Surf Air Mobility’s share price continues to drop

Since listing last Thursday on the NYSE, Surf Air Mobility’s (SAM) share price has fallen from a high of $4.60 down to $2.07 today.  

Whilst two business days since listing does not constitute a trend, the continued decline of SAM’s share price is “a disappointing start to say the least,” according to industry analyst Brian Foley.

A reference price of $20.00 per share of common stock had been established by the NYSE for the expected listing of SAM’s common stock. The day after listing it closed at $2.45 per share.

According to the investor prospectus, on an adjusted EBITDA basis, SAM lost roughly $30m in 2021, $28m in 2022 and $9.5m the first quarter of this year, for a total of over $65m in the last couple of years. “At the end of the first quarter, liabilities exceeded assets resulting in around a $20m working capital deficit. We’ve recently seen this movie elsewhere in the private air travel industry, which has caused considerable consternation amongst stakeholders,” said Foley, founder, Brian Foley Associates. 

SAM has plans to operate regional service using a fleet of hybrid-electric and all-electric Cessna Caravans. To do so it is working on supplemental type certificates for the Caravan conversions with firms including AeroTec, TAI and magniX. The day before it listed, SAM merged with Southern Airways Express, an operator with a significant fleet of Cessna Caravans which mainly serves airports with FAA Essential Air Service contracts.

Surf Air also revealed it wants to order up to 150 extra Caravans from Textron. The firm also plans to help smaller operators electrify their fleets by arranging aircraft financing and access to in-house operating software.

“I’ve always been a bit concerned by the split personality of the company, claiming to be both an electric aviation as well as a travel company,” said Foley. “For any company, particularly one of Surf Air’s small scale, it would be a full-time job to be good at just one of these pursuits and only dilutes the resources available to either.”

“Going public is not always the panacea envisioned by small companies, as compliance costs alone can add $1-2m in additional yearly expenses,” Foley added.