Surf Air Mobility (SRFM) Q2 2025: Completion Factor Hits 95%, Unlocking Operational and Software Leverage
Surf Air Mobility’s operational overhaul delivered a 95% controllable completion factor, driving both revenue and margin improvement while laying the foundation for a software-first transformation. With Palantir-powered SurfOS moving from internal deployment to early customer interest, the company is positioning itself as a technology platform for regional air mobility, not just an airline. Guidance holds for both revenue and airline profitability, but the next phase will test Surf’s ability to scale software and maintain operational discipline as growth accelerates.
Summary
- Operational Reset Unlocks Profitability: Airline operations reached profitability as execution and completion rates surged.
- Software Platform Gains Traction: SurfOS, built with Palantir, is now in beta with real operators and brokers.
- Guidance Affirms Inflection: Management reaffirmed full-year targets, signaling confidence in continued transformation.
Performance Analysis
Surf Air Mobility posted a breakout quarter operationally and financially, with revenue exceeding the high end of guidance and both business units contributing to margin improvement. Scheduled service, the core airline business, drove most of the upside, benefitting directly from a sharp increase in controllable completion factor—from 82% in Q1 to 95% in Q2—reflecting improved maintenance, leadership, and process discipline. This operational reliability is critical in regional aviation, where completion factor, the percent of scheduled flights flown without operational cancellations, directly impacts passenger revenue and contract retention.
On-demand aviation, which includes charter and jet card sales, showed positive margin in June for the first time, aided by a strategic shift to larger cabin aircraft and software-enabled margin tracking. While the on-demand business is smaller, its profitability and July sales record highlight the benefits of the new BrokerOS platform. The $45 million capital raise and subsequent balance sheet de-leveraging further strengthened the company’s ability to invest in technology and fleet, supporting both near-term stability and long-term platform ambitions.
- Controllable Completion Factor Surge: Scheduled service completion rose to 95%, unlocking revenue and contract wins.
- On-Demand Margin Inflection: Positive margin in June reflects disciplined sales focus and software leverage.
- Balance Sheet Transformation: $45 million capital raised and debt conversion reduced interest expense and improved liquidity.
Operational improvements have moved the company from stabilization to an inflection point, with both airline and software businesses now showing tangible signs of scale and leverage.
Executive Commentary
"We substantially improved all our key operating performance metrics, including on-time departure, on-time arrival, and controllable completion factor by double-digit percentages as compared with the prior year. We achieved profitability in our airline operations for the second quarter, keeping us on track toward our goal of profitability in our airline operations for the full year."
Deanna White, Chief Executive Officer & Chief Operating Officer
"The strong financial results we are reporting demonstrates the return on investments for all of the capital invested in our operations since November when we closed on our $50 million term loan with Comvest."
Oliver Reeves, Chief Financial Officer
Strategic Positioning
1. Software-First Platform Ambition
SurfOS, the company’s modular operating platform, is central to Surf’s transformation from a regional airline to a technology provider for the wider air mobility ecosystem. Built with Palantir, SurfOS is already deployed internally and with beta users, offering live flight data integration, real-time scheduling, and maintenance tools. The recent five-year exclusive license agreement with Palantir positions Surf as the sole configuration and sales partner for Part 135 operators and brokers, with sub-licensing rights and joint bidding for major software projects—potentially unlocking a new, high-margin revenue stream as SurfOS commercializes in 2026.
2. Operational Discipline and Airline Profitability
Core airline operations have been stabilized and are now profitable, thanks to leadership upgrades, process benchmarking, and fleet maintenance investments. The renewal of essential air service (EAS, federally subsidized regional routes) contracts and the addition of a fifth interline partner (Japan Airlines) provide both revenue visibility and network expansion opportunities. EAS now accounts for 46% of scheduled service revenue, anchoring the business with multi-year contracts.
3. On-Demand Business Recalibration
The on-demand charter segment has pivoted to a larger cabin focus and industry-standard jet card, using BrokerOS to drive margin discipline and sales conversion. Volume purchase agreements with operators, now beta users of SurfOS, have improved supply and pricing accuracy. July delivered the highest sales month since inception for this business unit, validating the new approach.
4. Electrification and Next-Gen Fleet Readiness
Surf maintains a multi-pronged electrification strategy, with preferred delivery positions for 90 Electra hybrid-electric aircraft and a bilateral agreement to integrate SurfOS into Electra’s systems. The timeline for certification and commercial deployment remains late 2027, but partnerships and demonstration flights (such as the recent EL-2 event at Virginia Tech) keep Surf at the forefront of regional aviation innovation.
5. Capital Structure and Growth Investment
Recent capital raises and debt conversions have materially improved liquidity and reduced interest expense, providing the runway needed to invest in both fleet expansion (new Cessna Grand Caravans in 2026) and continued software R&D. The company’s ability to attract equity, including from insiders, signals internal confidence and external validation of the transformation strategy.
Key Considerations
This quarter marks a turning point for Surf Air Mobility, as operational reliability and software traction converge to create new strategic options. The company’s ability to scale SurfOS beyond internal use, maintain airline profitability, and execute on electrification will determine whether it can capture a meaningful share of the emerging $75 billion-plus regional air mobility market.
Key Considerations:
- Completion Factor as a Revenue Lever: Sustained 95%+ completion rates are crucial for contract retention and passenger growth.
- SurfOS Monetization Path: The go-to-market strategy will likely involve a take-rate model, but pricing and adoption rates remain to be validated in 2026.
- Essential Air Service Dependency: EAS contracts provide stability but expose the business to federal funding and regulatory risk.
- Electrification Execution Risk: Delivering on the 2027 electrification timeline will require continued technical and regulatory progress.
- Capital Allocation Discipline: With new capital in hand, management must balance investment in growth with ongoing profitability targets.
Risks
Surf Air Mobility faces execution risk as it transitions from a stabilized airline to a technology platform provider, including software adoption uncertainty, regulatory hurdles around electrification, and continued reliance on EAS contracts. The go-to-market ramp for SurfOS and the ability to maintain high operational standards as scale increases will be critical. Any slip in completion factor or delays in software commercialization could pressure both revenue and valuation.
Forward Outlook
For Q3 2025, Surf Air Mobility guided to:
- Revenue between $27 and $28.5 million
- Adjusted EBITDA loss of $8.5 to $10 million
For full-year 2025, management reaffirmed guidance:
- Revenue in excess of $100 million
- Profitability in airline operations (positive adjusted EBITDA)
Management cited continued operational improvements, software deployment progress, and stable contract wins as drivers for confidence in guidance.
- Sequential rollout of SurfOS to external customers expected to begin in 2026
- Delivery of new fleet aircraft and further software feature launches on track
Takeaways
Surf Air Mobility’s Q2 marks a strategic inflection, validating its operational reset and positioning it to monetize software and electrification tailwinds.
- Operational Performance Drives Financial Upside: The leap in completion factor and disciplined cost control enabled both revenue outperformance and margin improvement, setting a new baseline for airline profitability.
- Software Ambitions Gain Real-World Traction: SurfOS is now live in beta with customers, and the Palantir partnership expands Surf’s addressable market and competitive moat, but commercialization is still in early innings.
- Next Phase Hinges on Scaling and Execution: Investors should watch for SurfOS external adoption, sustained operational reliability, and progress on electrification as the main catalysts for future valuation re-rating.
Conclusion
Surf Air Mobility’s operational turnaround and software-first strategy have delivered a credible inflection point, with both the airline and technology businesses showing tangible progress. The challenge now shifts to scaling SurfOS beyond internal use and maintaining performance as growth accelerates.
Industry Read-Through
Surf’s transformation offers a blueprint for regional aviation players seeking to blend operational excellence with technology-driven margin expansion. The successful integration of live operational data, real-time scheduling, and maintenance tools via SurfOS demonstrates the potential for software to unlock new efficiencies and revenue streams in a traditionally asset-heavy sector. The Palantir partnership signals increasing convergence between aviation and enterprise AI, while the focus on electrification highlights the sector’s pivot toward sustainability and next-gen fleet renewal. Other regional carriers and charter operators will likely face competitive pressure to invest in similar technology stacks or risk margin compression and contract loss as the market evolves.