AIR T INC
For the period ended Dec 31, 2025. Filed Feb 13, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 13, 2026
AIRT$27.70-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0000353184-25-000126
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-13.
0000353184-26-000016
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 119 previous paragraphs and 146 current paragraphs.
75 unchanged; 37 reworded; 33 added; 6 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
•The risk that we may not successfully integrate Rex (including financial reporting, systems, and personnel), which could adversely affect our results and reporting;
Current report
•The risk that Rex’s revenues and operating costs may be volatile or unpredictable and that we may be unable to offset cost increases or revenue decreases through pricing, surcharges, cost reductions, or other measures, which could adversely affect our results;
Current report
•The risk that the preliminary purchase price allocation for the Rex acquisition, including the determination and measurement of any bargain purchase gain and related tax treatment, may be revised as valuations and other inputs are finalized during the measurement period, which revisions could materially change our reported results of operations and financial position from period to period;
Current report
•The risk that Rex’s operations are subject to extensive regulation and oversight and that compliance failures or adverse regulatory actions could materially harm our business and results;
Current report
•The risk that the Rex transaction structure, including the Australian DOCA/administration process, could result in unexpected liabilities, claims, or delays that could materially harm our results and liquidity;
Current report
•Regional airline, which provides scheduled regional passenger and cargo airline services in Australia, operating a fleet of aircraft serving regional communities and connecting passengers to major metropolitan centers.
Current report
Effective as of the third quarter of fiscal year 2026, the Company introduced a new reportable segment named, "Regional Airline". This new segment includes all reportable activity as it relates to the company's acquisition of Rex, as discussed in Note 2.
Current report
Recent Events
Current report
On December 18, 2025, the Company, through Air T Rex, LLC, completed the Acquisition of substantially all of the assets and operations of Rex. The Acquisition was completed pursuant to an asset purchase agreement in the context of Rex’s voluntary administration proceedings in Australia, which commenced on July 30, 2024, and the related DOCA process. The Acquisition represents a significant transaction for the Company and is expected to meaningfully affect the Company’s business, including expanding the Company’s operating footprint into Australia and adding a regulated regional airline operation to the Company’s portfolio. The Company expects that integrating Rex will require significant management attention and the coordination of operational oversight, safety and regulatory compliance, governance, and financial reporting processes and controls across jurisdictions, and may involve additional costs and complexity.
Current report
Because the Acquisition closed on December 18, 2025, Rex’s results of operations have been included in the Company’s consolidated financial statements only for the period from December 18, 2025 through December 31, 2025. As a result, the Company’s operating results for the quarter ended December 31, 2025 reflect only a short stub period of Rex operations and do not reflect the full-period impact of the Acquisition on the Company’s operating results, cash flows, or financial condition, and period-to-period comparisons may not be indicative of the ongoing operating results of Rex or the combined company in future periods.
Current report
Consolidated revenue for the three-month period ended December 31, 2025 decreased by $6.7 million (8.7%) compared to the same quarter in the prior fiscal year.
Current report
Revenues from the overnight air cargo segment for the three-month period ended December 31, 2025 decreased by an immaterial amount (0%) compared to the third quarter of the prior fiscal year.
Current report
Regional airline revenues were $5.2 million for the three months ended December 31, 2025 compared to none in the prior year period. The reported revenues represent approximately two weeks of operations from the acquisition date through December 31, 2025. The increase is attributable to the acquisition of Rex on December 18, 2025, as discussed in Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.
Current report
The overnight air cargo segment contributed $26.0 million and $25.6 million to the Company's operating expenses for the three-month period ended December 31, 2025 and 2024, respectively, representing a $0.4 million (2%) increase in the current quarter. Operating expenses remained relatively consistent period-over-period.
Current report
The ground support equipment segment contributed approximately $9.6 million and $10.3 million to the Company's operating expenses for the three-month period ended December 31, 2025 and 2024, respectively, representing a $0.7 million (7%) decrease in the current quarter. The decrease was primarily driven by an improved product and customer mix, as well as lower non-material spending during the quarter.
Current report
Regional airline operating expenses were $5.5 million for the three months ended December 31, 2025 compared to none in the prior year period, resulting from the acquisition of Rex on December 18, 2025, as discussed in Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q. The reported operating expenses represent approximately two weeks of operations from the acquisition date through December 31, 2025. The operating loss during this initial period is attributable to fixed operating costs associated with maintaining flight operations, aircraft and crew, regulatory compliance requirements, and transaction-related integration expenses.
Current report
On July 4, 2025, the OBBBA was signed into law in the U.S., which includes a broad range of tax reform provisions affecting businesses. The Company has reflected the impact of the OBBBA in the second quarter of 2026 financial statements as required by generally accepted accounting principles. The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position, but does not expect the legislation to have a material impact on its financial statements.
Current report
The ground support equipment segment's revenue for the nine-month period ended December 31, 2025 was $37.5 million compared to $33.7 million in the same period in the prior fiscal year, an increase of $3.8 million (11%). Truck sales grew substantially, led by higher sales of high-lift catering units and deicers. Spare parts and service revenues also increased, driven by aging customer fleets and a colder, more severe winter season.
Current report
Regional airline revenues were $5.2 million for the nine months ended December 31, 2025 compared to none in the prior year period. The reported revenues represent approximately two weeks of operations from the acquisition date through December 31, 2025. The increase is attributable to the acquisition of Rex on December 18, 2025, as discussed in Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.
Current report
The overnight air cargo segment contributed $76.9 million and $77.7 million to the Company's operating expenses for the nine-month period ended December 31, 2025 and 2024, respectively, representing a $0.8 million (1%) decrease in the current period. Operating expenses remained relatively consistent period-over-period.
Current report
Regional airline operating expenses were $5.5 million for the nine months ended December 31, 2025 compared to none in the prior year period, resulting from the acquisition of Rex on December 18, 2025, as discussed in Note 2 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q. The reported operating expenses represent approximately two weeks of operations from the acquisition date through December 31, 2025. The operating loss during this initial period is attributable to fixed operating costs associated with maintaining flight operations, aircraft and crew, regulatory compliance requirements, and transaction-related integration expenses.
Current report
The Company had a net non-operating income of $2.0 million for the nine months ended December 31, 2025 compared to a net non-operating loss of $2.0 million in the prior year nine-month period. The non-operating income was driven by a $3.5 million increase in net income allocated to the Company from equity method investments. Refer to Note 2 and Note 9, respectively, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.
Current report
$59.3 million, an increase of $28.4 million, primarily driven by an increase in cash and cash equivalents of $14.9 million and inventories of $11.5 million. The increase in cash and cash equivalents was primarily driven by proceeds from debt and the increase in inventories was primarily driven by purchases of engines and airframes by the commercial aircraft, engines and parts segment.
Current report
Term Note A.
Current report
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, On November 24, 2025, ATA 22.1 entered into a $6.0 million term loan with Alerus. The loan proceeds were used to repay amounts due on the $3.5 million term loan from Bridgewater Bank. The new term loan is due on or before November 24, 2032 and has an interest rate of the greater of 5.00% or 1-month SOFR plus 1.90%. Interest on the outstanding principal amount of the loan is due on the 15th day of each month and annual principal payments are due on September 30th of each year, commencing September 2026. The loan may be prepaid at any time without penalty. The loan is secured by all the assets and membership interests of ATA 22.1 and 200,000 shares of TruPs owned by ATA 22.1, as well as an investment account of Air T. Events of default of the loan are enumerated in the loan agreement, including, among other events, the failure to pay an amount due timely or a change of control transaction. The loan covenants include: (i) affirmative covenants such as notice, reporting and financial statement delivery requirements, inspection rights, compliance with environmental laws, performance of contracts and a liquidity requirement not less than $0.4 million; and, (ii) negative covenants such as a limitation on debt and liens, merger or change of control and limitations on investments, dispositions, sales/leasebacks, restricted payments, prepayments or amendments of debt and transactions with affiliates and restrictive agreements. As of December 31, 2025, ATA 22.1 and the Company were in compliance with all financial and
Current report
non-financial covenants applicable under the term loan.
Current report
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, On November 24, 2025, Contrail entered into a Master Loan Agreement and Supplement No. 1 to Master Loan Agreement (collectively the “Master Loan Agreement”) with Alerus. The agreement provides for a $15.0 million revolving loan facility that is evidenced by a Promissory Note Revolving Note dated November 24, 2025 in the principal amount of $15.0 million. The funds are to be used for the purchases of engines and working capital needs. The revolving loan carries interest at the rate of 1-month SOFR plus 3.11% and the loan requires payments of interest only until maturity at November 24, 2027. There is no penalty on prepayment and the loan includes a 30 day resting period requirement if Contrail’s debt service coverage ratio exceeds 1.25 to 1.00. The loan contains normal and customary default provisions and is secured by a security interest in all of Contrail’s assets. In addition, the loan is secured by a payment guaranty of Air T, in an aggregate amount not to exceed $2.0 million plus collection and collateral recovery costs. The Master Loan Agreement contains additional terms regarding the transaction, including affirmative covenants such as requirement related to the delivery of annual and quarterly financial statements of Contrail and Air T, the right to inspect, examine and appraise collateral, insurance requirements as well as negative covenants such as making restricted payments other than permitted redemptions, indebtedness, mergers and acquisitions, investments, lines of business and transactions with affiliates as well as change of control restrictions. As of December 31, 2025, Contrail and the Company were in compliance with all
Current report
financial and non-financial covenants applicable under the Master Loan Agreement.
Current report
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, On December 15, 2025, the Company and its wholly-owned subsidiary ATA 25.1, entered into a Note Purchase Agreement (the “Agreement”) with two Institutional Investors (the "Investors"). Pursuant to the Agreement, ATA 25.1 issued to the Investors a 11.5% Senior Secured Note due December 15, 2031 in the aggregate principal amount of $40.0 million (the “Investor Note”). The loan proceeds were made immediately available to ATA 25.1’s wholly-owned subsidiary ATL 25.1 and used to provide financing to Rex pursuant to the Syndicated Loan Note Subscription Agreement – Project Mustang dated December 17, 2025 between and among ATL 25.1, Rex and additional parties (the “New Cap Note Facility”). The New Cap Note Facility provides a A$50.0 million line of credit, matures on December 15, 2030, and bears interest at 12.0% per annum. Interest on the New Cap Note Facility must be paid equally between cash and capitalization (i.e., paid-in-kind through the issuance of additional debt), during the initial period, as defined in the Intercreditor Deed (i.e., the period commencing on December 17, 2025 and ending on the earlier of the date the applicable availability period in the New Facility Agreement (as defined below) has ended and the facilities under such loan agreement are fully drawn). Interest under the New Cap Note Facility is first payable on December 31, 2025, and such interest is payable quarterly thereafter. The New Cap Note Facility further permits the Rex Companies to incur other unsecured financial indebtedness up to an aggregate limit of A$10.0 million. Interest on the Investor Note accrues commencing on April 10, 2026 at the rate of 11.5% per annum on the basis of a 30/360-day year (and actual days elapsed) and is payable quarterly in arrears. The Investor Note matures on December 15, 2031 and may not be prepaid, in whole or in part, prior to June 15, 2027 unless the prepayment premium specified therein has been paid. The Investor Note is secured by a pledge of all equity interests of ATA 25.1 and is guaranteed by the Company, which guarantee generally covers 25% of principal and interest due under the Investor Note and related documents. The Agreement includes customary covenants and events of default and restricts, among other things, change of control transactions, dividends and other restricted payments by ATA 25.1. In connection with the Investor Note, the Company, ATA 25.1, Air T Rex, a wholly-owned subsidiary of ATA 25.1, and the Investors entered into a Contingent Payment Agreement that provides the Investors with the right to receive up to A$8.0 million of contingent payments after the Investor Note has been repaid in full, based on the gross revenues of Air T Rex and its direct and indirect subsidiaries on a consolidated basis.
Current report
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on December 17, 2025, as part of the Company's acquisition of Rex, the Company assumed approximately A$107.8 million in liabilities associated with the Commonwealth Facility Agreement originally dated November 11, 2024, with the Commonwealth of Australia, as represented by the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (the “Commonwealth”).
Current report
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on December 17, 2025, Rex and the Commonwealth entered into (i) an amendment and restatement of the Commonwealth Facility Agreement originally dated November 11, 2024 (the “Perpetual Facility Agreement”), and (ii) a new facility agreement (the “New Facility Agreement” and, together with the Perpetual Facility Agreement, the “Commonwealth Facilities”). The Perpetual Facility Agreement is for an initial term of 30 years and permits extension of the termination date by up to an additional 20 years (in two 10‑year increments) subject to specified conditions and require mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed. The Perpetual Facility Agreement does not bear interest, provided that if the Rex fails to maintain compliance with certain ‘Rex Regional Commitments’ (and a resulting event of default date occurs), interest shall accrue on the outstanding principal at a rate of 2.00% per annum during the period of such non-compliance. The fair value of the Perpetual Facility Agreement on December 17, 2025 was approximately $22.5 million, estimated using a DCF approach, consistent with market practice and applicable accounting standards for the valuation of long-dated, non-tradeable debt instruments.
Current report
The New Facility Agreement bears interest at 12.0% per annum (which rate shall increase by 2.00% per annum if the Rex Companies fail to maintain compliance with certain “Rex Regional Commitments” regarding flight service levels and route profitability). The interest rate applicable to the New Facility Agreement is subject to adjustment from time to time in accordance with the Intercreditor Deed to match the interest rate applicable to the New Cap Note Facility. The New Facility Agreement matures on December 17, 2032 and provides for differing availability periods: (i) a three-year availability period for the A$40.0 million facility for engine care and maintenance; and (ii) a two-year availability period for the A$20.0 million business operations facility. The Commonwealth Facilities are secured by general security deeds and certain real property and aircraft‑related security and, among other things: (i) include a financial covenant requiring the Rex Companies to maintain a minimum cash balance of A$5.0 million at all times until the New Cap Note Facility is fully drawn, (ii) require application of Excess Cash Flow as mandatory prepayments pursuant to the Intercreditor Deed, (iii) under the New Facility Agreement, provide for mandatory prepayments from asset sale proceeds, insurance proceeds not applied to repair or replacement, and Excess Cash Flow, (iv) restrict the sale or disposal of assets outside the ordinary course of business, subject to a basket for disposals where the market value or consideration does not exceed A$1.0 million in any financial year; and (v) under the Perpetual Facility Agreement, require mandatory prepayments from Excess Cash Flow in accordance with the Intercreditor Deed. As of December 31, 2025, the Rex Companies were in compliance with all financial and non-financial covenants
Current report
applicable under the Commonwealth Facilities, including the Rex Regional Commitments and minimum cash balance requirements.
Removed paragraphs (6)
Previous report
Consolidated revenue for the three-month period ended September 30, 2025 decreased by $17.1 million (21.0%) compared to the same quarter in the prior fiscal year.
Previous report
The overnight air cargo segment contributed $24.9 million and $26.3 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $1.4 million (5%) decrease in the current quarter. The decrease was primarily attributable to the decrease in revenues noted above.
Previous report
The ground support equipment segment contributed approximately $6.5 million and $12.4 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $5.9 million (47%) decrease in the current quarter. The decrease was primarily driven by lower costs associated with the reduced sales volume discussed in the segment revenue section above. However, the decline in operating expenses as a percentage of net sales was less pronounced than in the prior-year quarter, reflecting higher margins realized on deicing truck sales during the current period.
Previous report
The ground support equipment segment's revenue for the six-month period ended September 30, 2025 was $24.7 million compared to $21.8 million in the same period in the prior fiscal year, an increase of $2.9 million (13%). The increase is a result of increased deicer shipments and increase in spare parts sales in the current period. We believe the increase in parts revenue is driven by heightened demand for maintenance and overhaul services preparation for the coming winter season.
Previous report
The overnight air cargo segment contributed $50.8 million and $52.0 million to the Company's operating expenses for the six-month period ended September 30, 2025 and 2024, respectively, representing a $1.2 million (2%) decrease in the current period. The decrease was primarily attributable to lower costs associated with the decrease in revenues noted above.
Previous report
The Company had a net non-operating income of $0.1 million for the six months ended September 30, 2025 compared to a net non-operating income of $0.3 million in the prior year six-month period. Overall, non-operating results were relatively consistent with the prior-year period.
Reworded paragraphs (37)
Previous wording
Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025
Current wording
Third Quarter Fiscal 2026 Compared to Third Quarter Fiscal 2025
Previous wording
The ground support equipment segment contributed approximately $9.6 million and $14.5 million to the Company’s revenues for the three-month period ended September 30, 2025 and 2024 respectively, representing a $4.8 million (33%) decrease in the current fiscal year quarter. The decrease was primarily driven by a lower number of deicing trucks sold in the current quarter compared to the comparable quarter from the prior fiscal year as a result of timing on fulfilling annual orders for certain customers. At September 30, 2025, the ground support equipment segment’s order backlog was $12.9 million compared to $6.2 million at September 30, 2024.
Current wording
The ground support equipment segment contributed approximately $12.8 million and $11.8 million to the Company’s revenues for the three-month period ended December 31, 2025 and 2024 respectively, representing a $0.9 million (8%) increase in the current fiscal year quarter. The increase was primarily attributable to higher sales of high-lift catering equipment. At December 31, 2025, the ground support equipment segment’s order backlog was $12.9 million compared to $6.2 million at December 31, 2024.
Previous wording
The commercial aircraft, engines and parts segment contributed $20.9 million of revenues in the quarter ended September 30, 2025 compared to $32.9 million in the comparable prior year quarter, which is a decrease of $12.0 million (37%). The decrease was largely attributable to a decline in component sales at Contrail, driven by a lower level of component inventory purchases during the preceding twelve-month period.
Current wording
The commercial aircraft, engines and parts segment contributed $18.8 million of revenues in the quarter ended December 31, 2025 compared to $32.7 million in the comparable prior year quarter, which is a decrease of $13.9 million (42%). The decrease was largely attributable to a decline in component sales at Contrail from aging component inventory. The aging inventory resulted from lower component inventory purchases during the preceding twelve-month period due to increased competition in acquiring component inventory as a result of market-wide initiatives. The Company is working to rebuild component inventory to historic levels.
Previous wording
Digital solutions segment contributed $2.2 million of revenues in the quarter ended September 30, 2025 compared to $1.8 million in the prior year quarter, an increase of $0.4 million (20%). The increase is primarily due to increased software subscriptions represented by monthly recurring revenues of $0.7 million as of September 30, 2025 versus $0.6 million as of September 30, 2024.
Current wording
Digital solutions segment contributed $2.5 million of revenues in the quarter ended December 31, 2025 compared to $2.0 million in the prior year quarter, an increase of $0.5 million (25%). The increase is primarily due to increased software subscriptions represented by monthly recurring revenues of $0.8 million as of December 31, 2025 versus $0.7 million as of December 31, 2024.
Previous wording
Consolidated segment operating expenses for the three-month period ended September 30, 2025 decreased by $15.2 million (24%) compared to the same quarter in the prior fiscal year.
Current wording
Consolidated segment operating expenses for the three-month period ended December 31, 2025 decreased by $3.9 million (6%) compared to the same quarter in the prior fiscal year.
Previous wording
The commercial aircraft, engines and parts segment contributed $14.4 million and $22.6 million to the Company's operating expenses for the three-month period ended September 30, 2025 and 2024, respectively, representing a $8.2 million (36%) decrease in the current quarter. Lower component sales in the current quarter resulted in the decrease in operating expenses.
Current wording
The commercial aircraft, engines and parts segment contributed $14.1 million and $23.7 million to the Company's operating expenses for the three-month period ended December 31, 2025 and 2024, respectively, representing a $9.6 million (41%) decrease in the current quarter. Lower component sales in the current quarter resulted in the decrease in operating expenses.
Previous wording
The digital solutions segment contributed $0.8 million of operating expenses in the quarter ended September 30, 2025 compared to $0.7 million in the prior year quarter, reflecting a relatively flat year-over-year trend.
Current wording
The digital solutions segment contributed $0.8 million of operating expenses in the quarter ended December 31, 2025 compared to $0.6 million in the prior year quarter, reflecting a relatively flat year-over-year trend.
Previous wording
General and administrative expenses for the three-month period ended September 30, 2025 increased by $3.9 million (27%) compared to the first quarter of the prior fiscal year. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.
Current wording
General and administrative expenses for the three-month period ended December 31, 2025 increased by $2.5 million (17%) compared to the first quarter of the prior fiscal year. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.
Previous wording
The Company had net non-operating income of $1.7 million during the quarter ended September 30, 2025, compared to net non-operating loss of $0.3 million in the prior year quarter. The non-operating income was driven by a $1.8 million increase in net income allocated to the Company from equity method investments, as detailed in Note 9 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.
Current wording
The Company had net non-operating income of $1.9 million during the quarter ended December 31, 2025, compared to net non-operating loss of $2.3 million in the prior year quarter. The non-operating income was driven by a $3.6 million increase in net income allocated to the Company from equity method investments. Refer to Note 2 and Note 9, respectively, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report on Form 10-Q.
Previous wording
During the three-month period ended September 30, 2025, the Company recorded $2.2 million in income tax expense at an effective tax rate (“ETR”) of 30.4%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible acquisition-related costs, and the benefit from the Foreign-Derived Intangible Income (“FDII”) deduction.
Current wording
During the three-month period ended December 31, 2025, the Company recorded $0.1 million in income tax benefit at an ETR of 6.4%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended December 31, 2025 were the valuation allowance related to the Company's U.S. consolidated group, DTI, DSI, and Rex and its subsidiaries, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible acquisition-related costs, and the benefit from the Foreign-Derived Intangible Income (FDII) deduction.
Previous wording
During the three-month period ended September 30, 2024, the Company recorded $0.3 million in income tax expense at an ETR of 10.2%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.
Current wording
During the three-month period ended December 31, 2024, the Company recorded $0.3 million in income tax expense at an ETR of 38.7%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period ended December 31, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.
Previous wording
First Six Months of Fiscal 2026 Compared to First Six Months of Fiscal 2025
Current wording
First Nine Months of Fiscal 2026 Compared to First Nine Months of Fiscal 2025
Previous wording
Consolidated segment revenue for the six-month period ended September 30, 2025 decreased by $12.6 million (9%) compared to the same period in the prior fiscal year.
Current wording
Consolidated segment revenue for the nine-month period ended December 31, 2025 decreased by $19.4 million (9%) compared to the same period in the prior fiscal year.
Previous wording
Following is a table detailing revenue by segment, net of intercompany during the six months ended September 30, 2025 compared to the same period in the prior fiscal year (in thousands):
Current wording
Following is a table detailing revenue by segment, net of intercompany eliminations, during the nine months ended December 31, 2025 compared to the same period in the prior fiscal year (in thousands):
Previous wording
Revenues from the overnight air cargo segment for the six months ended September 30, 2025 decreased by $1.1 million (2%) compared to the six months ended September 30, 2024. The decrease was principally attributable to lower flight admin fees driven by increased soft and hard parked aircraft when compared to the prior year comparable period.
Current wording
Revenues from the overnight air cargo segment for the nine months ended December 31, 2025 decreased by $1.1 million (1%) compared to the nine months ended December 31, 2024. The decrease was principally attributable to lower flight admin fees driven by increased soft and hard parked aircraft when compared to the prior year comparable period.
Previous wording
The commercial aircraft, engines and parts segment contributed $42.8 million of revenues in the six months ended September 30, 2025 compared to $59.2 million in the comparable prior year six months period. The decrease was largely attributable to a decline in component sales at Contrail, driven by a lower level of component inventory purchases during the preceding twelve-month period.
Current wording
The commercial aircraft, engines and parts segment contributed $61.7 million of revenues in the nine months ended December 31, 2025 compared to $91.9 million in the comparable prior year nine months period. The decrease was largely attributable to a decline in component sales at Contrail from aging component inventory. The aging inventory resulted from lower component inventory purchases during the preceding twelve-month period due to increased competition in acquiring component inventory as a result of market-wide initiatives. The Company is working to rebuild component inventory to historic levels.
Previous wording
The digital solutions segment contributed $4.3 million of revenues in the six months ended September 30, 2025 compared to $3.5 million in the prior year six month period, an increase of $0.8 million (22%). The increase was primarily due to increased software subscriptions represented by monthly recurring revenues of $0.7 million as of September 30, 2025 versus $0.6 million as of September 30, 2024.
Current wording
The digital solutions segment contributed $6.8 million of revenues in the nine months ended December 31, 2025 compared to $5.5 million in the prior year nine-month period, an increase of $1.3 million (23%). The increase was primarily due to increased software subscriptions represented by monthly recurring revenues of $0.8 million as of December 31, 2025 versus $0.7 million as of December 31, 2024.
Previous wording
Consolidated segment operating expenses for the six-month period ended September 30, 2025 decreased by $13.1 million (11%) compared to the same period in the prior fiscal year.
Current wording
Consolidated segment operating expenses for the nine-month period ended December 31, 2025 decreased by $16.9 million (10%) compared to the same period in the prior fiscal year.
Previous wording
Following is a table detailing operating expenses by segment during the six months ended September 30, 2025 compared to the same period in the prior fiscal year (in thousands):
Current wording
Following is a table detailing operating expenses by segment during the nine months ended December 31, 2025 compared to the same period in the prior fiscal year (in thousands):
Previous wording
Operating expenses from the ground support equipment segment for the six months ended September 30, 2025 was relatively flat compared to the six months ended September 30, 2024 but showed improvements when viewed as a percentage of net sales due to higher margins realized on deicer and part sales in the current year.
Current wording
Operating expenses from the ground support equipment segment for the nine months ended December 31, 2025 was relatively flat compared to the nine months ended December 31, 2024, representing a $0.8 million (3%) decrease. However, ground support equipment improved its operating expenses as a percentage of net sales from 87% for the nine-month period ended December 31, 2024 to 76% for the nine months ended December 31, 2025. The improvement was due to higher margins realized on deicers, part sales and service revenue in the current year.
Previous wording
The commercial aircraft, engines and parts segment contributed $29.1 million and $41.5 million to the Company's operating expenses for the six months ended September 30, 2025 and 2024, respectively, representing a $12.4 million (30%) decrease in the current period. Lower component sales in the current year resulted in the decrease in operating expenses.
Current wording
The commercial aircraft, engines and parts segment contributed $43.2 million and $65.2 million to the Company's operating expenses for the nine months ended December 31, 2025 and 2024, respectively, representing a $22.0 million (34%) decrease in the current period. Lower component sales in the current year resulted in the decrease in operating expenses.
Previous wording
The digital solutions segment contributed $1.6 million of operating expenses in the six months ended September 30, 2025 compared to $1.2 million in the prior year comparable period, reflecting a relatively flat year-over-year trend.
Current wording
The digital solutions segment contributed $2.4 million of operating expenses in the nine months ended December 31, 2025 compared to $1.9 million in the prior year comparable period, which represented 36% and 34% of segment net sales, reflecting a relatively flat year-over-year trend.
Previous wording
General and administrative expenses for the six month period ended September 30, 2025 increased by $4.7 million (17%) compared to the prior year comparable period. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.
Current wording
General and administrative expenses for the nine month period ended December 31, 2025 increased by $7.2 million (17%) compared to the prior year comparable period. The increase was primarily driven by acquisition-related costs incurred during the current year, as well as higher payroll and employee-related expenses.
Previous wording
Following is a table detailing non-operating income (expense) during the six months ended September 30, 2025 compared to the same six months in the prior fiscal year (in thousands):
Current wording
Following is a table detailing non-operating income (expense) during the nine months ended December 31, 2025 compared to the same nine months in the prior fiscal year (in thousands):
Previous wording
During the six-month period ended September 30, 2025, the Company recorded $2.1 million in income tax expense at an ETR of 32.1%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2025 were the valuation allowance related to the Company’s U.S. consolidated group, DTI and DSI, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible transaction costs, and the benefit from the FDII deduction.
Current wording
During the nine-month period ended December 31, 2025, the Company recorded $2.2 million in income tax expense at an ETR of 48.1%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the nine-month period ended December 31, 2025, were the valuation allowance related to the Company’s U.S. consolidated group, DTI, DSI and Rex, the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico, non-deductible transaction costs, and the benefit from the FDII deduction.
Previous wording
During the six-month period ended September 30, 2024, the Company recorded $0.4 million in income tax expense at an ETR of 12.0%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period ended September 30, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.
Current wording
During the nine-month period ended December 31, 2024, the Company recorded $0.8 million in income tax expense at an ETR of 30.1%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the nine-month period ended December 31, 2024 were the valuation allowance related to the Company’s U.S. consolidated group, DTI, LGSS, DSI and BCCM Kenya, and the foreign rate differentials for Air T’s operations located in the Netherlands and Puerto Rico.
Previous wording
As of September 30, 2025, the Company held approximately $17.5 million in cash and cash equivalents and restricted cash. The Company has an aggregate of approximately $28.4 million in available funds under its lines of credit as of September 30, 2025.
Current wording
As of December 31, 2025, the Company held approximately $42.2 million in cash and cash equivalents and restricted cash, of which $4.7 million is reserved as collateral under the terms of certain merchant facilities. The Company has an aggregate of approximately $53.6 million in available funds under its lines of credit as of December 31, 2025.
Previous wording
As of September 30, 2025, the Company’s working capital amounted to $49.4 million, an increase of $18.5 million compared to March 31, 2025, primarily driven by a $8.1 million increase in inventory and a $11.5 million increase in cash and cash equivalents.
Current wording
As of December 31, 2025, the Company’s working capital, excluding the deferred bargain purchase gain of $95.8 million that does not represent future uses of cash or resources, amounted to $89.2 million, an increase of $58.4 million compared to March 31, 2025, primarily driven by a $26.9 million increase in inventory, a $31.4 million increase in cash and cash equivalents, $19.3 million increase in accounts receivable, and the deferred credit related to the preliminary bargain purchase gain associated with the acquisition of Rex. These increases were substantially attributable to the acquisition of Rex. Excluding Rex, the Company's working capital amounted to
Previous wording
The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as does all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer.
Current wording
The various equity interests that were assigned by the Company to the Issuer on or about the closing date of the original financings continue to serve as collateral for the repayment of the Multiple Advance Note as does all of the issued and outstanding capital stock of the Issuer owned by the Company, and the 320,000 Trust Preferred Securities, held by the Issuer. As of December 31, 2025, the Issuer was in compliance with all applicable covenants under the Multiple Advance Note, and an additional $10.0 million was advanced under the facility in October 2025.
Previous wording
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on September 3, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 5 to Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated Term Note A. Pursuant to Amendment No. 5 to Credit Agreement, the Overline Note provisions and note were eliminated. Pursuant to the Amended and Restated Revolving Credit Note, the revolving credit commitment to make revolving credit loans and to issue letters of credit was increased to an aggregate principal amount not to exceed $20.0 million. The interest rate on the Revolving Credit Note was decreased to the greater of 5.00% or 1-month SOFR plus 1.90%. The maturity date was extended to August 28, 2027. The financial covenants are to be measured semi-annually at December and March of each year and the Alerus Loan Parties are to deliver quarterly financial statements to Alerus. Pursuant to the Amended and Restated Term Note A, Term Note A was amended and restated by the Alerus Loan Parties in the principal amount of $9.2 million. The maturity date remains August 15, 2029. The Term Note A interest rate was revised to 1-month SOFR plus 2.00%.
Current wording
As mentioned in Note 13 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on September 3, 2025, the Alerus Loan Parties under the Revolving Credit Agreement with Alerus entered into Amendment No. 5 to Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated Term Note A. Pursuant to Amendment No. 5 to Credit Agreement, the Overline Note provisions and note were eliminated. Pursuant to the Amended and Restated Revolving Credit Note, the revolving credit commitment to make revolving credit loans and to issue letters of credit was increased to an aggregate principal amount not to exceed $20.0 million. The interest rate on the Revolving Credit Note was decreased to the greater of 5.00% or 1-month SOFR plus 1.90%. The maturity date was extended to August 28, 2027. The financial covenants are to be measured semi-annually at December and March of each year and the Alerus Loan Parties are to deliver quarterly financial statements to Alerus. Pursuant to the Amended and Restated Term Note A, Term Note A was amended and restated by the Alerus Loan Parties in the principal amount of $9.2 million. The maturity date remains August 15, 2029. The Term Note A interest rate was revised to 1-month SOFR plus 2.00%. As of December 31, 2025, the Company was in compliance with all covenants
Previous wording
Following is a table of changes in cash flow for the six months ended September 30, 2025 and 2024 (in thousands):
Current wording
Following is a table of changes in cash flow for the nine months ended December 31, 2025 and 2024 (in thousands):
Previous wording
Net cash used in operating activities was $6.5 million for the six-month period ended September 30, 2025 compared to net cash provided by operating activities of $3.0 million in the prior year six-month period, representing a decrease of $9.5 million. The decrease was primarily attributable to a $16.9 million change in cash flow from inventory and a $7.0 million current year period gain on sale of the two Airbus Model A321-111 aircraft. The change in inventory was primarily driven by Contrail purchasing an engine for tear-down in the current year period while the prior year period saw high sales of component inventory that was not replenished. The changes in inventory and gain on sale of aircraft were partially offset by a $13.4 million change in cash flow from accounts receivable. The change in cash flows from accounts receivable in the current year period was due to the decrease in component sales at Contrail.
Current wording
Net cash used in operating activities was $25.0 million for the nine-month period ended December 31, 2025 compared to net cash provided by operating activities of $19.4 million in the prior year nine-month period, representing a decrease of $44.4 million. The decrease was primarily attributable to a $33.9 million decrease in cash flow from inventory, a $7.0 million current year period gain on sale of two Airbus Model A321-111 aircraft, and $3.5 million increase in income from equity method investments. The change in inventory was primarily driven by the purchase of two engines and multiple airframes for tear-down in the current year period while the prior year period saw high sales of component inventory that was not replenished, as previously discussed as a reason for changes in operating revenue in Item 2.
Previous wording
Net cash provided by investing activities for the six-month period ended September 30, 2025 was $13.9 million compared to net cash used in investing activities of $14.2 million in the prior year period. The cash provided by investing activities in the current six-month period was primarily driven by proceeds of $19.9 million from the sale of the two Airbus Model A321-111 aircraft, partially offset by investments in unconsolidated entities of $6.8 million. Cash used in investing activities in the prior year period was primarily driven by capital expenditures of $14.6 million related to the purchase of the two aircraft that were sold in the current year period.
Current wording
Net cash provided by investing activities for the nine-month period ended December 31, 2025 was $7.0 million compared to net cash used in investing activities of $16.8 million in the prior year period. The cash provided by investing activities in the current nine-month period was primarily driven by proceeds of $19.9 million from the sale of the two Airbus Model A321-111 aircraft and distributions from unconsolidated entities of $4.1 million, partially offset by investments in unconsolidated entities of $10.8 million and cash used in acquisitions, net of cash acquired in each transaction, of $6.4 million. Cash used in investing activities in the prior year period was primarily driven by capital expenditures of $14.6 million related to the purchase of the two aircraft that were sold in the current year period.
Previous wording
Net cash provided by financing activities for the six-month period ended September 30, 2025 was $3.7 million compared to net cash provided by financing activities of $12.5 million in the prior year period. The year-over-year decrease in net cash provided by financing activities was primarily due to a $13.4 million and $4.2 million increase on payments made on the Company's revolving lines of credit and term loans, respectively, partially offset by a $11.1 million increase in proceeds from the Company's revolving lines of credit.
Current wording
Net cash provided by financing activities for the nine-month period ended December 31, 2025 was $53.7 million compared to net cash provided by financing activities of $8.0 million in the prior year period. The year-over-year increase in net cash provided by financing activities was primarily due to a $41.4 million increase and $14.0 million decrease in proceeds and payments, respectively, on the Company's term loans, partially offset by a $7.9 million increase in payments on the Company's lines of credit.
Previous wording
The tables below provide a reconciliation of operating income (loss) to Adjusted EBITDA for the three and six months ended September 30, 2025 and 2024 (in thousands):
Current wording
The tables below provide a reconciliation of operating income (loss) to Adjusted EBITDA for the three and nine months ended December 31, 2025 and 2024 (in thousands):
Previous wording
The table below provides Adjusted EBITDA by segment for the three and six months ended September 30, 2025 and 2024 (in thousands):
Current wording
The table below provides Adjusted EBITDA by segment for the three and nine months ended December 31, 2025 and 2024 (in thousands):
Previous wording
Air T Funding has a term of 30 years, but may terminate earlier as provided in the Trust Agreement, as amended. The Trust Agreement was most recently amended on March 3, 2021 and on January 28, 2022 and currently allows for the issuance of up to $100.0 million of Trust Preferred Securities. As of September 30, 2025, there are $48.5 million in Trust Preferred Securities outstanding ($13.0 million held by the wholly-owned subsidiaries of the Company).
Current wording
Air T Funding has a term of 30 years, but may terminate earlier as provided in the Trust Agreement, as amended. The Trust Agreement was most recently amended on March 3, 2021 and on January 28, 2022 and currently allows for the issuance of up to $100.0 million of Trust Preferred Securities. As of December 31, 2025, there are $48.6 million in Trust Preferred Securities outstanding ($13.0 million held by the wholly-owned subsidiaries of the Company).
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
applicable under the Revolving Credit Agreement, the Amended and Restated Revolving Credit Note, and the Amended and Restated
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Revenues from the overnight air cargo segment for the three-month period ended September 30, 2025 decreased by $1.3 million (4%) compared to the second quarter of the prior fiscal year. The decrease was principally attributable to lower flight admin fees driven by increased soft and hard parked aircraft when compared to the prior year comparable quarter.