Air T, Inc. (AIRT) - Q3 2026 (Ended Dec 31, 2025) Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2025 (Third Quarter of Fiscal 2026). Air T, Inc. is a holding company operating in overnight air cargo, ground support equipment, commercial aircraft parts, digital solutions, and, newly, regional airline services. The reporting period is significantly impacted by the acquisition of Rex Express Holdings Ltd. ("Rex"), an Australian regional airline, on December 18, 2025, which introduced a new reportable segment and substantial debt obligations.
Key Financial Metrics
| Metric | Q3 2025 (Current) | Q3 2024 (Prior) | 9M 2025 (YTD) | 9M 2024 (YTD) |
|---|---|---|---|---|
| Total Revenue | $71.1 million | $77.9 million | $206.2 million | $225.5 million |
| Operating Income (Loss) | $(3.8) million | $1.4 million | $2.6 million | $4.5 million |
| Net Income (Loss) Attributable to Air T | $(2.5) million | $(1.3) million | $0.3 million | $0.9 million |
| Diluted EPS | $(0.91) | $(0.47) | $0.10 | $0.32 |
| Cash & Restricted Cash | $42.2 million | $18.8 million (9M 2024 end) | N/A | |
| Total Debt (Gross) | $196.9 million | $110.7 million (Mar 31, 2025) | N/A | |
| Adjusted EBITDA | $0.2 million | $2.7 million | $9.5 million | $8.6 million |
Material Changes vs. Prior Period
- Revenue Decline: Consolidated revenue decreased 8.7% QoQ and 9% YTD. The Commercial Aircraft, Engines and Parts segment saw a 42% revenue drop due to aging component inventory and lower sales. Conversely, Ground Support Equipment revenue increased 8% QoQ and 11% YTD, driven by deicer and catering equipment sales.
- Regional Airline Segment: The new Rex segment contributed $5.2 million in revenue for the quarter (approx. two weeks of operations) but incurred an operating loss of $1.5 million due to fixed costs and integration expenses.
- Operating Loss: The company reported an operating loss of $3.8 million for the quarter, compared to income of $1.4 million in the prior year. This was driven by higher General and Administrative expenses ($16.7M vs $14.2M) due to acquisition costs and the initial loss from Rex.
- Non-Operating Income: Net non-operating income improved significantly to $1.9 million (from a $2.3M loss prior year), primarily due to a $3.6 million increase in income from equity method investments (notably Crestone Asset Management).
- Balance Sheet Expansion: Total assets nearly doubled to $381.8 million from $173.8 million (Mar 31, 2025), largely due to the acquisition of Rex assets ($164.8M fair value) and increased inventory ($65.4M).
Guidance, Outlook, Risks, and Unusual Items
- Rex Acquisition Accounting: The acquisition resulted in a preliminary bargain purchase gain of $95.8 million, recorded as a deferred credit. Management notes this is preliminary and subject to adjustment during the measurement period, which could materially affect future results.
- Debt Structure: The company assumed significant liabilities, including a $71.2 million face value Commonwealth Facility Agreement (CFA Debt) valued at $22.5 million. New financing includes a $40 million Senior Secured Note (11.5% interest) and a $50 million AUD line of credit for Rex.
- Inventory Strategy: Management is actively working to rebuild component inventory in the Commercial Aircraft segment to historic levels, which may impact short-term cash flow but is expected to support future revenue.
- Risks: Key risks include the successful integration of Rex, compliance with Australian aviation regulations, currency fluctuations (AUD/USD), and the potential for adjustments to the bargain purchase gain valuation. The company also faces risks related to the voluntary administration proceedings of Rex.
- Outlook: Management believes it has sufficient liquidity to meet obligations for at least 12 months. No specific forward-looking financial guidance was provided in this filing.
Investor Verification Checklist
- Bargain Purchase Gain: Verify the finalization of the purchase price allocation for Rex and the potential for adjustments to the $95.8 million deferred credit.
- Debt Covenants: Review compliance with new debt covenants, specifically the minimum cash balance requirements for Rex and debt service coverage ratios for Alerus facilities.
- Inventory Valuation: Assess the write-downs recorded ($1.1M YTD) and the strategy for replenishing aging inventory in the Commercial Aircraft segment.
- Equity Method Investments: Confirm the sustainability of the $8.4 million income from equity method investments (primarily CAM) which offset operating losses.
- Integration Costs: Monitor the trajectory of General and Administrative expenses as Rex integration progresses beyond the initial stub period.