Air T Posts 7% Revenue Gain in Q1

Air T (AIRT -0.51%), a diversified aviation-focused holding company, reported its results for the quarter ended June 30, 2025, on August 13, 2025. The headline news was a 6.8% uptick in total revenue to $70.9 million (GAAP) in Q1 FY2026 compared to the prior year period, along with improved adjusted EBITDA at $1.5 million and a return to positive operating income of $0.4 million. While the company showed overall growth, the results by segment revealed uneven performance. Notable gains in Ground Support Equipment offset losses in Commercial Aircraft Engines and Parts. The company does not provide quarterly guidance and had no analyst estimates for revenue or earnings. Overall, the quarter brought modest financial improvement, but persistent risks and segment unevenness remain.

Business Overview and Focus Areas

The company operates across several aviation-related sectors. Its main lines include overnight air cargo services, manufacturing and sales of ground support equipment such as deicing trucks, trading and leasing of commercial aircraft engines and spare parts, and digital software solutions for logistics and aviation customers.

Recently, Air T has concentrated on diversifying revenue, growing digital services, and managing customer exposure, especially to FedEx. Key to its success are securing and renewing major customer contracts, keeping ground equipment sales competitive, overseeing aircraft asset management, and ensuring ongoing regulatory compliance. The company’s future stability relies on the health of its long-standing contracts.

Quarter Highlights and Segment Updates

Performance across Air T’s segments was mixed. The Ground Support Equipment segment, which makes and sells aircraft deicing trucks, reported $15.1 million in revenue. Ground Support Equipment segment revenue was $15.1 million, compared to $7.4 million in the prior year period. Management stated, "The $7.7M revenue increase YoY is primarily attributed to higher number of deicing trucks sold." Adjusted EBITDA for this segment swung to a $1.4 million profit from a $0.5 million loss. However, the order backlog dipped from $9.9 million as of Q1 FY2025 to $7.2 million as of Q1 FY2026, suggesting that sales here can also be affected by weather and industry cycles, underlining an ongoing need to monitor backlog and order trends.

The Commercial Aircraft Engines and Parts segment, which includes trading of engine assets and aircraft parts, reported lower GAAP revenue of $22.0 million, compared to $26.3 million in the prior year period. The drop was mostly due to reduced sales of engine and airframe components. Adjusted EBITDA for this segment dropped to $0.8 million from $1.7 million. Management cited that the year-over-year decrease in revenue was primarily due to lower component sales. While not reflected in the current quarter, the company completed the sale of two Airbus aircraft after the reporting period.

The Overnight Air Cargo segment remains crucial to Air T’s results. It generated $30.6 million in revenue, essentially flat year over year, but profitability fell with adjusted EBITDA at $1.6 million versus $1.9 million in the prior year period. This business relies on dry-lease contracts with FedEx for cargo flight services, representing 39% of company revenue in FY2025. No update was provided on the upcoming contract renewals, but the dependence on FedEx continues to be flagged by management as a significant risk. The company completed the acquisition of Royal Aircraft Services during the period, though the deal did not materially affect results for the quarter.

Digital Solutions, which includes software and analytics products for cargo and aviation logistics, achieved revenue growth, up to $2.1 million compared to $1.7 million in the prior year period. Management noted that digital solutions revenue increased by $1.5 million in FY2025, primarily due to increased software subscriptions. Losses narrowed, but this segment remains unprofitable with adjusted EBITDA of negative $0.1 million. Management continues to describe this segment as strategic and with “significant growth potential.”

Financial Condition and Forward View

Air T’s balance sheet has weakened over the last year. The company reported negative shareholder equity as of June 30, 2025, resulting mainly from recent net losses, repurchases of its own shares, and shifts in earnings related to interest rate swaps. Interest expense rose to $2.3 million, compared to $1.9 million in the prior year period. Assets under management for joint ventures in aircraft rose to $594 million as of June 30, 2025, up from $577 million as of March 31, 2025. Dividend income from equity investments was $1.1 million, a significant drop from $2.5 million in the prior year period.

The company did not issue any formal financial guidance for the next quarter or fiscal year. Management commented on its long-term focus but withheld any concrete forecasts or updates on material risks, including the renewal status of its FedEx contracts. Given the mixed segment performance, continued negative equity, and no new guidance, investors are likely to scrutinize upcoming results for progress in digital solutions and signs of stability in Overnight Air Cargo, especially as the FedEx contracts near expiration.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.