Flight booking platform Surf Air Mobility (SAM) intends to go public after combining its business with special purpose acquisition company Tuscan Holdings. In a May 18 announcement, the company said it expects to raise around $467 million to fund its effort to introduce electric aircraft to the fleets of its partner operators.
SAM’s plans are focused on converting Cessna Grand Caravan turboprop aircraft to a hybrid-electric propulsion system being developed by MagniX in partnership with airframe modifications specialist and systems integrator AeroTec. The California-based company said it will now support efforts to bring this modification to market under a supplemental type certificate (STC) that it will own.
In a related deal, SAM is to acquire U.S. regional airline Southern Airways, which operates a fleet of Grand Caravans that carried more than 300,000 passengers on routes connecting 39 cities in 2021. The operator is expected to expand the Surf Air network, which encompasses both scheduled services and on-demand charter flights.
The planned initial public offering with Tuscan has the backing of strategic investors including iHeartMedia and Partners for Growth, as well as a committed equity line from Global Emerging Markets. Surf Air projects that the pro forma equity value of the new company will be $1.4 billion.
The transaction, subject to the approval of Tuscan’s shareholders, is expected to close in the second half of 2022. It was announced just a few weeks after confirmation that an earlier plan for Surf Air to acquire MagniX’s rival powertrain developer Ampaire had been abandoned.
The newly combined company, which will include Southern Airways, is expected to generate revenues of around $100 million this year. This would represent a 50 percent year-on-year increase over 2021 revenues.
As part of its plans to expand services across the U.S., SAM this week also announced a partnership with the private air terminal group Signature Aviation. Under a memorandum of understanding, Signature will make its airport facilities available and will also make sustainable aviation fuel available for the flights, as well as develop infrastructure for recharging future electric aircraft.
Under its agreement with MagniX and AeroTec, SAM would develop the STC for what the company described as its “proprietary electrification solutions,” based on the MagniX powertrain that has already been flown on a Grand Caravan 208B technology demonstrator. AeroTec will act as program manager for the STC development, providing engineering, testing, and certification expertise.
SAM’s declared business plan envisaged the converted Caravans being added to the fleets of its operating partners for the scheduled and charter services marketed via its booking platform. The terms under which these aircraft will be acquired have not yet been disclosed, but SAM also intends to offer the conversion package to third-party operators. MagniX already plans to convert 50 Caravans.
Among the first Caravans to be converted to hybrid-electric propulsion are the 40 aircraft operated by Southern Airways across its network spanning the Mid-Atlantic, Gulf South, Rocky Mountains, West Coast, New England, and Hawaii. The airline group also includes its Mokulele Airlines affiliate, which has previously been involved in flight trials for Ampaire’s in-development powertrain.
“We believe deploying hybrid-electric propulsion technology on existing aircraft at scale will be the most significant step we can take toward decarbonization of aviation in this decade,” said SAM co-founder and CEO Sudhin Shahani. “We’re at a moment when the increasing consumer demand for faster, affordable, and cleaner regional travel will be met with SAM’s electrification ecosystem to accelerate the industry’s adoption of green flying.”
According to SAM, the hybrid-electric Caravans will emit 50 percent less carbon than the current aircraft and could reduce direct operating costs by up to about 25 percent. The company maintains that by taking the hybrid step to reduce carbon, it will make it possible for aircraft to operate at several thousand U.S. airports that are currently underserved, without requiring a big investment in electric charging infrastructure.
SAM recently appointed Carl Albert—former chairman, CEO, and controlling shareholder in regional airliner manufacturer Fairchild Dornier—as its chairman. The company’s existing investors include IVP, NEA, Anthem Ventures, Plus Capital Base Ventures, Bill Woodward, Thor Bjorgolfsson, and Jo Bamford.