Aerospace Shake-Up: Tenax and Air Industries Announce Major Merger

BAYSHORE, N.Y. & RIDGELAND, Miss. – February 17, 2026 – In a significant move set to reshape a segment of the aerospace and defense landscape, special mission aviation provider Tenax Aerospace and precision manufacturer Air Industries Group (NYSE American: AIRI) have announced a definitive merger agreement. The deal will combine Tenax's government-focused aircraft services with Air Industries' deeply entrenched manufacturing capabilities, creating a vertically integrated entity with projected annual revenues exceeding $210 million.

The transaction is structured as a reverse merger, which will see privately-held Tenax become a public company through Air Industries' existing listing. Upon closing, Tenax shareholders will own approximately 95% of the combined company, leaving current Air Industries shareholders with the remaining 5%. The new, larger entity is expected to continue trading on the NYSE American under the symbol AIRI, with Tenax Chairman Tom Foley slated to become Chairman of the combined board.

From Parts to Patrol: Forging a Diversified Defense Platform

The strategic logic behind the merger is to create a more resilient and diversified company capable of serving a broader spectrum of the aerospace and defense market. Air Industries Group has long been a critical, albeit small, supplier of high-precision components. It manufactures flight-critical parts like landing gear, flight controls, and engine mounts for prime contractors such as Lockheed Martin and Northrop Grumman, and is the sole supplier of landing gear components for the U.S. Navy's E-2D Advanced Hawkeye aircraft.

Tenax Aerospace operates on the other end of the spectrum, providing specialized aircraft and services directly to government clients, including the U.S. and Canada. Its portfolio includes critical services like aerial firefighting, airborne intelligence, surveillance, and reconnaissance (ISR), and pilot training—all part of the rapidly growing special mission aircraft market, which is projected to surpass $26 billion globally by 2031. By merging, the companies aim to create a single entity that not only manufactures mission-critical components but also operates the final mission-ready aircraft.

“This merger represents an important step for Tenax’s plans to expand its presence in the aerospace and defense sector,” said Tom Foley, Chairman of Tenax, in a statement. “Partnering with Air Industries Group provides Tenax with a public listing for its shares, manufacturing capability, and access to permanent capital to support long-term growth.”

Based on preliminary 2025 financials, the combined company would have generated roughly $183.3 million in revenue with an Adjusted EBITDA of approximately $65.0 million. Looking ahead, the new firm projects pro-forma 2026 revenues to climb above $210 million, with Adjusted EBITDA exceeding $75.0 million, driven primarily by Tenax's existing contract pipeline.

A Risky Rebirth for Air Industries Shareholders

While the strategic vision is ambitious, the terms of the deal present a complex picture for Air Industries' existing shareholders. The 95% ownership stake for Tenax effectively transforms the transaction into a highly dilutive takeover, where Air Industries serves as the public vehicle for the much larger Tenax business.

Prior to the deal, Air Industries faced significant financial headwinds. Despite a healthy backlog, the company struggled with profitability, posting a negative operating margin in the twelve months leading up to November 2025 as overhead and interest expenses consumed its business-level profits. The merger offers a path to greater scale and potential profitability but at the cost of massive shareholder dilution.

The exact number of shares to be issued to Tenax will be determined by a 'Debt Adjusted AIR Share Price' calculated at closing. A preliminary calculation based on Air's December 31, 2025, balance sheet suggests a price of $3.44 per share, which would result in the issuance of approximately 112.5 million new shares.

To mitigate the impact on its investors, Air Industries has negotiated several protective measures. If the company's stock trades below the calculated merger price before closing, Air is required to commence a tender offer for up to one million shares. More significantly, existing shareholders will receive a non-transferable contingent redemption right. This gives them the option, one year after the merger's close, to sell their shares back to the company at 107.3% of the final 'Debt Adjusted AIR Share Price' if the stock's average price is below that threshold. Based on the preliminary price, this would create a redemption floor of approximately $3.69 per share.

Peter Rettaliata, Chairman of Air Industries Group, framed the deal as a necessary and compelling step. “The Board of Directors and management of Air believe this strategic merger is compelling. It represents an excellent outcome for Air shareholders, who will participate in a stronger combined company with a broader range of aerospace and defense products and the benefits of additional expertise and resources.”

Navigating Debt and Integration

The combined entity will begin its life with a significant debt load. The pro-forma net debt stands at approximately $380 million. This figure includes $80 million in debt Tenax incurred in January 2026 to buy out minority interests. While the company expects to reduce this figure by up to $30 million through cash flow and aircraft sales before the merger closes, managing the remaining leverage will be a critical task for the new leadership team.

As part of the transaction, Air Industries' existing debt is expected to be refinanced. This comes after the company recently secured an extension and waivers on its credit agreements, underscoring its previous financial pressures.

Beyond the balance sheet, the new management will face the operational challenge of integrating two fundamentally different businesses: a public precision manufacturer and a private aviation services provider. Successfully merging the distinct corporate cultures, operational workflows, and government contracting processes will be essential to realizing the synergies outlined in the merger announcement. The combined company will employ approximately 430 people across facilities in New York, Connecticut, and Mississippi.

The transaction is not conditioned on financing but remains subject to approval by Air Industries shareholders, who must vote to authorize a substantial increase in shares from 20 million to 200 million. It also requires customary regulatory and U.S. government approvals, including antitrust clearance under the Hart-Scott-Rodino Act. The companies anticipate closing the deal before June 30, 2026.