Q4 2023 Surf Air Mobility Inc Earnings Call
Call participants are now in listen only mode.
After the Speakers' remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: I will now turn the call over to Bill Margarita you May begin your conference.
Bill Margarita: Thank you operator, welcome to surface Mobilities fourth quarter 2023, and full year 2023 earnings call I'm joined today by stand a little survey, our CEO Oliver Reeves Surfers CFO. Please note we released our Q4 2023 results. This afternoon.
Speaker Change: Our available in filings with the SEC and uncertain <unk> investor page at investors Dot surveyor Dot com before we begin.
Oliver Reeves: I'll remind everyone that during this call we may discuss our outlook and future performance. These forward looking statements may be preceded by words, such as we expect we believe we anticipate or similar such statements. These statements are subject to risks and uncertainties and our actual results could differ materially from the views.
Oliver Reeves: Expressed today.
Oliver Reeves: Some of the risks have been set forth in our earnings release, and our periodic reports filed with the SEC.
Oliver Reeves: During today's call. We will also present, both GAAP and non-GAAP financial measures additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the earnings release, we issued earlier today, which has been posted on the Investor Relations page of surf Air mobility website and in our filings with the.
Oliver Reeves: The SEC with that I'll turn the call over to Stan.
Stan: Thanks, Bill and thank you everyone for joining our call today, we are pleased with our overall performance in both the fourth quarter and the full year 2023 and.
Stan: I am grateful to our team for delivering financial results that met or beat our guidance.
Speaker Change: The company recorded $112 $9 million in revenue up 12% year over year, beating our 2023 guidance.
Speaker Change: And negative $59 million in pro forma adjusted EBITDA, including investment in electrification and software achieving our 2023 guidance 2023 was a transformative year for <unk> mobility as evidenced by our completion of two big milestones our direct listing on the New York stock.
Speaker Change: Exchange and the completion of our merger with Southern Airways.
Speaker Change: We're also pleased with the integration of Southern Airways and surf Air.
Speaker Change: In just seven months, we've made strides in defining the strategic path ahead, bringing on new talent and building key partnerships with.
Speaker Change: We've also made steady progress in expanding our leading regional airline network developing proprietary powertrain technology to electrify the assessment of Grand caravan and advancing our AI driven software platform with the support of Pyland here.
Speaker Change: Our aircraft as a service platform model will enable independent owner operators to join our platform, where they will benefit from electrification technology state of the art software and aircraft financing or a bundle of all three.
Speaker Change: Over time, our aircraft as a service model will enable us to expand our operational ecosystem and grow our off fleet products.
Speaker Change: Our partnership with patented technologies and continued investment in our software platform. Our core to these efforts and we intend to offer access to our software to operators prior to launching electric powertrains.
Speaker Change: The expansion of our network over time, and our steadfast commitment to and investment in electrification should enable us to capture a meaningful portion of the emerging regional air mobility market.
Mckinsey: According to Mckinsey <unk> company by 2035, the total global market for regional Air mobility will be between 75 billion in $115 billion for trips between 100 500 miles.
Speaker Change: We believe that electrification will have a transformative effect on the unit economics of regional flying as it will drive down direct operating costs considerably.
Mckinsey: According to Mckinsey the emergence of regional Air mobility will also create the need for financing and distribution. Another software services that are not currently being offered at scale to this segment of the market.
Speaker Change: We plan to address these needs for ourselves and for third parties through our software products and aircraft as a service offerings.
Speaker Change: We are pursuing these initiatives in partnership with some of the most sophisticated technology companies in the aviation space.
Textron aviation: Textron aviation one of the world's largest airplane manufacturers is providing us with new caravan aircrafts under a preferential agreement.
Speaker Change: <unk> technologies, a multibillion dollar software company that builds enterprise data platforms for organizations with highly complex and sensitive data needs is deeply involved in co developing state of the art software for our regional air mobility platform.
Speaker Change: The tools, we've been developing with <unk> leverage AI to improve our operational efficiency, our customer experience and service levels and our back office intelligence across surface three air travel brands.
Speaker Change: More specifically as we continue to integrate our company's talented has supported the aggregation of financial and sales data across multiple systems into a unified dashboard and reporting platform.
We've been building a data warehouse of near real time flight information and aircraft positioning to facilitate more efficient operator outreach for our on demand charter fulfillment.
Speaker Change: We also designed the framework to help drive recommendations for potential new markets and route expansions.
Speaker Change: And finally, we are continuing development of an AI enhanced crew scheduling application that factors things like crew availability maintenance schedules and compliance guidelines to enhance our decision, making and improve the safety and efficiency of our flights.
Speaker Change: This work with talented has laid the foundation for our platform to be able to host and provide access to these tools for unlimited air operators beyond our own brand.
Speaker Change: We're also working with <unk> one of the most accomplished aerospace engineering firms in the world to develop the engineering specifications for our proprietary powertrain technology and to jointly work through the FAA certification process.
These and other partnerships provide us with an even deeper bench faster time to market and efficient R&D spend.
Speaker Change: Since our earnings call in November we've announced several new key agreements to advance our growth plans and scope of services, including providing commuter air service between Williamsport, Pennsylvania, and Washington, D C and bringing air service to Purdue University for the first time in over 20 years connecting their university.
Speaker Change: Chicago.
Speaker Change: These two new route will be subsidized by local and private entities, including launch costs without the need of the Central Air Service program.
Speaker Change: They will provide crucial regional transportation and are the first of what we believe will be many new subsidized partnerships with other airports cities and institutions.
Surf Air Purdue partnership is groundbreaking on several levels. In addition to connecting one of the world's Premier aviation universities to U S and international Air service connections with frequent daily flights it.
Speaker Change: It will provide a major boost to businesses along the emerging high 65 Tech and distribution corridor.
Speaker Change: One leading industry analysts has already dubbed this non federal subsidy program the southern Airways effects.
Speaker Change: Purdue launches on May 15th in Williamsport on May 23.
Speaker Change: Agreements like those with Purdue in Williamsport are so important because while in platelets worldwide have already surpassed pre COVID-19 levels and yields remained strong major airlines and their regional jet partners are still phasing out 50 seat aircraft.
Speaker Change: They are shrinking operations and smaller regional markets, thereby limiting customer options, which leaves a void we can phil.
Speaker Change: Southern business development leadership is actively engaged in identifying the best growth opportunities with minimal financial and resource risk.
Speaker Change: As a reminder, surf air provides two types of air services scheduled and on demand charters.
Speaker Change: These businesses grew 11% and 18% respectively in 2023 on a year over year pro forma basis.
Speaker Change: We recently integrated both southern and Moca lately ticketing functionality onto <unk> Dot com, which is an important step in integrating the brands we have.
Speaker Change: Encourage all of you to go to our website and see the brand synergy.
Speaker Change: I'm pleased to report that we have made considerable progress in overcoming the recent supply chain challenges and aircraft groundings that impacted our service levels throughout the latter part of 2023 and early 2024.
Speaker Change: Our maintenance teams have undertaken extensive efforts to work through supply chain challenges that have impacted the availability of parts over a prolonged period.
Speaker Change: And because of our unique pilot training program, we have cultivated a full roster of pilots to staff our bases.
Speaker Change: In 2024, we will continue to pursue synergistic opportunities between our scheduled and on demand charter networks further modernizing and streamlining our operations as we grow the business.
Speaker Change: As part of our continuing efforts to upgrade the talent of our team. We've recently hired two aviation industry veterans.
Speaker Change: As new Deputy head of airline operations Louie some Sir has had a successful career with both Hawaiian Airlines and West jet Louis will oversee things like fuel purchasing arrangements ground handling and crew travel and accommodation costs always with an eye on cost efficiencies. Additionally, he is introducing a new.
Speaker Change: New crew rosters platform designed by a talented team to drive efficiencies in how we optimally pair crews with a goal of reducing total crude numbers required.
Speaker Change: Louis also has an extensive history in customer experience and will be highly focused on optimizing our customer satisfaction scores.
Speaker Change: We've also hired a new director of maintenance for Southern Airways, Thomas and Dino who brings over 30 years of experience in aircraft maintenance, including overseeing maintenance programs at both Virgin America and Spirit Airlines Tommy has many years of knowledge of both necessity caravan and the Palatis PC 12 as well.
Speaker Change: We were thrilled to have found this combination of big airline and small airplane experience when we found Tommy.
Speaker Change: We are highly confident that the combined leadership and deep experience that Louis and Tommy bring to the company will help elevate the overall performance and reliability of our airline operations going forward.
Speaker Change: Additionally, we have expanded our technology team to include new experts with deep experience across consumer transportation and logistics marketplace and distribution.
Speaker Change: Working closely with our partner Palomar here. This team will lead the software development for surfers consumer technology and air operations, while building the tools for third party operators as part of our aircraft as a service offering.
Speaker Change: We are making solid progress with our electrification initiatives along with our lead partner Aerotech and are currently in the latter half of our conceptual design phase that means we're in the final stages of vendor selection for key components, including battery and electric motor suppliers.
Speaker Change: Additionally, we're working with the caravans avionics manufacturer garmin to integrate the powertrain with the aircraft displays.
Textron aviation: Our exclusive relationship with Textron is a real competitive advantage as it enables us to work more closely with Garmin and other key vendors on these critical components.
Textron aviation: Alongside the supplier selection work our design of the powertrains integration to the aircraft is progressing well.
Speaker Change: We intend to electrify our existing fleet using fully electric and hybrid electric powertrain technology. Once it's fully designed developed and certified.
Speaker Change: Due to the timing of availability for the optimal components for our powertrain. We believe we will obtain STC certification of the fully electric powertrain by early 2027 and for the hybrid electric powertrain sometime thereafter.
Speaker Change: Given this timeline, we remain confident that we can still be the first to market with an electric commercial regional passenger aircraft.
Speaker Change: To further this goal we've made great progress signing up new customers for our proprietary powertrains and have signed Mou with several new partners in Africa, including Safari link yellow wings Orrick are services and Z Boskovich all assessment caravan operators to upgrade their aircraft with our electric.
Speaker Change: Powertrains.
These providers are looking to surf air to substantially lower the carbon emissions of their caravan fleet reduce operating costs and deliver on their mission of protecting Africa as natural ecosystem and wildlife.
Speaker Change: These are no use represent 13% of the total care van fleet flying on the entire African continent.
Speaker Change: So if you recall from our Q2 earnings release last year, we offered long term guidance that 10% to 15% of the caravan market would be electrified or in contracts to be electrified.
Speaker Change: We believe these early successes demonstrate progress toward those goals.
Speaker Change: To enhance our platform offerings surf are also entered into an LOI with Electra aircrafts to commercialize their electric claims once certified.
Speaker Change: We will jointly develop a leasing partnership to enable new operators to expand access to regional transportation and we will collaborate on fleet wide data analytics services to provide real time aircraft information on <unk> network.
Speaker Change: We have also secured preferred delivery positions for 90 Electra East all that is electric short takeoff and landing aircraft that will be available to us or our operator partners.
Speaker Change: Before I turn the call over to our new CFO Oliver I want to thank all our team members across the company, who make our customers' journeys exceptional today, while working to transform regional flying through electrification tomorrow.
Their hard work is paying off and I'm grateful to them now.
Speaker Change: Now I'll turn things over to Oliver.
Oliver Reeves: Thanks, Dan and thanks to you all for joining us on the call today.
Oliver Reeves: As Dan mentioned, we are pleased with our financial performance with revenue, beating and pro forma adjusted EBITDA meeting 2023 guidance.
Oliver Reeves: I began my role as <unk> ability. This January I joined the company because I'm excited about the growth and profitability potential of the nascent regional <unk> market, the transformative potential and positive environmental impact of our electric planes and the related technological involved because we are planning to bring to the market overtime alongside our partners such as <unk>.
Oliver Reeves: Sure.
Speaker Change: My background is in finance enterprise software on insurance.
Speaker Change: I joined because of the company's transformative vision as well as the caliber of the team.
Speaker Change: I would like now to thank this team place warm welcome and I'm excited to roll up my sleeves, as we continue to fine tune our strategy now.
Now, let me turn to the numbers.
Speaker Change: On a GAAP basis, the company reported fourth quarter revenue of $26 8 million and full year revenue of $60 5 million.
Speaker Change: Unaudited pro forma basis, which assumes at southern acquisition closed as of the beginning of fiscal year 2023. The company reported $27 4 million of revenue in the fourth quarter flat year over year and 109.
Speaker Change: $9 million of revenue for the full year up 12% year over year.
Speaker Change: Our on demand platform, which includes both <unk> and <unk> chocolate businesses.
Speaker Change: Continues to be a key source of growth with revenue up 18% in deposits is about 76% all on a pro forma year over year basis, we are continuing to see very positive trends here exiting Q1, and we will update you further on our next call.
Speaker Change: Pro forma adjusted EBITDA, which assumes that the southern acquisition closed as of January five 2023 was negative $18 4 million for the fourth quarter as compared to negative $12 6 million for the same period last year and a negative $59 million for the full year.
Speaker Change: While we continue to invest in growth a path to electrification is capital efficient and de risk when compared to our competitors because.
Speaker Change: Because we have chosen to electrify an aircraft with an existing SEC rather than pursue a clean sheet design.
Speaker Change: We have taken an impairment of the goodwill recorded in the southern acquisition based on our interpretation of the applicable accounting standards, which require a point in time determination of fair value, which affords little credit for the benefits of our electrification and software initiatives given.
Speaker Change: Given the operational challenges faced by the southern business unit, particularly in the fourth quarter and declines in our share price and market capitalization in the fourth quarter. Our objected projections for the operations of seven indicated an impairment in Q4 2023, leading to the charge.
Speaker Change: This impairment is not a referendum on the business normally ultra commitment and efforts in executing our core strategy for southern network expansion re fleeting software driven margin improvements on electrification.
Beth <unk>: Turning to liquidity as of December 30, <unk> 2023, Beth <unk> had $1 7 million of cash on hand, with the ability to draw $92 5 million in committed draws and $297 3 million in follow on draws from the Gen share subscription facility.
As previously mentioned, we amended the facility in the third quarter of 2023 to give us more flexibility in the amounts and timing of equity sales to match our capital needs.
Beth <unk>: Flexibility will help us more effectively manage dilution as we execute our business plan our.
Beth <unk>: Our cash on hand reflects the balancing of our working capital needs with the dilution of Gen cash advances.
Beth <unk>: In aggregate the German facility should provide adequate capital to finance our investment in network growth.
Speaker Change: <unk> I notification over the short to medium term with that said, we will be strategic with regard to our capital needs, including a continuous search for ways to optimize our capital structure, lower our cost of capital and enhance shareholder value.
Speaker Change: As part of our overall reconfiguration of our planning we look ahead to the delivery of our first new Tech some aircraft.
Speaker Change: Not expecting delivery of aircraft in total in Q3 and Q4 instead of our original expectation of 11 across the year. The delay is due to an issue with customs SaaS apps specifications that we had orders from textron.
Speaker Change: As a reminder, we intend to use our $450 million leasing facility, we haven't faced with jet stream. The largest aircraft leasing company in the U S regional turboprop aircraft to finance our fleet.
Speaker Change: In terms of other uses of capital are priorities include.
Speaker Change: Technology to advance the certification of our electrified powertrain.
Speaker Change: Investment in our core direct to consumer passenger booking platform.
Speaker Change: Development of aircraft into service software for operators in conjunction with talent here and working capital to support growing the existing Airlines network.
Speaker Change: Our first quarter 2020 full guidance.
Speaker Change: Revenue in the range of $28 5 million to $29 5 million.
Speaker Change: Pro forma adjusted EBITDA in the range of negative $17 million to negative $14 million, which excludes the expected impact of stock based compensation and other nonrecurring items.
Speaker Change: Looking ahead in 2024, we are firmly committed to balancing growth with profitability expense reduction and disciplined capital allocation focused on high ROI opportunities, including potential expansions.
Speaker Change: As I close this call I would like to formally invite.
Speaker Change: One interested in a deeper dive into our business to join us for Seth as Investor Day on June 7th at the New York Stock Exchange.
Speaker Change: This event will be accessible virtually and a replay will be available on our website.
Seth: As part of our Investor day, we will be providing a comprehensive strategic update on the business. In addition to providing full year 2020 full guidance.
Seth: A press release with further details will be issued closer to the date and we hope to see many of you there with that operator, we will take Q&A.
Speaker Change: Thank you.
Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press star one.
Speaker Change: Your first question comes from Austin <unk> with Canaccord. Please go ahead.
Speaker Change: Hi, good afternoon.
Just my first question here, so one tier one <unk> as being critical to gain closer to profitability breakeven over the next.
Speaker Change: Here, so as you rollout additional routes.
Speaker Change: Well this is stand us in good good to hear from you to answer that question, we have changed a bit of our strategic thinking over the last six months not as have not vis vis new routes versus versus not new routes, but vis vis which ones are we willing to take on first based on the level of risk.
Speaker Change: If you recall I talked to at Investor day about how new routes, even the tier one routes can take anywhere from six to 12 months to achieve profitability what.
Speaker Change: What we discovered in the meantime is there are a lot of routes that can be profitable with zero days of lead time through subsidies or minimum revenue guarantees. So once we got the deal in place with Purdue and then following that one with Williams Port we discovered that in this near term as we're truly focused on profit.
Ability as our as our top goal for the company.
Speaker Change: We should proceed with these subsidized and NRG routes before we go into even the really good tier one routes that still require some time to mature.
Speaker Change: So I believe that there are not prepared to announce anything today, but I believe that there are more routes out there similar to the Purdue and Williams port routes and that's what we'll be looking at for the remainder of this year.
Speaker Change: And then as we announce other other market based flying for 2025.
Speaker Change: Im not prepared to give cities right now, but I will say when we do it we're going to do it with scale. So youre not going to see US go to two routes on the east coast and three routes on the West Coast and one in the Pacific Northwest, we're going to really build out footprints.
Speaker Change: Following following that.
Speaker Change: Great and just a follow up I think we already touched on this in the remarks, but.
Speaker Change: I guess route expansion and continued development of the powertrains.
Speaker Change: The gym advances should be sufficient to provide enough cash for that.
Speaker Change: Yes.
Speaker Change: We have not wavered in our position that the gym facility is adequate for us to execute the business plan, we still believe that to be the case that being said one of one of Oliver has great strengths is the capital markets and certainly one of the things. He is looking at and working hard on every day is additional sources of capital not alternative sources.
Speaker Change: But additional sources of capital so we will be able to do additional things when he is successful in those areas, but the gym facility is adequate we believe to fund the business plan as it now exists.
Speaker Change: Excellent thanks for the details.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Ben Johnson with Piper Sandler. Please go ahead.
Speaker Change #100: Hi, there Ben Johnson on for Alex I guess I have two for you.
Ben Johnson: <unk> I think you mentioned that you expected FCC certification in like 25 to 26, I guess, what's causing the update expectation of early 2027 now and then secondly, once you do receive the certification how quickly do you expect to able to convert all of your plans to hybrid or electric powertrains and at what.
Speaker Change #100: Hi.
Speaker Change #102: Do you expect to be able to purchase purpose built planes from textron and no longer have to retrofit them.
Speaker Change #103: Excellent question has been good to hear from you as well first of all I do have <unk> in the room with us today and I.
Speaker Change #104: I'm sure will want to add something to my comments here at the end, but as we get to the to the end of the conceptual design review phase, which is the phase that we're in right now we're down selecting the suppliers for the motor for the battery for the other components of the STC and what we've discovered is that not only do do we.
Speaker Change #105: To sort of what we had been discovered this we've known this all along but what has come to light is many of the best of those components are not yet certified so we have to do the certification timeline of the supplier and then allow time for the certification of our own STC. So what this is going to mean actually is.
Speaker Change #106: Is that it is going to be a better product in 2027, when it comes out because we will be able to use the exact motor that we want and the exact battery that we want.
Speaker Change #106: So a little bit of a delay there from what we were looking at before but I don't think anything considerable and I think that it'll be a better product once we get out once we get it out.
Speaker Change #107: And then as to the rollout of our of the conversion of the fleet, it's really too early for us to opine at this time, how quickly we're going to be able to do the conversions.
Speaker Change #108: And part of it will be on a case by case with the with the Motors certainly we're going to want to convert the engines that are up for.
Speaker Change #108: That are up for overhaul anyway as you know the whole plan for this is that the cost of doing the transition will be very similar to the cost of doing the overhaul. So the last thing frankly that we'd want to do is take a freshly overhauled engine pull it out of service and then immediately replace it with.
Speaker Change #109: Electric so theres going to be a lot of work for our team in determining the order and the timing of making those conversions, but we do believe we will be able to do them simultaneously across multiple conversion sites being that we have.
Speaker Change #109: Five five heavy maintenance centers across the across the country, Let me hand, it over to Ido for any further comments on both of these as well as whether or not he may want to put any kind of timeline on the textron question.
Ido: Hello, everyone and the only thing I'd add is.
Speaker Change #111: The initial FCC will be applied evenly.
Ido: Moving to new aircraft as they are rolling off the line.
Speaker Change #112: Thus far.
Speaker Change #113: From Textron directly.
Speaker Change #114: One power.
Speaker Change #115: There are any.
Speaker Change #116: The SEC will be initially applied after the aircraft has been constructive so it would've been.
Speaker Change #117: Growing off the line as they care of any ex rolling into Hanger next door and having the STC applied to it that's the initial state.
Speaker Change #118: The next phase of that.
Speaker Change #119: And part of what we're doing as well.
Speaker Change #120: Our relationship with Textron and the coordination of the SEC development with Exxon is we're holding hands with them. So this phase short as possible, but that next phase will be them ingesting our FTC into the Tc and making it was called in the industry Alliance. It. So you apply the STC is.
We're part of the Tc.
Speaker Change #120: And that could happen as early as six months. After we have the STC and it really depends on how good a job we do.
Speaker Change #120: The coordination of that.
Speaker Change #120: Okay.
Speaker Change #121: And that would make that would be a textron decision of textron issue not internal to serve there just to clarify.
Speaker Change #122: Did that answer your question, Ben or did you have anything else.
Speaker Change #123: Well that's great. Thank you very much.
Speaker Change #123: Thank you.
Speaker Change #123: Your next question comes from David Vernon with Bernstein. Please go ahead.
David Vernon: Hey, good afternoon, guys and thanks for the overview.
David Vernon: Couple of questions here first.
David Vernon: Is there a comp for the $29 million in revenue that you expect and is there a way to think about whether the top line in 'twenty four is growth rate anyway is better or worse than the 12% you realized on an adjusted basis in 'twenty three.
Speaker Change #125: Let me hand that over to our new CFO Oliver and he can opine on both of those Oliver.
Speaker Change #126: So you didn't come in very well would you just mind when people deceleration.
Oliver Reeves: Absolutely so the $29 million in revenue Youre expecting for <unk>.
Oliver Reeves: Is there a comp for that number like what's the growth rate on a year over year basis for the <unk> sort of like for like I'm, just trying to get a sense for whether you think.
Speaker Change #127: 24 is setting up to be better or worse than.
Speaker Change #128: The 12% adjust.
Speaker Change #129: Adjusted revenue growth rate realized in 2023.
Speaker Change #130: So to answer your first question.
Speaker Change #131: Our guidance does imply some growth top line.
Speaker Change #132: I don't think we've predicted guided to the number but somewhat similar to.
Speaker Change #133: What you saw for the full year.
Speaker Change #133: And with regard to your second question.
Speaker Change #134: We haven't we haven't really.
Speaker Change #135: I think what I would do is I would invite you to the analyst day will be far more prepared to answer that question for you.
Speaker Change #136: We have a we have a lot to offer there and I think that that would be a good use of time.
Speaker Change #136: I think you can get back to you David on the issue of the comp question.
Speaker Change #137: Let us let us get back to you on that one.
Yes. This is Dan maybe just as you can imagine Oliver wasn't here to this time last year end and is just getting settled in so.
Speaker Change #138: We will get back sorry to interrupt you what's your follow up.
Speaker Change #139: Yes, no real update.
Speaker Change #140: The comps with emergent everything.
It's foggy so I'm just trying to I'm, just trying to get a sense for the exit versus entry rate rates of growth. So.
Speaker Change #141: Second question would be around.
Speaker Change #142: You mentioned in your prepared remarks that some of the work you're doing on the software side is actually going to become commercialized able before you.
Speaker Change #142: Are getting certification for the electric powertrain can.
Speaker Change #143: Can you talk a little bit about what you might be able to do to further stimulate the top top line outside of just traditional route expansion on the software side and whether that can be meaningful out of electrification.
Speaker Change #144: Yeah, Yeah, absolutely and that's a great question I was talking about it this morning at our insurance underwriters summit here in Palm Beach.
Speaker Change #144: He's looking for way to increase revenue without burning a single gallon of jet fuel and because we are in electrification company someday, we're going to make most of our revenue by not burning a single gallon of jet fuel, but in the meantime, it's from these ancillary sources and one of the ones I am most excited about is the is the software package. So <unk>.
Speaker Change #145: Right now we are actually beta testing on the southern airway side on the operational side the crew scheduling AI unit.
Speaker Change #145: And it's really remarkable what we can do right now with AI.
Speaker Change #146: Scans emails and can detect when if it detects a sick call on an E mail, it's already looking for a replacement crew before a human being has even realize that a CIT call has occurred.
Speaker Change #147: Tons of things like that when you, especially when you tie in the maintenance side of it and the regulatory side of it that we're going to really be able to take the human element and the human error rate out of this and I think that's something that we're going to be able to market to other airlines with a recurring revenue component every single month.
Speaker Change #148: They are paying for the license for the software. There is also the distribution element that comes with it I was speaking at a conference down in Panama City Panama.
Speaker Change #149: <unk> operators in the Americas, three or four weeks ago, and I talked to several small operators that are looking for the ability to get their tickets distributed outside of just their own website. So they say how can you get us on kayak and Google flights on Expedia and can you potentially get us if we're going to do a connection with one of your interline partners can you.
Speaker Change #150: Can you get us onto their website and the answer is yes and for a fee.
Speaker Change #151: So that's another part of the of the software package that we're working on and then of course, the airline as a service which is the leasing arm of what we're going to do and would come with much of the of the software.
Speaker Change #151: The goal is to have to have a menu that you can basically ticked down the menu and say we can supply you with everything from the airplane the ticket distribution the software required to run your finances. The software required to run your operations the software required to maintain compliance with FAA regs.
Speaker Change #152: You pick and choose what you need and we'll set you up with something that provides that recurring revenue to surf air mobility.
Speaker Change #153: Alright, Thank you for that and I guess, you're thinking about putting together your investor day presentation to the extent that you can help us understand.
What that addressable market is on the software spend side outside of the leasing in the electrification part of it which.
Speaker Change #154: It's a little bit more tangible.
Speaker Change #154: It's hard and difficult from the outside looking in it that's just part of the industry to really understand kind of how much money is spent on this stuff today. So anything you can do to help us flesh that out would be really helpful. As we look at it.
Speaker Change #155: Absolutely we will make a note of that and make sure that we address that at Investor day and.
I understand the importance of that to you guys. Because the software income is going to likely be the first of the new ancillary income that comes in that will happen of course before electrification that will also happen before the aircraft as a service.
Speaker Change #156: Is launched as well so we need to be able to get you what you need to be able to model that.
Speaker Change #156: Alright, thank you.
Speaker Change #156: Thanks.
Speaker Change #156: Your next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Katherine: Hey, guys. Good afternoon. This is Katherine for Robyn. Thank you for taking the question I just had a quick question on premium which has been a big move a lot of airlines have been pushing towards recently. So just curious if you guys would consider yourself a premium product or anything more you can do on that.
Speaker Change #156: Yes.
Speaker Change #158: Yes, one of the interesting question, great glad to hear from you Catherine Yes.
Speaker Change #158: Yes, we absolutely consider ourselves.
Speaker Change #159: Both the premium product, but also in a voluntary product because there is something there for just about everybody. If you want to flip youre accustomed to flying first class and Youre accustomed to spending seven or $800 on a seat on one of the legacy carriers.
Speaker Change #160: We can be price competitive and give you just to give you a better product in most cases and some of the cities between that we fly between but then again, we also put 400000 people a year on scheduled service routes at for tickets that are under $200.
Speaker Change #161: I think it's a combination of both certainly it's depending on what your priority is if youre looking for a hot meal on your flight youre not going to get that on surf air mobility, but we're going to get you to your destination and gets you to your favorite restaurant, a heck of a lot faster than if you go through the airport experience at Laguardia.
Kathryn: Anything else Kathryn.
Kathryn: Thank you.
Kathryn: Thanks.
There are no further questions at this time this will conclude today's conference. Thank you all for your participation you may now disconnect.