8-K: Air T Reports Q3 FY26 Loss Amid Rex Airline Acquisition

Air T, Inc. announced a significant operating loss and decreased revenue for Q3 FY26, alongside the strategic acquisition of Australian regional airline Rex.

Summary

• Revenues totaled $71.1 million for the quarter ended December 31, 2025, a decrease of $6.7 million, or 9%, from the prior year's comparable quarter.
• Operating loss was $3.8 million for the quarter ended December 31, 2025, a decrease of $5.2 million from the prior year's comparable quarter's operating income of $1.4 million.
• Adjusted EBITDA profit was $0.2 million for the quarter ended December 31, 2025, compared to an Adjusted EBITDA profit of $2.7 million in the prior year's comparable quarter.
• Earnings per share was $(0.91) for the quarter ended December 31, 2025, compared to earnings per share of $(0.47) in the prior year's comparable quarter.
• The investment balance for equity method investees was $33.6 million at December 31, 2025, an increase from $19.0 million at March 31, 2025.
• Air T acquired Rex Regional Airlines on December 18, 2025, investing AUD $50 million cash, which includes commitments to the Commonwealth of Australia for loan repayment and an expansion plan for Saab 340 aircraft.
• The Rex acquisition is expected to result in a preliminary bargain purchase gain of $(95,840) due to its distressed financial condition prior to acquisition.
• Rex contributed $5.2 million in revenue and a net loss of $1.5 million for the 13 days of operations from the acquisition date through December 31, 2025.
• The Ground Support Equipment (GGS) segment's revenues increased by 8% to $12.8 million, and its order backlog grew to $12.9 million from $6.2 million year-over-year.
• The Commercial Aircraft, Engines and Parts segment's revenues decreased by $13.9 million to $18.8 million due to lower component sales.
• The Digital Solutions segment's revenues increased by $0.5 million to $2.5 million, driven by increased software subscriptions.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report. While the Rex acquisition offers long-term strategic potential and the GGS segment shows strength, the overall financial performance for the quarter, marked by significant revenue and operating income declines, is concerning.

Positives

• Strategic acquisition of Rex Regional Airlines on December 18, 2025, expanding into the Australian regional airline market and international aviation services portfolio.
• The Rex acquisition includes long-term commitments to the Commonwealth of Australia, including full repayment of its AUD $108 million loan and an expansion of the Saab 340 fleet from approximately 30 to 44-45 aircraft over the next two years.
• Air T invested AUD $50 million cash into Rex as part of the acquisition, specifically to fund engine overhauls needed for the expansion plan.
• The Ground Support Equipment (GGS) segment's revenues increased by 8% to $12.8 million for the quarter, primarily due to higher sales of high-lift catering equipment.
• The GGS segment's order backlog significantly increased to $12.9 million at December 31, 2025, compared to $6.2 million at December 31, 2024.
• The GGS segment's Adjusted EBITDA profit increased by $1.4 million to $1.7 million, driven by an improved product and customer mix and lower non-material spending.
• The Digital Solutions segment's revenues increased by $0.5 million to $2.5 million, primarily due to increased software subscriptions, with monthly recurring revenues growing from $0.7 million to $0.8 million.
• The acquisition of Rex is expected to result in a preliminary bargain purchase gain of $(95,840) due to Rex's distressed financial condition prior to the transaction.

Negatives

• Total revenues decreased by $6.7 million, or 9%, to $71.1 million for the quarter ended December 31, 2025.
• The company reported an operating loss of $3.8 million for the quarter, a $5.2 million decrease from the prior year's operating income of $1.4 million.
• Adjusted EBITDA profit significantly decreased to $0.2 million for the quarter, down from $2.7 million in the prior year's comparable quarter.
• Earnings per share worsened to $(0.91) for the quarter, compared to $(0.47) in the prior year's comparable quarter.
• The Overnight Air Cargo segment's Adjusted EBITDA decreased by $1.0 million to $1.0 million, primarily due to a 2% increase in cost of sales related to outside maintenance expenses.
• The Commercial Aircraft, Engines and Parts segment's revenues decreased by $13.9 million, largely attributed to a lower level of component sales at Contrail.
• The Commercial Aircraft, Engines and Parts segment recorded an Adjusted EBITDA loss of $0.2 million, a $3.1 million decrease from the prior year's profit of $2.9 million.
• The Rex acquisition resulted in a net loss of $1.5 million for the initial 13 days of operations, attributed to fixed operating costs, aircraft and crew maintenance, regulatory compliance, and transaction-related integration expenses.

Risks

• An inability to finance operations through bank or other financing or through the sale or issuance of debt or equity securities.
• Economic and industry conditions in the Company's markets.
• The risk that contracts with FedEx Corporation could be terminated or adversely modified.
• The risk that the number of aircraft operated for FedEx is reduced.
• The risk that GGS customers will defer or reduce significant orders for deicing equipment.
• The impact of any terrorist activities or armed conflict on United States soil or abroad.
• Changes in U.S. and foreign trade regulations and tariffs.
• The Company's ability to manage its cost structure for operating expenses, or unanticipated capital requirements, and match them to shifting customer service requirements and production volume levels.
• The Company's ability to meet debt service covenants and to refinance existing debt obligations.
• The risk of injury or other damage arising from accidents involving the Company's overnight air cargo operations, equipment or parts sold and/or services provided.
• Market acceptance of the Company's commercial and military equipment and services.
• The risk that we may not successfully integrate Rex (including financial reporting, systems, and personnel), which could adversely affect our results and reporting.
• 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.
• 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.
• 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.
• 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.
• Competition from other providers of similar equipment and services.
• Changes in government regulation and technology.
• Changes in the value of marketable securities held as investments.
• Mild winter weather conditions reducing the demand for deicing equipment.
• Market acceptance and operational success of the Company's aircraft asset management business and related aircraft capital joint venture.
• Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.

Future Outlook

The company plans to expand the number of Saab 340s servicing regional and remote Australia from approximately 30 to 44-45 over the next two years as part of the Rex Regional Commitments (RRC) plan. Management expresses hope for the future of the Rex brand and looks forward to working together to deliver a bright future for Air T Rex.

Management Comments

• "In December 2025, Air T acquired Rex Regional Airlines through a competitive bidding process organized for the benefit of Rex creditors by the Administrators of the Rex Voluntary Administration."
• "Our decision to buy Rex was driven in large part by the quality of the Rex management team."
• "Air T is a decentralized portfolio of companies and Australia is as geographically decentralized as it gets."
• "The interactions we have had with the Rex team give us a lot of hope for the future of this venerable and beloved Australian brand."
• "Rex is a good business serving as a critical link from capital cities to regional and remote Australia."
• "We look forward to working together to deliver a bright future for Air T Rex."
• "Doing the Rex deal required significant efforts by the multi-talented Air T team. This intense period took up most of 2025 and remains ongoing."
• "Watching Air T team in action highlights for me their dedication to working collegially and their ability to do good work. I am very thankful for the people of Air T. They deserve appreciation and respect from all shareholders."

Industry Context

StockSavvy.ai notes that Air T's acquisition of Rex Regional Airlines represents a strategic expansion into the Australian regional aviation market, diversifying its international aviation services portfolio. This move positions Air T to capitalize on the essential role regional airlines play in connecting remote communities, a trend seen globally where smaller carriers fill gaps left by major airlines. The commitment to expand the Saab 340 fleet suggests a focus on regional connectivity and potentially leveraging existing infrastructure and demand in a geographically vast country like Australia.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders: Potential for long-term value creation through the Rex acquisition and growth in GGS and Digital Solutions, but short-term financial performance is negative.
• Employees (Rex): Continued employment and potential for growth with the expansion plan under Air T's ownership.
• Creditors (Rex): The acquisition was organized for their benefit, and Rex is committed to repaying its AUD $108 million loan to the Commonwealth of Australia.
• Customers (Rex): Expansion of regional airline services in Australia with an increased Saab 340 fleet.
• FedEx Corporation: Continued partnership with the Overnight Air Cargo segment, though risks of contract termination or reduction are noted.
• Commonwealth of Australia: Rex is committed to long-term obligations, including loan repayment and service expansion.

Next Steps

• Integrate Rex into Air T's operations, including financial reporting, systems, and personnel.
• Fund engine overhauls for Rex's Saab 340 fleet.
• Expand Rex's Saab 340 fleet from approximately 30 to 44-45 over the next two years to meet Rex Regional Commitments (RRC) plan.
• Rex to repay AUD $108 million loan from the Commonwealth of Australia by allocating 70% of excess cash flows.
• Address stakeholder questions via Slido.com, with answers provided live and in writing at the Annual Meeting and quarterly.

Key Dates

Recommendation

The significant decline in overall financial performance (revenue, operating income, EPS) is a strong negative. However, the strategic acquisition of Rex, while currently loss-making for the initial period, presents a long-term growth opportunity and a bargain purchase gain. The strong performance and backlog growth in the Ground Support Equipment segment are also positive. Given the mixed signals and the ongoing integration of a major acquisition, a "hold" recommendation allows investors to observe the integration progress and the realization of the strategic benefits before making further investment decisions.

Keywords

Air T, AIRT, Q3 2026, Financial Results, Earnings, SEC Filing, 8-K, Regional Airline, Rex Regional Airlines, Acquisition, Overnight Air Cargo, Ground Support Equipment, Commercial Aircraft, Digital Solutions, EBITDA, Operating Loss, Revenue, Australia, Aviation Services, Aircraft Leasing, Airline Operations