Surf Air Mobility Inc. Announces Two Mergers and an Agreement

Company will combine with Southern Airways, go public via a SPAC, and partner with AeroTec and magniX.

California-based company Surf Air Mobility Inc. (SAM) made a series of announcements Monday that could surely shake up the hybrid-electric market. 

First, the company announced that it will merge with Tuscan Holdings Corp. II (NASDAQ: THCA), a special purpose acquisition company (SPAC), in a deal valued at $1.42 billion, allowing SAM to become a publicly listed company.

The transactions from the SPAC deal are expected to yield up to $467 million in gross cash proceeds to SAM, including committed capital from strategic and financial investors, including iHeartMedia, Partners For Growth, and an equity line from Global Emerging Markets (GEM). Before the deal, SAM’s existing investors included IVP, NEA, Anthem Ventures, Plus Capital, Base Ventures, Bill Woodward, Thor Björgólfsson, Jo Bamford, and other venture and private investors.

SAM also said it will merge with Southern Airways Corporation, the largest passenger operator of Cessna Grand Caravans in the U.S., with more than 300,000 customers across 39 cities and who completed over 60,000 flights in 2021. 

Once the Southern Airways deal is closed, which will happen before the SPAC merger, Stan Little, founder, chairman, and CEO of Southern will serve as president of the combined company.

SAM provides a regional air mobility platform with scheduled routes and on-demand charter flights operated by third-party Part 135 charter operators. The company wants to create a national air travel platform and accelerate efforts to commercialize hybrid-electric aircraft. 

To do that, SAM intends to upgrade Southern’s fleet of Cessna Grand Caravans with proprietary electrified powertrain technology. SAM said this would allow it to deploy the world’s largest fleet of hybrid electric aircraft on regional routes serviced today and on additional routes in new markets.

“Southern Airways sees the regional routes between 50 and 500 miles that we’re currently flying as the quickest, most practical solution for bringing electric air travel to market,” Little said. “We are excited to be a part of Surf Air Mobility’s mission to electrify aviation and to bring sustainable innovation to market faster.” 

That leads to the third announcement. SAM said it would partner with AeroTEC, an aircraft development and integration company, and magniX, an electric propulsion company, to develop SAM’s launch product. 

Per the agreement, Aerotec will develop proprietary powertrain technology for SAM, while magniX will supply electric propulsion units for SAM’s hybrid electric powertrain, initially designed for the Cessna Grand Caravan. Once its hybrid-electric propulsion technology is certified, SAM says it will work with OEMs and third-party operators to upgrade their existing aircraft with the new hybrid-electric powertrains.

Management Reacts

In a statement, SAM’s recently appointed chairman, Carl Albert, expressed enthusiasm about the SPAC merger with Tuscan, saying, “Surf Air Mobility is positioned to bring benefits to consumers quickly while creating opportunities for the entire aviation industry.” Before his appointment, Albert was the former chairman, CEO, and controlling shareholder of aircraft OEM Fairchild Dornier.

Meanwhile, Stephen Vogel, Tuscan Holdings’ chairman and CEO, called SAM’s plan for decarbonizing aviation “practical” and said the strategy was based on “tangible revenue.”

The companies say the combination of SAM, Southern, and the SPAC deal would generate approximately $100 million in 2022 revenue from all its business units, roughly a 50 percent year-over-year increase from 2021.

SPAC sponsors and SAM’s shareholders have also restricted a combined 51 percent of their shares in an earnout geared toward achieving specific operational and financial goals.

SAM’s eCaravan

Regarding the partnership with AeroTEC and magniX, Sudhin Shahani, co-founder and CEO of Surf Air Mobility, described “hybrid-electric propulsion technology on existing aircraft” as the most significant step toward decarbonization of aviation in this decade. Previously, magniX successfully flew the world’s largest fully electric aircraft to date, a prototype Cessna Grand Caravan 208B, called the eCaravan. AeroTEC will provide engineering, testing, program management, and certification expertise to support design, development, and FAA type certification.

Once developed, SAM plans to develop supplemental type certificates (STCs) for its proprietary electrification solutions and would create a path for magniX’s existing pipeline of approximately 50 Grand Caravan aircraft.

SAM also said its initial hybrid-electric aircraft would not require charging stations, new takeoff and landing infrastructure, or zoning changes. These benefits, it said, would allow the aircraft to operate anywhere in the U.S., unlocking more air travel potential for over 5,000 underserved public airports. Of the partnership, Lee Human, president and CEO of AeroTEC, said, “Our decades of experience bringing new aviation technologies to market will help accelerate the commercialization of SAM’s hybrid-electric Cessna Grand Caravan and set the stage for the development of additional aircraft types.”

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