AIR T INC
For the period ended Jun 30, 2026. Filed Aug 14, 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.
Jun 30, 2026 · Filed Aug 14, 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 2025-12-31; filed 2026-02-13.
0000353184-26-000016
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0000353184-26-000077
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsNon-GAAP Financial MeasuresThe 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 146 previous paragraphs and 113 current paragraphs.
48 unchanged; 31 reworded; 34 added; 67 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 7 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 (34)
Current report
•The risk that Rex may be unable to return aircraft to service on anticipated timelines, to retain regulated route contracts and protected airport slots, or to maintain compliance with the Rex Regional Commitments under the Commonwealth Facilities;
Current report
•The risk that the bargain purchase gain recognized in connection with the Rex acquisition may increase scrutiny by investors, regulators, creditors, or other parties regarding the valuation assumptions and accounting judgments used in determining the purchase price allocation and bargain purchase gain;
Current report
•Aviation leasing and asset management, which originates and structures asset acquisitions and related financings and provides lease administration, technical and risk management, and remarketing services for aircraft and engines on lease to airline customers globally.
Current report
Reportable segment revenue for the three-month period ended June 30, 2026 increased by $44.6 million (63%) compared to the same quarter in the prior fiscal year.
Current report
Regional airline revenues for the three-month period ended June 30, 2026 were $55.9 million, representing a full quarter of Rex operations, which was acquired on December 18, 2025. There is no prior-year comparable. Revenue consisted of passenger revenue, ancillary fees, freight and charter, and government subsidy income.
Current report
Revenues at MAC and CSA for the three-month period ended June 30, 2026 were relatively flat compared to the first quarter of the prior fiscal year, while WASI grew revenue approximately 14%, to $3.2 million on higher third-party parts and labor revenue, and Royal (acquired May 15, 2025, and therefore lacking a full prior-year comparable quarter) contributed incremental revenue.
Current report
Contrail reported lower revenues for the three-month period ended June 30, 2026 as its leasing revenue fell from $1.8 million to less than $0.1 million, a decline attributable to two aircraft previously on lease that were sold in July 2025 and therefore contributed lease income in the prior-year quarter but not the current quarter. Contrail also showed lower component sales, continuing the post-fiscal-2026 normalization discussed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026. AirCo attributed the shortfall in its revenue to delays in its materials program and low narrow body parts inventory, and Worthington attributed part of its shortfall to a slower-than-anticipated growth in its MRO exchange program alongside softness in third-party repair work and a slow start for its new product line. Jet Yard saw increased revenue driven by large service projects and offsite teardown work.
Current report
The ground support equipment segment, consisting of Global Ground Support ("GGS"), contributed approximately $3.7 million and $15.1 million to the Company’s revenues for the three-month periods ended June 30, 2026 and 2025, respectively, representing an $11.4 million (76%) decrease in the current quarter. The decrease was primarily due to two factors: (1) the timing of an annual U.S. military order, which occurred in the first quarter of fiscal 2026, and is anticipated in the third quarter of fiscal 2027; and (2) a large one-time deicing truck order in the prior year's comparable quarter that did not recur in the current period. At June 30, 2026, the ground support equipment segment’s order backlog was $9.0 million compared to $7.2 million at June 30, 2025.
Current report
The aviation leasing and asset management segment, consisting of Crestone Air Partners and Arena, contributed revenues of $1.4 million, representing its contribution for the 21-day period from their respective consolidation and acquisition dates of June 10, 2026 through June 30, 2026. There is no prior-year revenue to report. Revenue consisted of origination, due diligence, and asset management fees.
Current report
Operating Income (Loss)
Current report
Following is a table detailing operating income (loss) during the three months ended June 30, 2026 compared to the same quarter in the prior fiscal year (in thousands):
Current report
Consolidated operating loss for the quarter ended June 30, 2026 was $12.8 million, compared to operating income of $0.8 million in the comparable quarter of the prior year.
Current report
The regional airline segment, consisting of Rex, incurred an operating loss of $7.7 million for the three-month period ended June 30, 2026. There was no prior-year comparable as Rex was acquired on December 18, 2025. Depreciation and amortization attributable to Rex was $8.8 million for the quarter. Fuel expense of $11.8 million was the primary driver of the loss, with the increase driven principally by higher per-liter fuel prices rather than increased consumption. Rex does not hedge its fuel price or related Australian dollar/U.S. dollar exposure and purchases fuel at prevailing market prices, mitigating higher costs through fare adjustments, capacity management, and fuel levy arrangements with certain state governments. Higher unscheduled engine removals, together with lower engine throughput from third-party maintenance, repair and overhaul providers, also contributed to the loss by reducing the number of aircraft available for service below planned levels.
Current report
The overnight air cargo segment's operating income for the three-month period ended June 30, 2026 was $1.9 million compared to operating income of $1.5 million in the same quarter in the prior fiscal year. The increase was primarily driven by an improvement of approximately $0.4 million in FedEx Maintenance gross profit at MAC, almost entirely offset by higher pilot labor costs and flight operations overhead costs. WASI experienced a $0.3 million increase in operating income due to higher parts and labor revenue, as discussed further in the revenue discussion above.
Current report
The commercial aircraft, engines and parts segment generated an operating loss of $0.7 million in the current year quarter, compared to operating income of $0.9 million in the prior year quarter. This decrease was primarily attributable to the lower leasing and component sales revenue at Contrail noted in the revenue discussion above, together with year-to-date operating losses at AirCo and continued softness at Worthington, partially offset by improved margins at Jet Yard, where operating expenses remained relatively flat despite the increased service revenues noted above, and by LGSS's consignment income.
Current report
The ground support equipment segment incurred an operating loss of $0.2 million for the quarter ended June 30, 2026 compared to the prior year comparable quarter's operating income of $1.3 million, a decrease of $1.6 million. This decrease was primarily attributable to the lower sales noted in the revenue discussion above; however, the decline in operating income was substantially smaller than the decline in revenue because gross margin improved year-over-year, aided by favorable freight costs and manufacturing absorption.
Current report
The digital solutions segment generated operating income of $0.2 million in the current year quarter, compared to an operating loss of $0.3 million in the prior year comparable quarter. The improvement was primarily driven by two factors: revenue growth at high incremental margins and lower labor costs as AI-driven tools improved efficiency.
Current report
Aviation leasing and asset management generated an operating loss of $3.5 million in the current year quarter, representing 21 days of operations from the Arena acquisition date of June 10, 2026 through June 30, 2026 and year to date activity related to Crestone Air Partners. The operating loss reflects ongoing direct and indirect operating costs during the initial post-acquisition period following acquisition, $0.1 million of depreciation and amortization and $3.0 million of acquisition-related transaction costs.
Current report
Adjusted EBITDA
Current report
Adjusted EBITDA for Rex was $1.9 million for the quarter, with no prior-year comparable. As with the operating loss discussion above, Rex's depreciation and amortization add-back of $8.8 million for the quarter is the largest reconciling item between its operating loss and its Adjusted EBITDA. Because the operating loss was driven principally by fuel expense and reduced aircraft availability rather than depreciation and amortization, most of that loss carries through to Adjusted EBITDA. In addition, Rex also incurred $0.7 million of post-acquisition integration costs during the quarter, which was added back to its Adjusted EBITDA from its operating loss.
Current report
Combined Adjusted EBITDA for the overnight air cargo businesses increased by $0.5 million (30%) to $2.1 million, consistent with the operating income improvement discussed above, driven by improved FedEx Maintenance results at MAC and higher parts/labor revenue at WASI.
Current report
Combined Adjusted EBITDA for the commercial aircraft, engines and parts businesses decreased by $1.2 million to a loss of $0.5 million, driven by the same factors discussed under operating income above: lower leasing and component sales revenue at Contrail, and year-to-date softness at AirCo and Worthington, partially offset by improvements at Jet Yard and LGSS.
Current report
Adjusted EBITDA for ground support equipment decreased by $1.6 million to a loss of $0.2 million. As with operating income, the decline was smaller than the magnitude of the revenue decrease due to improved gross margin percentage and general and administrative expense discipline at GGS. Adjusted EBITDA also benefited from the absence of approximately $0.1 million of one-time inventory carrying-cost charges incurred in the prior-year quarter that did not recur in the current quarter.
Current report
Combined Adjusted EBITDA for the digital solutions businesses improved by $0.5 million to $0.4 million, as revenue growth and lower labor costs more than offset any residual cost pressure in this group of businesses.
Current report
Adjusted EBITDA loss for the aviation leasing and asset management segment was $0.3 million for the quarter, with no prior-year comparable. As with the operating loss discussion above, the acquisition-related transaction expenses add-back of $3.0 million for the quarter is the largest reconciling item between its operating loss and its Adjusted EBITDA loss.
Current report
Non-operating (Expense) Income
Current report
During the three-month period ended June 30, 2026, the Company recorded $0.7 million in income tax expense at an effective tax rate ("ETR") of (4.4)%. The Company has computed the provision for income taxes using the discrete method. 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 June 30, 2026 is the effect of the pre-tax loss and the U.S. consolidated group being in an estimated taxable income position, principally due to limitations of interest expense, notwithstanding the full valuation allowance on the Company’s U.S. consolidated group, as well as the valuation allowance related to Delphax Technologies, Inc. (“DTI”), Delphax Solutions, Inc. ("DSI"), and Rex and its subsidiaries, and the foreign rate differentials for Air T’s operations located in Australia, the Netherlands, Ireland and Puerto Rico.
Current report
As of June 30, 2026, the Company’s working capital amounted to $47.4 million, a decrease of $17.0 million compared to March 31, 2026. The reduction in working capital was primarily driven by a decrease in accounts receivable of $6.6 million, decreases in other current assets of $3.1 million and cash and cash equivalents of $3.7 million, increases in accrued expenses and other of $6.0 million and current portion of long-term debt of $5.4 million, partially offset by an increase in inventory of $12.9 million.
Current report
1 The Investors advanced $15.0 million for the scheduled $10.0 million issuance on May 30, 2026. For the remaining scheduled issuances, the Company has the flexibility to choose which advance amount will be reduced by $5.0 million. As of the date the condensed consolidated financial statements are issued, the Company has not made that determination.
Current report
As of June 30, 2026, the Issuer has collectively received a total of $75.0 million of advances from the Investors.
Current report
As discussed further in Note 12 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on June 2, 2026, Contrail entered into a subordinated promissory note with OCAS, Inc. ("OCAS"), the former minority owner of Contrail, in the amount of $3.5 million ("Term Loan - OCAS II") with an economic effective date of April 1, 2026. The note was made pursuant to Contrail's purchase and redemption of OCAS' 5% membership interest in Contrail. The note matures on April 1, 2029 and bears interest at an annual rate equal to the ten year Treasury bond yield plus 2.50% which is compounded monthly on the basis of a 365-day year for the actual number of days elapsed. The rate adjusts on each anniversary date of the note.
Current report
As discussed further in Note 12 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on June 15, 2026, Air’Zona Aircraft Services, Inc., CSA Air, Inc., Global Ground Support, LLC, Jet Yard, LLC, Jet Yard Solutions, LLC, Mountain Air Cargo, Inc., Worldwide Aircraft Services, Inc., Royal Aircraft Services, LLC and Worthington Aviation, LLC, each a subsidiary or affiliate of the Company (collectively, the “Alerus Loan Parties”), entered into Amendment No. 6 to Credit Agreement with Alerus Financial, National Association (“Alerus”), as lender. In connection with Amendment No. 6, the Alerus Loan Parties executed an Overline Note with Alerus in the original principal amount of $2.8 million (the “Overline Note”). The Overline Note bears interest at a fluctuating annual rate equal to the greater of 5.00% or 1-month term SOFR plus 2.50% and matures on the earlier of October 15, 2026 or the termination of the overline commitment in accordance with the Alerus Credit Agreement.
Current report
Net cash used in operating activities was $2.8 million for the three-month period ended June 30, 2026 compared to $1.1 million in the prior year period. The increase in net cash used in operating activities was driven by an unfavorable change in inventory of $11.5 million, and a $9.2 million change in net loss after adjustments in the current period compared to the prior year period. Partially offsetting these changes were favorable changes in accounts receivable and other current assets of $7.4 million and $6.4 million, respectively, when compared to the prior year period.
Current report
Net cash provided by financing activities for the three-month period ended June 30, 2026 was $42.3 million compared to $12.6 million in the prior year period. The cash provided by financing activities during the three-month period ended June 30, 2026 was primarily driven by $18.9 million of net proceeds on the Company's term loans and revolving lines of credit and a $10.0 million contribution from redeemable non-controlling interests. The cash provided by financing activities in the three-month period ended June 30, 2025 was primarily driven by $16.1 million more proceeds on the Company's term loans and revolving lines of credit. These changes were partially offset by $3.1 million more payments made on the Company's revolving lines of credit.
Removed paragraphs (67)
Previous 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;
Previous 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.
Previous report
Effective as of the fourth quarter of fiscal year 2025, we renamed our ground equipment sales segment to ground support equipment and renamed our commercial jet engines and parts segment to commercial aircraft, engines and parts to better align the descriptions of the segments with their activities.
Previous report
Additionally, we elected to separately disclose the digital solutions segment to better align our financial statement presentation with a key anticipated long-term growth area for the Company. Digital solutions was previously classified as part of insignificant business activities. As a result of this change, prior period segment information has been recast to conform to our current presentation in our financial statements and related notes.
Previous report
Recent Events
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 report
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 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.
Previous report
Operating Expenses
Previous report
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 report
Following is a table detailing operating expenses by segment during the three months ended December 31, 2025 compared to the same quarter in the prior fiscal year (in thousands):
Previous 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.
Previous 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.
Previous report
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 report
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 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.
Previous report
General and administrative
Previous report
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 report
Non-Operating Income (Expense)
Previous report
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 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.
Previous report
First Nine Months of Fiscal 2026 Compared to First Nine Months of Fiscal 2025
Previous report
Operating Revenue
Previous report
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 report
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 report
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 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.
Previous report
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 report
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 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.
Previous report
Operating Expenses
Previous report
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 report
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 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.
Previous report
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 report
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.
Showing the first 40 of 67 passages. Open the source sections for the rest.
Reworded paragraphs (31)
Previous wording
This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, March 31, 2025, to and including December 31, 2025 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.
Current wording
This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, March 31, 2026, to and including June 30, 2026 and (ii) results of operations during the current quarterly period as compared to the corresponding period(s) of the preceding fiscal year.
Previous wording
•The risk that the number of aircraft operated for FedEx is reduced;
Current wording
•The risk that the number of aircraft operated for FedEx will be reduced;
Previous wording
•The risk that GGS customers will defer or reduce significant orders for deicing equipment;
Current wording
•The risk that Global Ground Support ("GGS") customers will defer or reduce significant orders for deicing equipment;
Previous wording
•The risk that we may not successfully integrate Rex (including financial reporting, systems, and personnel), which could adversely affect our results and reporting;
Current wording
•The risk that we may not successfully integrate Regional Express Holdings Pty Ltd ("Rex") (including financial reporting, systems, and personnel), which could adversely affect our results and reporting;
Previous wording
Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (including the information presented therein under Risk Factors), as well other publicly available information.
Current wording
Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (including the information presented therein under Risk Factors), as well as other publicly available information.
Previous wording
We currently operate in four industry segments:
Current wording
We currently operate in six core industry segments:
Previous wording
•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 wording
•Regional airline, which provides scheduled regional passenger, freight and charter airline services and pilot training in Australia, operating a fleet of Saab 340 aircraft serving regional communities and connecting passengers to major metropolitan centers;
Previous wording
•Commercial aircraft, engines and parts (formerly known as Commercial jet engines and parts), which manages and leases aviation assets; supplies surplus and after market commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and;
Current wording
•Commercial aircraft, engines and parts (formerly known as commercial jet engines and parts), which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines;
Previous wording
•Ground support equipment (formerly known as Ground equipment sales), which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;
Current wording
•Ground support equipment, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers;
Previous wording
•Digital solutions, which develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues.
Current wording
•Digital solutions, which develops and provides digital aviation and other business services to customers within the aviation industry to generate recurring subscription revenues; and
Previous wording
Third Quarter Fiscal 2026 Compared to Third Quarter Fiscal 2025
Current wording
First Quarter Fiscal 2027 Compared to First Quarter Fiscal 2026
Previous wording
Following is a table detailing revenue by segment, net of intercompany during the three months ended December 31, 2025 compared to the same quarter in the prior fiscal year (in thousands):
Current wording
Following is a table detailing revenue, net of intercompany eliminations during the three months ended June 30, 2026 compared to the same quarter in the prior fiscal year (in thousands):
Previous 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.
Current wording
The digital solutions segment contributed $2.6 million of revenues in the quarter ended June 30, 2026 compared to $2.1 million in the prior year quarter, an increase of $0.5 million (25%). The increase was primarily due to continued growth in data analytics and airspace management engagements in this segment.
Previous wording
The table below provides Adjusted EBITDA by segment for the three and nine months ended December 31, 2025 and 2024 (in thousands):
Current wording
The table below provides Adjusted EBITDA, as described and reconciled on a consolidated basis to operating (loss) income as described in Non-GAAP Financial Measures below, for the three months ended June 30, 2026 and 2025 (in thousands):
Previous wording
Following is a table detailing non-operating income (expense) during the three months ended December 31, 2025 compared to the same quarter in the prior fiscal year (in thousands):
Current wording
Following is a table detailing non-operating (expense) income for the three months ended June 30, 2026 and 2025 (in thousands):
Previous 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.
Current wording
The Company had a net non-operating loss of $2.2 million during the quarter ended June 30, 2026, compared to $1.7 million in the prior year quarter. The non-operating loss in the current year was driven by a $3.4 million increase in interest expense, partially offset by an improvement of $3.2 million related to income (loss) 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.
Previous 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.
Current wording
During the three-month period ended June 30, 2025, the Company recorded income tax expense of $0.1 million at an ETR of 16.9%. 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 June 30, 2025 were the change in valuation allowance related to the Company's U.S. consolidated group, DTI, LGSS, DSI, BCCM Kenya, and the foreign rate differentials for Air T's operations located in the Netherlands and Puerto Rico.
Previous wording
Future economic developments such as inflation and increased interest rates as well as further business issues present uncertainty and risk with respect to our financial condition and results of operations. We expect that issues caused by economic and business issues will continue beyond the current fiscal year. The fluidity of this situation precludes any prediction as to the ultimate adverse impact these issues on economic and market conditions and our businesses in particular, and, as a result, presents material uncertainty and risk with respect to us and our results of operations. The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2025.
Current wording
Future economic developments such as inflation and increased interest rates as well as further business issues present uncertainty and risk with respect to our financial condition and results of operations. We expect that issues caused by economic and business issues will continue beyond the current fiscal year. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of these issues on economic and market conditions and our businesses in particular, and, as a result, presents material uncertainty and risk with respect to us and our results of operations. The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2026.
Previous 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.
Current wording
As of June 30, 2026, the Company held approximately $21.7 million in cash and cash equivalents and restricted cash. The Company has an aggregate of approximately $42.4 million in available funds under its lines of credit as of June 30, 2026.
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 May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with the Institutional Investors that replaced the Second NPA transaction documents. Pursuant to the Third NPA with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $100.0 million (the “Multiple Advance Note”). For purposes of clarity and the avoidance of doubt, as of the closing date, the Institutional Investors advanced an additional $10.0 million to the Issuer and have collectively advanced under the Multiple Advance Note to the Issuer the aggregate amount of $40.0 million. Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third NPA, the Investors are obligated to advance to the Issuer an additional aggregate $60.0 million in $10.0 million increments, each on or within fifteen days of the following dates (in thousands):
Current wording
As discussed further in Note 12 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, on May 30, 2025, the Company, along with AAM 24-1 (the "Issuer"), entered into new transaction documents with two Institutional Investors that replaced the Second Note Purchase Agreement ("Second NPA") transaction documents. Pursuant to the Third Note Purchase Agreement ("Third NPA") with the Institutional Investors, the Issuer agreed to issue and sell a Multiple Advance Senior Secured Note in an aggregate principal amount of up to $100.0 million (the “Multiple Advance Note”). Provided no default or event of default of the Issuer exists, and subject to satisfaction of all requirements for any closing as set forth in the Third NPA, the Investors agreed to advance to the Issuer an additional aggregate $60.0 million in $10.0 million increments, each on or within fifteen days of the following dates, of which the Issuer has received all contractually required advances through June 30, 2026 (in thousands):
Previous wording
The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to two percent (2.0%) of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to one percent (1.0%) of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $1.0 million.
Current wording
The Issuer may prepay all or a portion of the outstanding principal and accrued but unpaid interest at any time, provided that (i) if the Issuer prepays all or any portion of the Multiple Advance Note within one year from the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal 2.0% of the amount being prepaid, and (ii) if the Issuer prepays all or any portion of the Multiple Advance Note after the first anniversary of the Issue Date but on or prior to the second anniversary of the Issue Date, the Issuer is required to pay the Investors a prepayment premium equal to 1.0% of the amount being prepaid. If the Issuer elects to prepay a portion of the outstanding principal and accrued but unpaid interest, then in no event can such prepayment be for an amount less than $1.0 million.
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. 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.
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 do 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.
Previous wording
Following is a table of changes in cash flow for the nine months ended December 31, 2025 and 2024 (in thousands):
Current wording
Following is a table of changes in cash flow for the three months ended June 30, 2026 and 2025 (in thousands):
Previous 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.
Current wording
Net cash used in investing activities for the three-month period ended June 30, 2026 was $44.0 million compared to $2.7 million in the prior year period. The cash used in investing activities for the three-month period ended June 30, 2026 was primarily driven by capital expenditures related to property and equipment of $21.3 million and acquisitions of businesses, net of cash acquired of $19.2 million. Net cash used in investing activities for the three-month period ended June 30, 2025 was primarily driven by investments in unconsolidated entities of $2.0 million.
Previous wording
Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates Adjusted EBITDA by removing the impact of specific items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. When calculating Adjusted EBITDA, the Company does not add back depreciation expense for assets that are on lease, as the Company believes this expense matches with the corresponding revenue earned on leased assets.
Current wording
Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates Adjusted EBITDA by removing the impact of specific items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. When calculating Adjusted EBITDA, the Company does not add back depreciation expense for certain assets that are on lease, as the Company believes this expense matches with the corresponding revenue earned on these leased assets.
Previous wording
Management believes that Adjusted EBITDA is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability. We may periodically review and update our non-GAAP financial measures based on our determination of their relevance to our business which could result in the addition or elimination of select non-GAAP financial measures in the future. Adjusted EBITDA is not intended to replace or be an alternative to operating income (loss), the most directly comparable amounts reported under GAAP.
Current wording
Management believes that Adjusted EBITDA is a useful measure of the Company's performance because it provides investors additional information about the Company's operations allowing better evaluation of underlying business performance and better period-to-period comparability. We may periodically review and update our non-GAAP financial measures based on our determination of their relevance to our business which could result in the addition or elimination of select non-GAAP financial measures in the future. Adjusted EBITDA is not intended to replace or be an alternative to operating (loss) income, the most directly comparable GAAP measure.
Previous 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):
Current wording
The tables below provide a reconciliation of operating (loss) income to Adjusted EBITDA for the three months ended June 30, 2026 and 2025 (in thousands):
Previous wording
Air T Funding is a statutory business trust formed under Delaware law in September 2018. Air T Funding exists for the exclusive purposes of (i) issuing and selling its Alpha Income Trust Preferred Securities (also referred to as the 8.0% Cumulative Securities, Capital Securities or “Trust Preferred Securities” or "TruPs"), par value $25.00 per share, (ii) using the proceeds from the sale of the Trust Preferred Securities to acquire Junior Subordinated Debentures issued by the Company, and (iii) engaging in only those other activities necessary, advisable or incidental thereto (such as registering the transfer of the Trust Preferred Securities). Accordingly, the Junior Subordinated Debentures are the sole assets of Air T Funding, and payments by the Company under the Junior Subordinated Debentures and a related expense agreement are the sole revenues of Air T Funding. Air T Funding’s business and affairs are conducted by a Property Trustee, a Delaware Trustee and two individual Administrative Trustees who are officers of Air T.
Current wording
Air T Funding is a statutory business trust formed under Delaware law in September 2018. Air T Funding exists for the exclusive purposes of (i) issuing and selling its Alpha Income Trust Preferred Securities (also referred to as the 8.0% Cumulative Securities, Capital Securities or “Trust Preferred Securities”), par value $25.00 per share, (ii) using the proceeds from the sale of the Trust Preferred Securities to acquire Junior Subordinated Debentures issued by the Company, and (iii) engaging in only those other activities necessary, advisable or incidental thereto (such as registering the transfer of the Trust Preferred Securities). Accordingly, the Junior Subordinated Debentures are the sole assets of Air T Funding, and payments by the Company under the Junior Subordinated Debentures and a related expense agreement are the sole revenues of Air T Funding. Air T Funding’s business and affairs are conducted by a Property Trustee, a Delaware Trustee and two individual Administrative Trustees who are officers of Air T.
Previous wording
Distributions on the Trust Preferred Securities are payable to record holders at the annual rate of 8% of the stated $25.00 liquidation amount, payable quarterly in arrears on the 15th day of February, May, August, and November in each year. The Trust Preferred Securities issued by the Trust are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Air T. Air T guarantees the payment of distributions by Air T Funding and payments on liquidation of or redemption of the Trust Preferred Securities (subordinate to the right to payment of senior and subordinated debt of Air T, as defined in Note 13 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report). If Air T Funding has insufficient funds to pay distributions on the Trust Preferred Securities (i.e., if Air T has failed to make required payments under the Junior Subordinated Debentures), a holder of the Trust Preferred Securities would have the right to institute a legal proceeding directly against Air T to enforce payment of such distributions.
Current wording
Distributions on the Trust Preferred Securities are payable to record holders at the annual rate of 8% of the stated $25.00 liquidation amount, payable quarterly in arrears on the 15th day of February, May, August, and November in each year. The Trust Preferred Securities issued by the Trust are fully and unconditionally guaranteed on a senior unsecured basis by Air T. Air T guarantees the payment of distributions by Air T Funding and payments on liquidation of or redemption of the Trust Preferred Securities (subordinate to the right to payment of senior and subordinated debt of Air T, as defined in Note 12 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this report). If Air T Funding has insufficient funds to pay distributions on the Trust Preferred Securities (i.e., if Air T has failed to make required payments under the Junior Subordinated Debentures), a holder of the Trust Preferred Securities would have the right to institute a legal proceeding directly against Air T to enforce payment of such distributions.
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 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).
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 June 30, 2026, there are $52.5 million in Trust Preferred Securities outstanding ($13.0 million held by the wholly-owned subsidiaries of the Company).
Previous wording
The Trust is a “finance subsidiary” of Air T within the meaning of Rule 3‑10 of Regulation S‑X under the Securities Act of 1933, as amended, and as a result the Air T Funding does not file periodic reports with the SEC under the Securities Exchange Act of 1934, as amended.
Current wording
The Trust is a “finance subsidiary” of Air T within the meaning of Rule 3‑10 of Regulation S‑X under the Securities Act of 1933, as amended, and as a result Air T Funding does not file periodic reports with the SEC under the Securities Exchange Act of 1934, as amended.