10-Q: flyExclusive Narrows Losses Amid Strong Revenue Growth

Sentiment:

Quarterly Report 12 November 2025 4:03 PM

flyExclusive, Inc. reported significant revenue increases and reduced net losses for Q3 and the first nine months of 2025, driven by fractional ownership and MRO services, despite an increased working capital deficit and ongoing merger complexities.

Delay expectedThe 'Outside Date' for the merger with Jet.AI Inc. was extended from October 31, 2025, to December 31, 2025, primarily due to the ongoing federal government shutdown.

Capital raiseThe company states it 'might need additional capital to fund growth plans or as circumstances change, which it would expect to obtain through equity issuances, refinancing existing debt, or new borrowings.'In March 2024, the company issued Series A Preferred Stock, providing approximately $25.0 million of capital.In August 2024, the company issued Series B Convertible Preferred Stock, providing approximately $25.5 million of capital.In March 2025, the company issued additional Series B Preferred Stock and warrants in exchange for the cancellation of the EGA Sponsor Note.

Better than expectedNet loss for the nine months ended September 30, 2025, significantly improved by 29.2% compared to the prior year.Total revenue for the nine months ended September 30, 2025, increased by 15.1% year-over-year, indicating strong top-line growth.Operating loss for the nine months ended September 30, 2025, improved by 45.3% year-over-year.Selling, general and administrative expenses decreased by 8.8% for the nine months ended September 30, 2025, reflecting successful cost control measures.

Summary

Net loss for the three months ended September 30, 2025, improved to $(21,078)k from $(24,136)k in the prior year period.
Net loss for the nine months ended September 30, 2025, significantly improved to $(60,198)k from $(84,980)k in the prior year period.
Total revenue for the three months ended September 30, 2025, increased by 19.8% to $92,132k from $76,923k.
Total revenue for the nine months ended September 30, 2025, increased by 15.1% to $271,589k from $235,908k.
Fractional ownership revenue surged by 86.3% for the nine months ended September 30, 2025, contributing to overall growth.
Maintenance, Repair, and Overhaul (MRO) revenue increased by 46.9% for the nine months ended September 30, 2025.
The company's working capital deficit increased to $(207,283)k as of September 30, 2025, from $(150,784)k at December 31, 2024.
Cash and cash equivalents stood at $18,702k as of September 30, 2025, a decrease of $12,992k from December 31, 2024.
The proposed merger with Jet.AI Inc. has been extended, with the 'Outside Date' moved to December 31, 2025, due to the federal government shutdown.
Fleet modernization efforts are ongoing, involving the sale of older aircraft and replacement with newer, more efficient models, expected to continue through fiscal 2025 without material revenue decline.
Material weaknesses in internal control over financial reporting persist, as previously reported.

Sentiment

Score: 6

Explanation: While the company continues to report net losses and an increasing working capital deficit, there are clear improvements in revenue growth, reduced net loss, and operational efficiency (gross margin, SG&A reduction). Strategic initiatives like fleet modernization and the Volato agreement are in progress. However, ongoing merger risks, liquidity concerns, and internal control weaknesses temper enthusiasm.

Positives

Revenue for the three months ended September 30, 2025, increased by 19.8% to $92,132k, demonstrating strong top-line growth.
Net loss for the nine months ended September 30, 2025, decreased by 29.2% to $(60,198)k, indicating improved financial performance.
Operating loss for the nine months ended September 30, 2025, improved by 45.3% to $(38,395)k.
Fractional ownership revenue grew significantly by 86.3% for the nine months ended September 30, 2025, highlighting success in a key strategic area.
MRO revenue increased by 46.9% for the nine months ended September 30, 2025, driven by increased external services.
Selling, general and administrative expenses decreased by $5.9 million (8.8%) for the nine months ended September 30, 2025, reflecting cost optimization efforts.
The company reported a gain on aircraft sales and aircraft held for sale of $3,313k for the nine months ended September 30, 2025, compared to a loss of $4,897k in the prior year, indicating a favorable selling environment.
Net cash provided by investing activities was $78,463k for the nine months ended September 30, 2025, a substantial increase from $22,095k in the prior year.
Management believes current cash and operating cash flows will be sufficient to fund operations for at least 12 months.

Negatives

The company continues to incur net losses, with $(60,198)k for the nine months ended September 30, 2025.
Working capital deficit increased to $(207,283)k as of September 30, 2025, from $(150,784)k at December 31, 2024.
Cash and cash equivalents decreased by $12,992k during the nine months ended September 30, 2025.
Net cash used in operating activities was $(10,310)k for the nine months ended September 30, 2025.
Net cash used in financing activities was $(81,145)k for the nine months ended September 30, 2025.
Interest income decreased significantly by 68.0% to $1,095k for the nine months ended September 30, 2025.
Loss on lease termination increased by $2,300k for the nine months ended September 30, 2025, primarily due to increased impairment on leasehold improvements.
A loss on extinguishment of debt of $4,161k was recorded for the nine months ended September 30, 2025, due to the cancellation of the EGA Sponsor Note.
The change in fair value of warrant liabilities resulted in a loss of $2,031k for the nine months ended September 30, 2025.
Aircraft management services revenue decreased by $121k (22.0%) for the three months ended September 30, 2025.
Material weaknesses in internal control over financial reporting persist, indicating ongoing control deficiencies.

Risks

The proposed merger with Jet.AI Inc. faces risks related to timing, satisfaction of closing conditions (including Jet.AI's net cash condition), relative ownership levels, and the ability to recognize anticipated benefits.
Economic conditions, including future increases in interest rates, the impact of the federal government shutdown, and the potential for recession, could adversely affect demand for private aviation services.
The company's ability to implement business plans, forecasts, and realize additional opportunities is subject to various uncertainties.
Limited liquidity and trading of the company's securities could impact investor confidence and capital access.
The outcome of legal proceedings, particularly the counterclaim against Wheels Up Partners, LLC seeking damages in excess of $75,000, remains uncertain.
The company faces risks associated with its indebtedness and the potential impact of debt on its business and financial condition.
Downturns in the aviation industry, including due to increases in fuel costs (e.g., war in Ukraine, Israel and Hamas conflict) and other global political and economic issues, could negatively affect operations.
Pilot availability and attrition rates, influenced by training delays and wage increases in the industry, could materially and adversely affect operations and financial results.
Failure to materially replace revenue lost from the termination of the GRP Agreement with Wheels Up could have an adverse effect on the business.
Uncertainty exists regarding the company's eligibility for the $9,044k Employee Retention Credit (ERC), which may potentially need to be repaid.
Material weaknesses in internal control over financial reporting could adversely affect the company's ability to record, process, summarize, and report financial information reliably.
Repurchase contingencies for leased aircraft total $55,683k, with significant amounts due in 2026 ($20,925k) and 2027 ($22,875k).

Future Outlook

The company expects to incur operating losses in the near term as it continues its fleet modernization and cost savings initiatives. Management believes current cash, operating cash flows, and fractional program proceeds will be sufficient to fund operations for at least 12 months. Revenue is expected to increase over time due to fleet additions and forecasted membership growth, with fleet modernization continuing through fiscal 2025 without an anticipated material decline in revenue. The ongoing merger with Jet.AI Inc. has been extended to December 31, 2025.

Management Comments

"Our mission is to be the worlds most vertically integrated private aviation company through capital-efficient program growth, an industry-leading pricing model, optimal dispatch availability, in-house training, and a controlled premium customer experience on modernized aircraft."
"We expect the fleet modernization to continue through fiscal 2025 and do not anticipate a material decline to revenue as we will replace sold models with the newer aircraft which offer increased availability and operating efficiency."
"We expect our revenue to increase over time as a result of adding aircraft to our fleet and forecasted membership growth."
"These positive trends reflect the Company's efforts to optimize its workforce and control costs, even as revenue grew for the period."
"We believe that our existing cash on hand, cash generated from operations and available borrowings under our debt arrangement will enable us to secure refinancing as needed to meet our cash requirements for the next 12 months."
"We believe that we have meritorious arguments in our current litigation matters and that any outcome, either individually or in the aggregate, will not be material to our financial position or results of operations."

Industry Context

The private aviation industry is highly competitive, characterized by existing operators, expanding private aircraft ownership, and luxury commercial airline alternatives. Competition is influenced by factors such as price, reliability, safety, regulations, and aircraft availability. The company's strategy to become vertically integrated aims to enhance control over operations and customer experience. The industry also faces challenges related to pilot availability and attrition, as well as broader economic conditions, including fuel costs and global political issues, which can impact demand for private air travel, often considered a luxury service.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Equity Incentive Plan Amendment	The Board of Directors approved an amendment to increase the authorized number of shares for the 2023 Equity Incentive Plan from 6,000,000 to 15,000,000 shares.	September 2025	Increases the pool of shares available for employee incentives, subject to stockholder approval, which is expected to be granted.
Employee Stock Purchase Plan Amendment	The Board of Directors approved an amendment to increase the authorized number of shares for the Employee Stock Purchase Plan (ESPP) from 1,500,000 to 2,500,000 shares.	September 2025	Expands opportunities for employees to acquire equity, subject to stockholder approval, which is expected to be granted.
Internal Control Weaknesses	Material weaknesses in internal control over financial reporting persist.	September 30, 2025	Indicates ongoing deficiencies in financial reporting controls, requiring continued remediation efforts.

Legal Proceedings

**Wheels Up Partners, LLC (WUP) Lawsuit**: Exclusive Jets, LLC (a flyExclusive subsidiary) terminated its Fleet Guaranteed Revenue Program Agreement with WUP on June 30, 2023, due to material breaches. WUP subsequently filed a lawsuit against flyExclusive, alleging wrongful termination and seeking unspecified compensatory damages. flyExclusive filed a counterclaim for breach of contract seeking damages in excess of $75,000. Settlement discussions are currently ongoing.
**Other Litigation**: The company is subject to various other claims and contingent liabilities arising in the normal course of business, which management believes will not have a material effect on its consolidated results of operations, financial position, or cash flows.

Related Party Transactions

Purchased $1,091k in fuel from subsidiaries of LGM Ventures, LLC (LGMV), an entity owned by Thomas James Segrave, Jr., for the nine months ended September 30, 2025.
Incurred $3,110k in rent expense to subsidiaries of LGMV for the nine months ended September 30, 2025, for real property and equipment leases.
Outstanding accounts payable to related parties (LGMV subsidiaries) for fuel and lease purchases totaled $505k as of September 30, 2025.
Recorded $11,133k in charter flight revenue from owners of subsidiaries and Lessor VIEs (at reduced rates) for the nine months ended September 30, 2025.
Short-term accounts receivable from related parties (customer flight activity charges) totaled $1,260k as of September 30, 2025.
Related party receivables from LGMV were $371k as of September 30, 2025.
Holds $3,700k in notes receivable from a related party's purchases of 99% ownership of a consolidated subsidiary.
Long-term notes payable to related parties (EGA Sponsor) had a non-current portion of $15,808k as of September 30, 2025, with a 14% interest rate and extended maturity to January 1, 2027.
The EGA Sponsor Note (principal $3,947k) was cancelled on March 21, 2025, in exchange for Series B Preferred Stock and warrants.
FlyExclusive Jet Share, LLC (a wholly-owned subsidiary) entered into a Senior Secured Note with ETG FE LLC (a related party) for up to $25,773k, with $25,723k outstanding as of September 30, 2025.
Issued Series A Preferred Stock and Series A Penny Warrants to EnTrust Emerald (Cayman) LP (a related party) for $25,000k capital.
Issued Series B Convertible Preferred Stock and Series B Penny Warrants to EnTrust Emerald (Cayman) LP and EGA Sponsor (related parties) for $25,510k capital.

Stakeholder Impact

**Shareholders**: Potential for increased value from improved financial performance and strategic growth, but also face risks from ongoing losses, working capital deficit, merger uncertainties, and potential dilution from future capital raises. The persistence of material weaknesses in internal controls could impact investor confidence.
**Employees**: Benefit from expanded equity incentive and stock purchase plans, but face industry challenges related to pilot availability and attrition.
**Customers**: Benefit from fleet modernization providing newer aircraft and diversified service offerings. Economic downturns could impact demand for private aviation services.
**Creditors**: Debt obligations are substantial, with some covenants requiring waivers in the past. Refinancing needs and security interests on assets are key considerations. The ongoing legal proceedings could also impact the company's financial standing.
**Regulatory Authorities**: The company is subject to SEC reporting requirements and is actively addressing material weaknesses in internal controls. Uncertainty regarding ERC eligibility could lead to repayment obligations.

Next Steps

Continue fleet modernization efforts through fiscal 2025.
Submit Board-approved increases in authorized shares for the 2023 Equity Incentive Plan (to 15,000,000) and the ESPP (to 2,500,000) to stockholders for formal approval at the 2025 annual meeting.
Proceed with the ongoing merger with Jet.AI Inc., with an extended 'Outside Date' to December 31, 2025.
Volato Option is exercisable by Volato beginning on the effective date of the Amendment and ending on the earlier of September 1, 2026, completion of the asset purchase agreement, or completion of the Volato Merger.
The flyExclusive Option is exercisable by the company beginning six months following the completion of any change of control of Volato (e.g., March 31, 2026, if the Volato Merger is consummated).
Series B Preferred Stock will automatically convert into Class A Common Stock on the earlier of December 31, 2025, and the closing of the Subsequent Capital Raise.
Address and remediate material weaknesses in internal control over financial reporting.

Key Dates

Date	Description
December 27, 2023	Closing Date of the business combination (Merger) between EG Acquisition Corp. and LGM; EG Acquisition Corp. changed its name to flyExclusive, Inc.
December 28, 2023	Class A common stock (FLYX) and public warrants (FLYX WS) commenced trading on The NYSE American LLC.
January 26, 2024	FlyExclusive Jet Share, LLC entered into a Senior Secured Note agreement for borrowings up to approximately $25,773k.
February 2024	Company entered into a long-term promissory note in the amount of $4,200k.
March 4, 2024	Company entered into a securities purchase agreement to issue and sell 25,000 shares of Series A Preferred Stock and Series A Penny Warrants.
March 21, 2025	Company and EGA Sponsor cancelled the EGA Sponsor Note in exchange for 4,227 shares of Series B Preferred Stock and warrants.
April 2024	Company entered into an amendment of a short-term promissory note, extending its maturity date to April 2029.
May 2024	Company entered into a long-term promissory note in the amount of $12,600k.
August 8, 2024	Company entered into a Securities Purchase Agreement to issue and sell Series B Convertible Preferred Stock and Series B Penny Warrants (Initial Closing Date).
August 14, 2024	Subsequent Closing Date for the issuance of remaining Series B Preferred Stock and Warrants to EG Sponsor.
September 1, 2024	Effective date of the Aircraft Management Services Agreement (Volato Agreement) with Volato Group, Inc.
September 2025	Board of Directors approved an amendment to increase authorized shares for the 2023 Equity Incentive Plan to 15,000,000 and for the ESPP to 2,500,000.
September 23, 2025	Registration statement on Form S-3 was declared effective.
September 30, 2025	End of the quarterly period covered by this report.
October 1, 2025	Company and Volato entered into an amendment to the Aircraft Management Services Agreement.
October 10, 2025	Amendment No. 2 to the A&R Merger Agreement with Jet.AI Inc. was executed, extending the Outside Date to December 31, 2025.
October 2025	Company issued 432,099 shares of Class A common stock to Volato for $2.1 million consideration.
December 27, 2024	Earliest redemption date for the redeemable noncontrolling interest.
December 31, 2025	Automatic Conversion Date for Series B Preferred Stock (earlier of this date or closing of Subsequent Capital Raise).
March 31, 2026	Beginning of the exercise period for the flyExclusive Option under the Volato Amendment, if the Volato Merger is consummated.
September 1, 2026	Extended term end date for the Volato Agreement.
January 1, 2027	Extended maturity date for the Senior Secured Notes issued in December 2023.
December 27, 2028	Expiration date for Public Warrants and Private Placement Warrants.

Recommendation

hold

The company demonstrates promising revenue growth and a significant reduction in net losses, driven by strategic initiatives like fleet modernization and expansion of fractional ownership and MRO services. These operational improvements are positive indicators. However, the persistent working capital deficit, negative cash flow from operations and financing, and the ongoing material weaknesses in internal controls present notable financial and operational risks. The pending merger with Jet.AI and the Wheels Up litigation introduce additional uncertainties. While there are clear signs of progress, the company is not yet profitable and faces significant hurdles, warranting a cautious 'Hold' stance for investors to monitor further execution and resolution of key risks.

Keywords

Private aviation, Jet charter, Fractional ownership, MRO, SEC filing, 10-Q, Financial results, Aircraft fleet, Merger, Jet.AI, Volato, Warrants, Debt, Equity incentive plan, Corporate governance, NYSE American, FLYX

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