Credit: Surf Air Mobility. Agreements in place with AeroTEC, MagniX and Textron Aviation to develop and supply electric and hybrid-electric powertrains for the Cessna Caravan are critical to Surf Air Mobility’s (SAM) complex plan to go public through a merger with a blank-check company, a regulatory filing reveals.
Agreements in place with AeroTEC, MagniX and Textron Aviation to develop and supply electric and hybrid-electric powertrains for the Cessna Caravan are critical to Surf Air Mobility’s (SAM) complex plan to go public through a merger with a blank-check company, a regulatory filing reveals.
The S-4 registration document filed with the U.S. Securities and Exchange Commission (SEC) details the plan to list publicly through the merger of regional aviation provider SAM with special purpose acquisition company (SPAC) Tuscan Holdings Corp. II (THCA).
When announced in May, the deal was expected to gross up to $467 million depending on how much of the $150 million cash held in trust by THCA is redeemed by its shareholders when they vote on the merger in December. But SPACs have performed poorly this year and redemption rates have soared.
Through the merger and the related acquisition of U.S. commuter airline Southern Airways, SAM plans to both expand its regional air mobility platform nationwide and become a leading provider of powertrains to electrify regional turboprop fleets, beginning with the Grand Caravan.
SAM is not a powertrain developer. So, under the merger plan, it intends to pay aerospace engineering company AeroTec to develop supplemental type certificates (STC) for conversion of the Caravan to electric and hybrid-electric propulsion. SAM will own the STCs and market the initial hybrid-electric powertrain, the EP1, with Textron Aircraft.
MagniX will exclusively provide the electric propulsion unit and energy storage system, the S-4 says. FAA approval of the EP1 is anticipated by early 2025. The EP1 is expected to reduce fuel consumption and emissions 50% and operating costs 25%.
In the S-4, SAM says its continued growth will require significant investments in development of the electric and hybrid-electric powertrains … “[and] Surf Air’s cash flow has not been sufficient to support these needs to date. Surf Air has historically had negative cash flows.”
Crucial to SAM’s plans is an agreement with Textron Aircraft to be “its exclusive supplier of certain electrified and hybrid-electric powertrains.” That exclusive relationship dates from June 2021, when SAM signed a purchase agreement with Textron for up to 150 Grand Caravans.
At that time, SAM intended to acquire hybrid-electric propulsion startup Ampaire to develop the Caravan conversion. But that agreement was dissolved in May and Ampaire is now developing its own hybrid-electric Caravan STC independent of SAM and Textron. The aircraft is planned to fly this year.
According to the S-4 filing, SAM expects its data license, exclusive collaboration and marketing and sales relationship with Textron to reduce the development workload and time required to obtain the STC.
Southern Airways Express has the largest passenger fleet of Caravans in the U.S., according to the S-4, and SAM plans to use the EP1 STC to retrofit its existing aircraft, convert new aircraft it buys from Textron and use the operating experience gained with these aircraft to sell the conversion to other customers.
The S-4 notes Textron can cancel its relationship with SAM if conditions and milestones are not met. Also AeroTec and MagniX must complete work to ensure the Caravan conversion is “feasible and consistent with available resources” before definitive partnership agreements can be signed.
SAM plans to offer aircraft-as-a-service and powertrains-as-a-service options to third-party customers and, according to the S-4, believes the initial EP1 hybrid powertrain can be upgraded to fully electric operation as battery technology improves, for zero emissions and 50% lower operating costs.
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