DALLAS, TX -- August 11, 2026 -- Surf Air Mobility Inc. (NYSE: SRFM): Stonegate Capital Partners Updates Coverage on Surf Air Mobility Inc. (NYSE: SRFM). SRFM’s 2Q26 results improved the forward setup, with revenue at the high end of guidance despite elevated fuel costs and Hawaii weather disruption, while the first SurfOS enterprise contract advanced commercialization. Revenue increased 8% y/y and 15% q/q to $29.5M, versus guidance of $27M-$30M, while adjusted EBITDA loss narrowed to $10.5M from $12.3M q/q, though widened from $9.5M in 2Q25. SRFM is moving beyond restructuring, with earnings supported by On Demand growth, structural airline efficiencies, initial SurfOS revenue expected in 2H26, lower financing pressure, and what we believe is a trough in scheduled service as route-exit headwinds begin to moderate.
Air Mobility: Scheduled service revenue declined 19% y/y to $17.4M as SRFM continued exiting unprofitable routes, while Mokulele revenue increased approximately 7% y/y and 15% q/q. Controllable completion factor reached 98%, with on-time departures of 83% and arrivals of 88%. OperatorOS savings offset approximately $0.5M of above-plan fuel costsManagement views these OperatorOS savings as structural. Surf On Demand remained the primary growth driver, with revenue up 101% y/y to $12.1M, departures up approximately 67%, and revenue per flight up 25% as mix shifted toward larger aircraft and longer flights. Legacy commitments remain a declining margin drag. New Cargo, Wholesale, and Powered by Surf On Demand lines represented approximately 14% of 1H26 charter revenue and were all gross margin positive.
Software: SurfOS reached a commercial milestone with Wheels Up becoming the launch Enterprise BrokerOS customer under a contract worth up to $12M. Management indicated the agreement should contribute approximately $2M in 2026 and $4M in 2027, with integration underway. The relationship also expands Surf Air’s engagement with Palantir, creating a potentially self-reinforcing commercial cycle in which additional enterprise customers drive deeper Palantir deployments. OperatorOS and OwnerOS remain on track for a 4Q26 commercial launch, while management expects to secure another enterprise contract by year-end. Powered by Surf On Demand has onboarded 50 brokers, halfway to its 100-broker year-end target.
Electrification: BETA began ALIA electric cargo demonstration flights across Hawaii in June with Hawaiian Airlines support, supporting SRFM’s planned electric passenger launch in Hawaii while providing critical data.
Outlook: Management reaffirmed FY26 revenue guidance of $128M-$138M and adjusted EBITDA loss guidance of $30M-$25M while introducing 3Q26 revenue guidance of $35.5M-$37.5M and adjusted EBITDA loss guidance of $7M-$4M. The expected 2H improvement reflects On Demand growth, seasonal strength, moderating route-exit comparisons, improving airline earnings, and initial SurfOS revenue. Post-quarter financing reduced convertible principal by 64% and monthly cash amortization by up to 50%, while total debt has declined approximately 50% over the last year and maturities have been extended. The balance-sheet improvement increasingly supports the operating model where incremental working capital can secure charter supply at negotiated wholesale rates, providing a direct path to higher On Demand margins as SRFM exits a heavier CapEx cycle and management expects FCF conversion to improve.
Valuation: We are using an EV/Revenue framework to inform our SRFM valuation. Currently SRFM is trading at a FY27 EV/Revenue of 1.0x compared to comps at a median of 2.0x. We are using our FY27 expected revenue and an EV/Revenue range of 2.5x to 3.0x, with a midpoint of 2.75x. This arrives at a valuation range of $3.50 to $4.25, with a price target of $3.88.
