Stonegate Capital Partners has updated its coverage of Surf Air Mobility Inc., highlighting the company's continued progress on its transformation plan during the third quarter of 2025. The aviation company reported revenue of $29.2 million with adjusted EBITDA of negative $9.9 million and adjusted earnings per share of negative $0.64, reflecting ongoing operational improvements across its business segments.
The company's airline operations showed particular strength, delivering another quarter of operational and commercial gains. Revenue increased modestly both year-over-year and sequentially, driven by strong growth in On Demand services that more than offset planned reductions in unprofitable scheduled flying. On Demand services benefited from higher aircraft utilization, a strategic shift toward larger-cabin aircraft, and increased international activity. Meanwhile, management intentionally scaled back Scheduled Service to prioritize routes with attractive unit economics.
Operational reliability continued to improve throughout the quarter, supported by a strengthened systems operations center and a more experienced aviation team. These improvements contributed to higher on-time departure and arrival rates and better controllable completion factors, enabling airline operations to remain profitable on an adjusted EBITDA basis. The company's capital structure saw significant improvements following the quarter, with refinancing of higher-cost debt that reduced annual cash interest expenses.
Surf Air Mobility continues to advance SurfOS, its cloud-based operating system built on Palantir's Foundry platform. During the third quarter, the company expanded internal deployment of SurfOS, rolling out aircraft and crew scheduling tools across key regions and enhancing the Crew App with capabilities that improve safety, maintenance visibility, and productivity. External beta usage broadened to a growing set of brokers and operators, supported by additional letters of intent that expand the future customer pipeline.
The company's electrification program remains on track, with management reiterating a 2027 FAA STC target for its electric powertrain system for the Cessna Grand Caravan. Surf Air Mobility continues to evaluate partnership and joint venture structures that can share development risk while preserving upside, leveraging its scale as a leading Caravan operator and its exclusive agreement with Textron Aviation.
For the fourth quarter of 2025, the company expects revenue between $25.5 million and $27.5 million with an adjusted EBITDA loss of $6.5 million to $8.0 million, reflecting the impact of exiting unprofitable scheduled routes and a continued mix shift toward higher-value On Demand flying. Management continues to anticipate full-year profitability in airline operations on an adjusted EBITDA basis, supported by ongoing operational improvements.
Stonegate Capital Partners' valuation analysis indicates Surf Air Mobility currently trades at a fiscal year 2026 enterprise value to revenue multiple of 1.9 times compared to comparable companies at a median of 4.1 times. Using an expected revenue multiple range of 4.0 to 5.0 times with a midpoint of 4.5 times, the firm arrives at a valuation range of $6.11 to $7.99 per share. These capital actions and operating improvements collectively position Surf Air Mobility with a more sustainable capital structure and clearer path toward scale, potentially enabling Phase 3 of its transformation plan to begin in fiscal year 2026.
