AIR T INC (AIRT, AIRTP)
Air T, Inc. is a diversified aviation-focused holding company with four reportable operating segments: • Overnight Air Cargo – Two of eight U.S. FedEx feeder carriers (Mountain Air Cargo and CSA). Under long-standing “dry‐lease” contracts, Air T flies and maintains FedEx-owned Cessna and ATR air...
Air T, Inc. 2025 Annual 10-K Review
In this deep dive, we analyze Air T, Inc.’s 2025 Form 10-K, assessing its four operating segments, consolidated performance, balance-sheet health and key risks. We conclude with an investment score out of 10 to help you decide if Air T belongs in your portfolio.
Warren.AI 💰 5.2 / 10
Business Overview
Air T, Inc. is a diversified aviation holding company organized around four core segments:
- Overnight Air Cargo: Includes Mountain Air Cargo (MAC) and CSA Air, two of the eight U.S. “dry-lease” feeder airlines for FedEx. Under long-term contracts, FedEx supplies planes and routing; Air T provides crews, maintenance and operations on Cessna Caravans, SkyCouriers, ATR-42/72s. 103 aircraft under lease as of March 31 2025; 92% of segment revenues reimbursed pass-through costs.
- Ground Support Equipment (GSE): Global design and manufacture of mobile deicers, tow tractors, scissor lifts, glycol equipment and other specialized airport/military servicing gear. GSE’s marquee U.S. Air Force contract (expires 2027) underpins sales.
- Commercial Aircraft, Engines & Parts: Contrail Aviation (leasing/trading older narrow-bodies and parts), Jet Yard and solutions (MRO, storage, part-outs) plus aftermarket sales via AirCo and Worthington Aviation. Critical aftermarket CFM56-series and V2500 engines.
- Digital Solutions: WorldACD and Ambry Hills Technology platforms for air-cargo data analytics (shipper pricing and global volumes) and aviation aftermarket ERP/RFQ software. Newest segment, driving recurring revenues and higher margins.
Air T also runs a small corporate function ("Corporate & Other") that allocates capital and central services.
Key names and entities – • Mountain Air Cargo, CSA Air – FedEx feeders • GGS – Global Ground Support, Olathe, Kansas • Contrail Aviation – Engine/airframe lessor, trading and part-outs (CFM56, V2500) • Jet Yard – Arizona storage/MRO campus • AirCo & Worthington – Parts procurement, repair stations (FAA/EASA) • WorldACD & Ambry Hills – Data and SaaS platforms
Accounting & Reporting
Air T reports four segments based on its CODM (CEO). Effective Q4 2025, it renamed segments to better reflect services and spun out digital into its own segment (formerly within Corporate & Other). Unconsolidated investments (e.g., Crestone Asset Management, Lendway, Cadillac Casting) use equity or HLBV methods.
Designated by ASC 280 reportable segments: overnight air cargo, GSE, commercial aircraft/engines/parts, digital solutions.
2025 Consolidated Results
Revenues rose 2% to $291.9 million from $286.8 million.
Operating Income improved to $1.9 million vs. $1.3 million in 2024.
Adjusted EBITDA moved up to $7.4 million vs. $6.2 million.
Net Loss of $6.1 million (–$2.23/share) vs. $6.8 million (–$2.42/share) in 2024.
Heavy debt service, swap losses and higher SG&A drove net shortfall.
Segment P&L (FY 2025 vs 2024)
| Segment | 2025 Rev | 2024 Rev | Δ | 2025 Op Inc (Loss) | 2024 Op Inc (Loss) | Δ |
|---|---|---|---|---|---|---|
| Overnight Air Cargo | $124.0 m | $115.5 m | +7% | $6.3 m | $6.8 m | –$0.5 m |
| Ground Support Equipment | $38.9 m | $37.2 m | +5% | –$1.2 m | –$1.6 m | +$0.3 m |
| Commercial Aircraft, Engines & Parts | $118.2 m | $125.5 m | –6% | $7.1 m | $4.2 m | +$2.9 m |
| Digital Solutions | $7.3 m | $5.8 m | +26% | –$1.1 m | –$0.7 m | –$0.4 m |
Key drivers –
• Air Cargo: Higher admin fees & labor plus FedEx-reimbursable maintenance costs offset by missed aircraft utilization.
• GSE: Parts & services grew; delivery timing dampened winter seasonality; warranty costs rising.
• Commercial Aviation: Revenue dip from supply competition; profits soared on better component margins.
• Digital: Recurring SaaS & data subscriptions growing; investments heat up R&D and sales.
Capital Investment & Balance Sheet
• CapEx: $15.7 million total – $14.6 million on lease assets at Contrail; $1.1 million on GSE plant/tooling.
• Cash & Investments: $8.6 million; working capital $30.8 million (down $25.2 million Y/Y).
• Debt: $110.3 million net debt (after fees) across revolvers, term loans & $48.3 million Trust Preferred Securities.
• Leverage & Liquidity: $6.5 million cash plus $30 million institutional RBL and $14 million Alerus–MBT line available; covenants met at March 31.
• Fixed charges: Interest adj. $8.4 million – $1.5 million mark-to-market on swap terminations; average rates ~7.7% on short-term borrowings.
FY 2025 Adjusted EBITDA of $7.4 million covers interest expense by less than 1x. Leverage (Net Debt/EBITDA) ~15.0x.
Strengths & Catalysts
- FedEx Niche – Two of eight U.S. FedEx feeder airlines; 40+ year track record.
- GSE Leadership – USAF contract renewals, global airport service sales, reputation for quality.
- Aviation Aftermarket – Contrail/Worthington deep expertise on CFM56/V2500 engines; higher margins on parts. Jet Yard captive MRO/storage in favorable Arizona climate.
- Digital Upside – Recurring SaaS and data revenues are higher margin, less capital-intensive.
- Backlog – GSE $14.3 million order run-rate into FY 2026; digital pipeline strong; feed into stable capex.
Risks & Headwinds
- Customer Concentration – 39% of consolidated sales from FedEx in FY 2025. FedEx contractual termination rights on 90 days’ notice.
- Debt & Cost – $110 million net debt plus $48 million Trust Preferred; small EBITDA coverage & rising rates strain cash.
- Cyclical Demand – Commercial MRO & leasing tied to airline capex and global economy; deicer sales tied to winter severity.
- Competitive Supply – Aging fleet part-outs drive supply gluts; lease rates & engine values volatile.
- Regulatory & Safety – Heavily regulated by FAA/TSA; insurance, environmental rules & cybersecurity threats add volatility.
- Equity Dilution – Continuing raise of capital (e.g., additional TruPs, Term Note draws) may dilute equity returns.
Outlook & Score: 5.2/10
Air T displays clear strengths in FedEx feeder services, GSE leadership and an emerging digital solutions platform—offset by significant debt service, high FedEx concentration risk and cyclical exposure. Free cash‐flow per share growth will rely on:
• Optimizing remaining FedEx dry-leases, negotiating renewals and improving utilization. • Expanding digital subscription base while managing R&D spends. • Managing debt maturities amid rising rates; exploring lower-cost refinancing. • Selective asset sales and capital recycling to reduce leverage.
Investment Score: 5.2/10 (Moderate); balanced between upside from niche segments and digital growth vs. downside from leverage and concentration.
Net Loss
• FY 2025 net loss: $6.1 million
• FY 2024 net loss: $6.8 million
Disclosure: This analysis is for informational purposes and not a recommendation to buy or sell any securities. Past performance does not guarantee future results. Always conduct your own due diligence.