For investors in Hawthorne-based commuter air service and charter operator Surf Air Mobility Corp., the period since the company went public 18 months ago and simultaneously acquired a major commuter airline has been a time of almost unrelenting turbulence.

Investors have seen several share price plunges, followed by temporary recoveries, all while the company has tried to restore its commuter airline operations to profitability and eventually convert its fleet to electric power trains.

Along the way, Surf Air Mobility investors have had to face a chief executive transition, a strategic review of company operations and a notice of non-compliance from the New York Stock Exchange for failing to meet market capitalization thresholds.

But company executives last month made a pair of announcements they hope will turn things around, both for company operations and its long-suffering investors.

Surf Air Mobility on Nov. 14 announced a $50 million term loan from Comvest Partners, a West Palm Beach, Florida-based middle market private equity firm. Simultaneously, interim

Chief Executive Deanna White announced a four-phase turnaround plan designed to maximize the profitability of Surf Air’s existing scheduled service and charter operations and, eventually, to expand those operations.

“We implemented a transformation plan for three reasons and with three clear priorities,” White said. “First, to improve our capital structure and strengthen our balance sheet after our public listing and merger. Second, to make the necessary improvements that put us on a path to achieve profitability in our airline operations in the near-term.”

White said those first two objectives have largely been accomplished, especially with the $50 million loan.

“The third and remaining priority is to create a clear understanding for all stakeholders of the positive impact of our software and electrification initiatives over the short and long term,” White added.

Shareholders’ reaction to these moves the company announced on Nov. 14 was muted for several days as the share price remained mired below $2.50 for a week. Then on Nov. 25, the share price surged 40% to $3.75 in what appeared to be a delayed reaction. The company had not made any significant announcements in the intervening days and there was no word of analyst upgrades.

The share price fell back a bit on Nov. 26 to $3.48 and remained down about 68% for the year to date.

Rocky start

Surf Air Mobility’s difficulties began with its efforts to go public a couple years back. The company was eyeing one of the nation’s largest commuter airlines, Palm Beach, Florida-based Southern Airways, for acquisition so that it could use the latter’s fleet as a pathway to electrification.

But as a condition of any deal, Surf Air had to become a publicly-traded company. After the post-pandemic shutdown of the IPO market and a failed attempt through a SPAC vehicle, the company was forced to take an unusual path: a direct listing, in which shares of existing shareholders are converted into publicly tradeable shares.

The direct listing backfired as the lack of an investor marketing campaign prompted the shares to land on the market with a thud. Company executives rushed to lock up any shares that remained.

But as soon as that was accomplished, the company faced the reality of operating a commuter airline in the brutal post-pandemic market. With the purchase of Southern Airways, the company overnight became one of the nation’s largest commuter air carriers, with a total of 75,000 departures from 48 cities carrying about 450,000 passengers. But commuter airlines have historically had low profit margins, especially when compared with charter jet operations and Surf Air Mobility struggled, posting a string of quarterly earnings losses that in turn prompted another share price downturn.

In May, Surf Air Mobility announced a chief executive transition. Out was Stan Little, the former chief executive of Southern Airways who came on board Surf Air Mobility in the same post at the time of the acquisition. Moving up to interim chief executive was White, who had briefly served as chief financial officer. White has held several top posts in the industry, including as chief executive of Cleveland Ohio-based Bombardier Flexjet and chief operating officer of an electric vertical takeoff and landing (EVTOL) startup.

Simultaneously, the company announced a strategic review aimed at reducing costs, injecting more capital into its aircraft electrification efforts and increasing shareholder value.

That prompted a ratings downgrade from Vancouver, British Columbia-based Canaccord Genuity and yet another investor selloff, pushing the company’s market cap below a New York Stock Exchange threshold and triggering a non-compliance notice from the exchange.

In August, the company announced a mandatory convertible security and implemented a 1 for 7 reverse stock split to boost the stock price so it could remain in compliance.

Then, in October, Surf Air Mobility announced the expansion of an existing investment by Denver-based Palantir Technologies Inc. in which the latter boosted its stake in Surf Air Mobility to 1.27 million shares, or 18% of total outstanding shares. In exchange, Palantir will continue to provide flight booking and operations software to Surf Air Mobility.

Electrification efforts

According to Surf Air Mobility’s third quarter earnings announcement, the recent $50 million term loan from Comvest Partners will be used in conjunction with cash freed up from cost reductions to “unlock the company’s ability to complete the rationalization of routes, resolve deferred maintenance, and further improve flight completion rates.”

Unplanned maintenance was a major factor in the portion of planned flights that had to be cancelled, according to the earnings announcement.

The company also has focused on making its charter service more profitable; revenue from charter flights dropped 13% in the third quarter from the same period a year earlier. The earnings announcement attributed this drop to “management’s focus on profitability rather than near-term market penetration.”

Company executives are hoping these moves will help stabilize operations and allow the company to return its focus to electrifying the power trains for Cessna Caravan aircraft supplied by Wichita, Kansas-based Textron Aviation.

In the earnings announcement, the company said it hopes to obtain a supplemental type certificate from the Federal Aviation Administration by 2027 that would enable it to put the electrified Cessna Caravans into service.

In the meantime, Surf Air Mobility said in the earnings announcement that it is actively pursuing joint venture opportunities to further capitalize these aircraft electrification efforts.