LOS ANGELES - Surf Air Mobility Inc. (NYSE: SRFM), a company specializing in regional air mobility, has announced a partnership with Brazilian regional carrier Asta Linhas Aéreas to upgrade up to four of Asta’s Cessna Grand Caravan aircraft with Surf Air’s electrified powertrains, pending certification. This move aims to reduce emissions and operating costs for Asta, marking a step towards the adoption of electric propulsion technologies in the Brazilian aviation sector.
The memorandum of understanding (MOU) outlines the initial upgrade of a portion of Asta's fleet, which operates tourist, corporate, and cargo charter services. Deanna White, Interim CEO and COO of Surf Air Mobility, expressed enthusiasm about expanding the company's presence in Brazil and assisting Asta in achieving more environmentally friendly and cost-efficient operations.
José Neto, Planning and Management Director at Asta, highlighted the collaboration as part of Asta’s ongoing investment in new technologies to enhance operational efficiency and customer experience. The implementation of the electric powertrain is expected to significantly reduce fuel and maintenance costs and is seen as a crucial step in minimizing aviation's carbon footprint.
Surf Air is currently developing Supplemental Type Certifications for hybrid and fully-electric variants of the Cessna Grand Caravan. The company anticipates that the fully-electric powertrain could cut direct operating costs by up to 50% and carbon emissions by 100%, potentially having a profound effect on air operators globally by making flying more cost-effective and environmentally sustainable.
This announcement follows Surf Air's recent MOUs with other major Cessna Caravan operators, including Azul Conecta in Brazil and several air service providers in East Africa, signaling a growing interest in electric aviation solutions.
In other recent news, Surf Air Mobility has been navigating a series of financial and regulatory challenges. Bernstein SocGen Group downgraded the company's stock from Outperform to Market Perform, citing concerns over the company's financial structure which includes a depletion rate of $16-18 million per quarter. The firm has also adjusted the price target for the company's shares to $0.40, a significant decrease from the previous target of $3.62.
In addition, Surf Air Mobility received two notifications from the New York Stock Exchange (NYSE) regarding non-compliance with the exchange's continued listing standards. The company's average global market capitalization fell below the required $50 million over a consecutive 30 trading-day period and its average closing stock price was below the required minimum of $1.00 over a consecutive 30 trading-day period. To address these issues, Surf Air Mobility plans to submit a business plan to regain compliance with the listing standards and is considering several options, including a potential reverse stock split.
In light of these challenges, Canaccord Genuity (TSX:CF) shifted its rating of Surf Air Mobility from Buy to Hold, while also adjusting the price target for the company's shares to $1.00, a decrease from the previous target of $2.50. Despite these obstacles, Surf Air Mobility continues to make progress in its business operations, including advancements in network expansion and the acquisition of new customers for its unique powertrain technology. The certification of its electric powertrain, however, has been deferred to 2027 due to timing issues in obtaining optimal components necessary for the technology.
InvestingPro Insights
Surf Air Mobility Inc. (NYSE: SRFM) is navigating the skies of innovation and sustainability but faces significant financial turbulence according to recent data from InvestingPro. The company's market capitalization stands at a modest $23.64 million, reflecting the challenges small-cap companies often face in capital-intensive industries.
The financial metrics reveal a company in the midst of a storm. With an adjusted P/E ratio for the last twelve months as of Q1 2024 at -0.11, Surf Air Mobility is currently not profitable. The company's revenue, however, has shown a meteoric rise of 308.44% during the same period, indicating a sharp increase in sales which aligns with the "InvestingPro Tip" that analysts anticipate sales growth in the current year. Despite this growth, the company's gross profit margin remains low at 2.18%, underscoring the "InvestingPro Tip" about weak gross profit margins.
Investors should note the high volatility in Surf Air Mobility's stock price, which has fallen significantly over various periods, with a one-year total return of -90.96% as of mid-2024. This volatility is also highlighted in the "InvestingPro Tips," which point to the stock's high price volatility and its status as trading near a 52-week low.
For those interested in a deeper analysis, there are additional "InvestingPro Tips" available at https://www.investing.com/pro/SRFM that can provide further insight into Surf Air Mobility's financial health and stock performance. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable tips. With a total of 20 "InvestingPro Tips" listed for Surf Air Mobility, investors can gain a comprehensive understanding of the potential risks and opportunities associated with this pioneering aviation company.
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