestones to watch over the next 12 months.
About Surf Air Mobility (NYSE:SRFM)
Surf Air Mobility Inc operates as an electric aviation and air travel company in the United States. The company offers an air mobility platform with scheduled routes and on demand charter flights operated by third parties. Surf Air Mobility Inc is headquartered in Hawthorne, California.
