Air T (AIRT) risk factors, FY2025 10-K

General Business Risks

1. 01Market fluctuations may affect our operations
2. 02Rising inflation and interest rates may result in increased costs of operations and negatively impact the credit and securities markets generally, which could have a material adverse effect on our results of operations and the market price of our Common Stock
3. 03We could experience significant increases in operating costs and reduced profitability due to competition for skilled management and staff employees in our operating businesses
4. 04Legacy technology systems require a unique technical skillset which is becoming scarcer
5. 05Security threats and other sophisticated computer intrusions could harm our information systems, which in turn could harm our business and financial results
6. 06We may not be able to insure certain risks adequately or economically
7. 07Legal liability may harm our business
8. 08Our business might suffer if we were to lose the services of certain key employees
9. 09A pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our markets could adversely impact our business
10. 10Changes to U.S. tariff and import/export regulations may have a negative effect on our suppliers and/or service providers and, in turn, could have a material adverse impact on our financial condition

Risks Related to Our Structure and Financing/Liquidity Risks

1. 11Our holding company structure may increase risks related to our operations
2. 12A small number of stockholders has the ability to control the Company
3. 13Although we do not expect to rely on the “controlled company” exemption, we do qualify as a “controlled company” within the meaning of the Nasdaq listing standards, and we do qualify for exemptions from certain corporate governance requirements
4. 14An increase in interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our cash flow and negatively affect the results of our business operations
5. 15Our inability to maintain sufficient liquidity could limit our operational flexibility and also impact our ability to make payments on our obligations as they come due
6. 16Future cash flows from operations or through financings may not be sufficient to enable the Company to meet its obligations
7. 17A large proportion of our capital is invested in physical assets and securities that can be hard to sell, especially if market conditions are poor
8. 18To service our debt and meet our other cash needs, we will require a significant amount of cash, which may not be available
9. 19If our cash flows and capital resources are insufficient to fund our debt service obligations or meet covenant requirements, we may be forced to seek alternatives
10. 20Despite our substantial indebtedness, we may incur significantly more debt, and cash may not be available to meet our financial obligations when due or enable us to capitalize on investment opportunities when they arise
11. 21Our current financing arrangements require compliance with financial and other covenants and a failure to comply with such covenants could adversely affect our ability to operate
12. 22Future acquisitions and dispositions of businesses and investments are possible, changing the components of our assets and liabilities, and if unsuccessful or unfavorable, could reduce the value of the Company and its securities
13. 23We face numerous risks and uncertainties as we expand our business
14. 24Our business strategy includes acquisitions, and acquisitions entail numerous risks, including the risk of management diversion and increased costs and expenses, all of which could negatively affect the Company’s ability to operate profitably
15. 25Strategic ventures may increase risks applicable to our operations
16. 26Rapid business expansions or new business initiatives may increase risk
17. 27Our policies and procedures may not be effective in ensuring compliance with applicable law
18. 28As a public company, we are subject to various regulatory requirements including, but not limited to, compliance with the rules
19. 29Deficiencies in our public company financial reporting and disclosures could adversely impact our reputation

Risks Related to Our Segment Operations

1. 30The operating results of our segments may fluctuate, particularly our commercial aircraft, engines and parts segment
2. 31i.the timing of necessary overhauls of engines and aircraft
3. 32Our Overnight Air Cargo Segment is dependent on a significant customer
4. 33Our dry-lease agreements with FedEx subject us to operating risks
5. 34Because of our dependence on FedEx, we are subject to the risks that may affect FedEx’s operations
6. 35A material reduction in the aircraft we fly for FedEx could materially adversely affect our business and results of operations
7. 36Sales of deicing equipment can be affected by weather conditions
8. 37We are affected by the risks faced by commercial aircraft operators and MRO companies because they are our customers
9. 38Our engine values and lease rates, which are dependent on the status of the types of aircraft on which engines are installed, and other factors, could decline
10. 39Upon termination of a lease, we may be unable to enter into new leases or sell the airframe, engine or its parts on acceptable terms
11. 40Failures by lessees to meet their maintenance and recordkeeping obligations under our leases could adversely affect the value of our leased engines and aircraft which could affect our ability to re-lease the engines and aircraft in a timely manner following termination of the leases
12. 41We may experience losses and delays in connection with repossession of engines or aircraft when a lessee defaults
13. 42Our commercial aircraft, engines and parts segment and its customers operate in a highly regulated industry and changes in laws or regulations may adversely affect our ability to lease or sell our engines or aircraft
14. 43Our aircraft, engines and parts could cause damage resulting in liability claims
15. 44We have risks in managing our portfolio of aircraft and engines to meet customer needs
16. 45Liens on our engines or aircraft could exceed the value of such assets, which could negatively affect our ability to repossess, lease or sell a particular engine or aircraft
17. 46In certain countries, an engine affixed to an aircraft may become an addition to the aircraft and we may not be able to exercise our ownership rights over the engine
18. 47Higher or volatile fuel prices could affect the profitability of the aviation industry and our lessees’ ability to meet their lease payment obligations to us
19. 48Interruptions in the capital markets could impair our lessees’ ability to finance their operations, which could prevent the lessees from complying with payment obligations to us
20. 49Our lessees may fail to adequately insure our aircraft or engines which could subject us to additional costs
21. 50If our lessees fail to cooperate in returning our aircraft or engines following lease terminations, we may encounter obstacles and are likely to incur significant costs and expenses conducting repossessions
22. 51If our lessees fail to discharge aircraft liens for which they are responsible, we may be obligated to pay to discharge the liens
23. 52If our lessees encounter financial difficulties and we restructure or terminate our leases, we are likely to obtain less favorable lease terms
24. 53Withdrawal, suspension or revocation of governmental authorizations or approvals could negatively affect our business

Risks Related to Environmental, Social, and Governance Issues

1. 54Climate change, related legislative and regulatory responses to climate change, and the transition to a lower carbon economy may adversely affect our business
2. 55Environmentally hazardous conditions could potentially adversely affect us
3. 56We are subject to increasing scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, employee retention, and ability to raise capital from investors

Risks Related to Air T Funding

1. 57The ranking of the Company’s obligations under the Junior Subordinated Debentures and the guarantee creates a risk that Air T Funding may not be able to pay amounts due to holders of the Trust Preferred Securities
2. 58The Company has the option to extend the interest payment period could delay interest payments on the Trust Preferred Securities
3. 59Tax event redemption or investment company act redemption
4. 60The Company may cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities
5. 61There are limitations on direct actions against the Company and on rights under the guarantee
6. 62The covenants in the Indenture are limited
7. 63Holders of the Trust Preferred Securities will generally have limited voting rights