Hey.
Hi guys. So we are back with Deanna White, CEO of Surf Air Mobility. We continue our day with the coverage of drones and eVTOLs. And Surf Air is an interesting story where they have a legacy airline operations and are starting to build out a technology services platform to cater to that market as well. So welcome, Deanna. Great having you today and appreciate you spending some time with us today.
Yeah, thanks for inviting me to the Aero Next Conference. Really appreciate it.
So yeah, so just to get started then, so those who aren't familiar with Surf Air Mobility, can you tell us a little bit about the company, what the vision is and strategies, and what you have been up to lately?
Sure. At Surf Air Mobility, we're creating a business platform for the future air mobility ecosystem that will help transform how stakeholders within that ecosystem provision short-haul flights. Today, we have operated millions of miles in a charter model and also in our on-demand services, and we have good insight into that model. That ecosystem is going to explode once you enter all the new technology that's coming to play in the near future into that ecosystem, and it's a perfect place to spawn or birth that, and with that, you're going to have all of these new players. You're going to have more consumers, suppliers, operators, brokers that are all going to have to have interactions and business transactions, and so at Surf Air, we're planning to take all of our insights and experience to help build that business model and also build a digital infrastructure to do that.
We're going to do that with a partnership we have with Palantir and a product called SurfOS , we're really excited about. So got a lot of things going on here, and it has direct connection to all of the new technology that's happening in the eVTOL space.
Yeah, I mean, it just seems like investors are not yet fully aware of the changing dynamics that is underway in the short-haul space, especially from the electrification point of view. So thank you for that. So you had a pretty big size financing, the $100 million financing recently. How does the company plan to use proceeds from this? Any color on how these funds are going to be deployed?
So obviously, we have big ambitions, and ambitions require capital. Over the past year, we've done a few debt and equity transactions to help raise capital. The recent transaction we did for $100 million was very significant to us. I'm really pleased with that transaction and its participants. We had Palantir, one of our co-founders, and some large institutional investors involved in that transaction. So real excited that they would put their money behind, backing and investing in the things that we're doing here and the ambitions that we have. The money is going to be used to pay down some interest-bearing debt for working capital to help strengthen our balance sheet, but also to advance the technology initiatives that we have at the company that I just previously mentioned.
A year ago, we launched a four-phase transformation plan to talk about how we would plan and execute on strategies to build a business platform, including a digital infrastructure to support that platform and evolve our existing businesses into a business platform that can now adopt all the new technology that's coming into play.
Right. So of the four phases, we are now in Phase 3, I believe, right?
Actually, we're still in Phase 2. Phase 2 is, it's not a yearly thing. It's 2025, 2026 is Phase 2. But there are things that are required for three and four that you can't just start in those phases. You have to start building the blocks now. And so we do have initiatives and things that are going on at the company that support other phases other than just two.
Okay. Understood. So the on-demand revenue grew by 42% sequentially from Q2 2025, I believe, while the scheduled services revenue dropped a little bit, basically reflecting a strategic shift towards a higher margin services and exiting your unprofitable routes. So what is the optimal long-term mix between these two segments? And how will the company ensure stability and growth of its scheduled service network, which provides sort of the foundational customer base and operational data to the overall business?
Our on-demand business has been a real excitement to watch and see. We birthed that business five years ago, and it has grown exponentially. We now have a collection of consumers and relationships with over 400 charter operators that we have that we're able to produce profitable margins for the flights that we conduct on that. All of that business has a lot of data from those customers and from all those operators, not just the operations that we have on our scheduled service side. I previously mentioned the charter industry and the industry that we operate within is going to spawn the advanced air mobility ecosystem. It is going to happen rapidly.
We've got a lot of new aircraft coming on, electrified aircraft coming on board that will be into this system, and it will just exponentially expand this, and our experience, having already built this business on the charter on-demand side, gives us a unique insight. We're well positioned to be a part of this growth. We are also well positioned to be developing the digital infrastructure for this ecosystem. We are building SurfOS. It's a technology to help do all of the management and efficiently and accurately do all the interactions in this ecosystem. We were the first customer of this. We built it in-house with our partnership with Palantir. We've used it in our on-demand business. It's helped make that business successful, helped drive costs down in there. We're also using it in our scheduled service.
So we have used our expertise to help build this with Palantir. And it's been able to take fragmented things in our business, fragmented players within this ecosystem, bring it all together into one platform. And this product and our business platform will be the center of data collection for this ecosystem to be used by businesses throughout. We've also seen network effects from our charter business and our business model. We have seen our ability to take some of the operators that we have relationships with and do volume purchase agreements with them. And a number of those operators have also been beta customers, users of our platform, helping us give feedback and already have signed LOIs, expressed big interest in our SurfOS platform. On our second segment, the scheduled service side, this year has been all about the turnaround.
In the last year, we've improved that business operationally and financially tenfold. We did it by bringing in an exceptional group of aviation management and talent. And also, we've been using our SurfOS software to help improve that. So that whole business has set us up to have a footprint, a network that's operating really efficiently. And our network is small, short-haul flights and routes. And our network in Hawaii is a real diamond of ours. It's going to be a showcase for all the new electrified aircraft coming to play. We operate under the Mokulele brand, all the inter-island flying in Hawaii. In some cases, we're the only airline that's connecting an outer island to the main island. And we've got that route established. We've been running that for a number of years.
And that represents a perfect place to showcase electric aircraft and to start doing pilot programs with that network that we have. So we believe all the new aircraft that are coming and all the new electrification technology is going to be perfectly used by our business. And our Hawaii network will be a great showcase to grow our scheduled service using all of this new technology and our own SurfOS software.
Do you think, just a side question on your comments around Hawaii, do you think these electric aircraft that are coming up will take a good chunk of market share from some of these legacy aircraft?
It depends on the use case. They're obviously more for short-haul flying and 25 to 50-mile routes, which we do in Hawaii today. We do about 100 flights a day. We fly 100,000 passengers in Hawaii today doing that using a combustion engine Caravan. You can easily replace that in with another electrified aircraft. There are some that are conventional takeoff and landing aircraft. There are others that are the vertical takeoff and landing that will be perfect solutions for that environment.
Interesting. So moving on to the SurfOS , the more sort of exciting part of the future of the company. Can you just maybe break down what the SurfOS comprises of first? I know there are three modules, I believe. Maybe we can go through some of that background, and then I can follow up with other questions around SurfOS .
Yeah, sure. So we just talked about our two segments, but our plan is to have our SurfOS initiative become the third segment of our business. And as part of our four-phase transformation plan, we are going to have a commercial launch of that product in 2026. This digital infrastructure will be the enabler of the business platform for the future air mobility ecosystem. Our SurfOS tech team with Palantir collaborated internally with our own scheduled service group and our on-demand business and helped develop this product. And we've seen, like I mentioned, efficiency and accuracy of the interactions that are needed within our operations. We have had beta testers doing that with us, other than just ourselves, some of those operators and brokers that I told you about that we use today in our business.
And we've been in discussion with some enterprise clients to be able to do that. We plan to launch the products that we're developing, so BrokerOS for brokers in the industry, OperatorOS , and then OwnerOS for aircraft owners. But we are also developing customized solutions for enterprise clients. So larger enterprise clients may be able to use the power of the data management and federation of data and the AI tools that we have with our Palantir relationship to get their arms around all their data and then be able to do business case solutions to solve some of the problems they have within their business.
So not only are we looking at rolling out software modules that we have developed for specific stakeholders within the ecosystem, we're also looking at developing customized solutions for larger enterprise clients who would be an OEM or an operator or such.
Deanna, maybe how was the experience with these eight trials that you're doing beta testing with the eight charter brokers?
So they've provided us really great feedback, and we've been able to adapt the application and improve on the application. We have a great tech team that's able to iterate really fast. We're using agile software processes to do this, and they're able to agile and agilely create new applications and new modules, and it will be a platform that will continually grow, continually iterate. The first step was to get all of the data that they have. Today, a lot of the 135 industry is fragmented with data all over the place. They have it in PDFs. They have it in spreadsheets on paper, and so getting a solution that they can get all their arms around that and then be able to present that information to them in intelligent ways is just the first step, and then being able to optimize using tools within those modules.
They've helped design some business cases for us that have provided feedback to the development.
So Palantir is an important strategic partner for you. They're also a big investor in the company. Can you give the audience some color on what Palantir is providing to Surf Air and how you are leveraging their expertise to build this market up?
Yeah, so this year, we announced a five-year exclusive partnership with Palantir. The two of us have been partners for the past four years in developing things, but that relationship has been expanded to include a number of things. Palantir brings to that equation their data management abilities and their AI tools that are perfect for building a digital infrastructure that's needed for the business platform for advanced air mobility. What we bring is unique perspective and unique expertise because having been an operator both in a commercial commuter service and also in a charter business, we bring unique insight. We have a significant charter business with over 400 operators that we have developed within that business that not only will be players in this, but also consumers of the SurfOS product. We're also one of the largest commuter airlines, so those two things, Palantir recognized this years ago.
This was an interesting partner to have. Real excited that they participated in the recent financing transaction, and they're actually our largest shareholder. Where this new agreement will take us is further into teaming opportunities, so there's many opportunities that will exist for enterprise clients and even the government for Palantir and ourselves to team up to make creative tools and solutions for them. A perfect example is Palantir has already had success with this, with Airbus as an OEM building Skywise application for them and their business model, and so that's within the larger commercial airline space. Palantir was real excited about partnering with us because this is the smaller 135 operator space, but it's a big market.
And so them being able to partner with us, who brings all of our unique ideas and experience and our connections, was something that they viewed as really strong in the partnership. We just recently also announced that one of our new board members is coming from Palantir. So that's a very deep and strong relationship that we have there and necessary to help achieve our ambition of building the business platform for advanced air mobility and the digital infrastructure to do that.
Understood. The rollout plan, Deanna, for SurfOS , can you maybe give us a high-level timeline if you can share something like that in terms of how this will be deployed and how you will onboard customers, etc., over the next, say, 12 to 18 months for SurfOS ?
Yeah, sure. And we're busy sharpening our pencils on our commercial rollout plan, our operational plans, and our budgets and stuff associated with this. We already have LOIs signed by a number of the beta users and customers that are the individual module BrokerOS customers. And so that's where we'll be starting first with that customer set. And we're looking at starting to roll out that and generating revenue in Q1 of 2026. And then we are already deep in discussions with some enterprise clients who potentially could be a larger opportunity for us that we will seek to have a few of those customers in the pipeline for 2026, where we'll begin doing development work. And that development work could exceed past 2026 into 2027, depending upon the scope and scale of projects there.
Okay. Understood, and we should assume that you are going after the international market as well with SurfOS, not just the U.S., right?
Correct. That is correct.
Okay. Understood. So you are in an interesting position where, from, say, a valuation perspective, where you have a legacy airlines business that you are now running kind of profitably, but you have this emerging opportunity as a technology play providing various software-type solutions, AI-type solutions to the regional air mobility market. So in this context, how should investors think about the company and its valuation as you are now entering a period where you could have a profitable airline business paired with an emerging technology services business?
So I would look at our value as an enterprise as a whole, not as the pieces or the sum of the pieces, because all of, as I've hopefully articulated, all of the pieces do connect, right? Our scheduled service, our on-demand services, all we play in the business platform of today's ecosystem, which will evolve into the ecosystem of the future and advanced air mobility, of which we're building the digital infrastructure and the AI tools for that industry to be able to do exchanges, connections, and transact itself. So all of those connect together. So I would say, looking at our business more from an enterprise value level as opposed to any one of the individual pieces, we are going to be, in the first quarter, doing a larger rollout of the different pieces of the business and talking about them more.
And we will give investors insights into that. We will start doing segment reporting and also have separate metrics assigned to each one of the segments in business so people can think about how the pieces operate and fix. But I would look more as to the whole enterprise and how it works together. We are building a business platform, and all of those pieces are a part of the business platform.
Yeah. I think providing that segment-level reporting, etc., will be very helpful for investors who are following the story to keep track of the progress you are making, and just adding another layer of transparency for everyone would be a huge positive, so looking forward to seeing all of that. Maybe just last question, Deanna. A lot of changes underway in the aviation industry that many folks may not be paying attention to, but can you talk about maybe a few key trends that investors should monitor, and that could be relevant to Surf Air as well?
So Amit, you're right. A lot's going on in technology today. I mean, you've seen billions invested in the eVTOL development and those companies. All of the new technology that's being developed in the aviation industry is in small aircraft. And we at Surf Air Mobility, it's in our DNA. We've had over a decade operating small aircraft, and they have experience with that. So we're a natural operator, preferred operator for all of these new types of aircraft. Electric aircraft are short-haul. They have limited range. And a lot of our networks are a perfect testbed for all of this new technology. So Hawaii is the best example of that, where we operate under our Mokulele brand. It's a perfect testbed for all of this new electric technology to be inserted. You don't have to necessarily build the whole network and operation.
You just have to now interject a new aircraft type within an existing network and the existing route, so Hawaii is our diamond. It's our gem, and you'll be seeing us in the future utilizing that as a pilot and a testbed for all of the future technology. Another thing, the technology that's with these electrification initiatives improves drastically the operating costs, so operators like ourselves, that matters to us. That makes us have an economic incentive to adopt these technologies, but also, it can help drive down the cost of what it means to fly, and so you'll see a transition of people out of their cars into planes, and so you'll even grow that air mobility ecosystem into having many more consumers flying within those networks. Lastly, we talk about the aircraft and all that technology, but SurfOS is a transformative technology.
It's something we are also building. It's going to be using things like AI predictive abilities and optimization abilities. And so it's going to be able to give more efficient, more accurate, better real-time information and business intelligence for people to operate within that ecosystem. So not only is all of the new aircraft that's coming online, but also our SurfOS technology are also going to cause a sea change in the industry.
Maybe if I can squeeze in one last one, Deanna. It looks like you could be a consumer of the electrification happening for your airline business. But could you also be on the other side of that equation where you are working to develop some of these aircraft, etc.?
Yeah, so not a clean sheet aircraft, but we have our powertrain electrified and hybrid electric powertrain initiative that we've had going on. We have an exclusive partnership with Textron to be the sales and marketing train of the Palantir of the, I'm sorry, the Palantir, the powertrain that we're developing for the Caravan, so the Textron Aviation, we fly Caravans today. It's very costly for an operator to do an overhaul event of a combustion engine. When those events occur, there's going to be a decision point, and if there's an alternative type of power source that's electrified or hybrid electric that can be swapped out and make these older aircraft or even new aircraft coming off the line in Textron, make them electric and make them more efficient, there's opportunity to do that, and we're involved in that.
We're involved with a number of the stakeholders in the supply chain to do that for the Caravan . And you should be hearing in the near future more news on that.
That sounds like an interesting note to end on. Looking forward to any headlines around those developments. And again, thank you, Deanna, for joining us today. Really appreciate your time and the insights you provided. We'll end it over here. Thank you.
Thank you, Amit. Thank you, Shamir.