Air Taxi Startup Verical Aerospace Will get Large Backing From High Tech, Airline Shares

Two electric air taxi startups backed by American Airlines (AAL) and United Airlines (UAL) on Thursday teased a rapidly-approaching Jetsons-like future with splashy investment deals or debuts. But electric aircraft built for the long haul, it turns out, are still years away, one analyst said.




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“eVTOL is the next disruptive technology in aviation,” Cowen analyst Helane Becker said in an interview, referring to electric vertical takeoff and landing aircraft. “Even though it’s sort of a mid- to late-decade event, there’s a lot that has to be done before you get there.”

She said that there were around a dozen steps such aircraft developers needed to take to receive certification from the Federal Aviation Administration. That process can take three to seven years. Manufacturing facilities also need to be certified as well.

The two startups — Archer, backed by United, and Vertical Aerospace, now backed by American Airlines and others — expect certification or commercial launch for their aircraft as early as 2024.

But other observers have cautioned that timeline could be optimistic. Becker also noted the size of the air taxis being developed.

“Most of these aircraft seat one to four people,” she said. “I mean, that’s nothing. The way I look at this initial iteration of aircraft is really replacing an Uber ride to the airport, or one rich person going from Philadelphia to Boston or something like that. The range on these is very small.”

“Obviously, the second and third iterations will be longer,” she continued. “But those are 2030-2035 events.”

‘Up to 1,000’ Air Taxi Orders

UK-based electrical aircraft maker Vertical Aerospace on Thursday said it has landed “up to 1,000” preorders from American Airlines and others — a move that represents the latest bet from the aviation’s old guard on a cleaner air-taxi future.

Vertical also announced investments from the likes of American, Honeywell (HON) and Microsoft‘s (MSFT) venture capital fund. The air taxi maker also said it plans to go public via a SPAC, making it the latest such company to do so.

Meanwhile, rival Archer, which is backed by United Airlines (UAL), unveiled its own air taxi.

Air Taxi Stocks

Vertical Aerospace says it plans to go public via a merger with Broadstone Acquisition Corp. (BSN). The deal is set to close in the second half of this year. The deal valued the combined company at $2.2 billion, Vertical and Broadstone said.

Once public, Vertical, founded in 2016, would trade on New York Stock Exchange. Its ticker would be EVTL.

Broadstone rose 0.7% in the stock market today.

Archer, similarly, plans to go public via the SPAC Atlas Crest Investment (ACIC). United Airlines announced its plans to work with Archer in February.

United said then that it would help Archer with aircraft development. The carrier said it and Mesa Airlines would acquire up to 200 of the aircraft, which would be operated by a partner, once “the aircraft are in operation and have met United’s operating and business requirements.”

The airline said the air taxis could give customers “a quick, economical and low-carbon way to get to United’s hub airports and commute in dense urban environments within the next five years.”

Joby Aviation, another air taxi startup, has similar plans via Reinvent Technology Partners (RTP). And Ilium, a German air taxi startup, also plans to go public via the SPAC Qell Acquisition (QELL)

American Airlines rose 0.3% on Friday. United crept 0.5% higher.

Air Taxi Solution To ‘Bandwidth Constraint’

Thursday’s announcements arrived as carbon emissions rise and U.S. cities become increasingly congested. More air taxi developers hope short-haul, electric-powered aircraft could unclog roads.

“We are bandwidth-constrained on the ground,” Archer co-founder Brett Adcock said at an event on Thursday evening in Hawthorne, Calif., to introduce its Maker brand air taxi. “Even moving to a fully-electric automobile won’t fix the traffic problems that we’re seeing.”

“Who hasn’t sat in traffic wishing they could just fly over all of it?” he continued.

In a statement, Archer said its air taxi would be capable of vertical takeoff and landing. It would also be able to travel 60 miles at 150 miles per hour. The company said it was “in an excellent financial position to continue on its accelerated timeline toward commercial launch in 2024.”

Vertical Lands Big Backers

Vertical, meanwhile, is developing a zero-carbon electrical aircraft, called the VA-X4. It too will have electric vertical takeoff and landing, or eVTOL, capabilities. The company said it would travel at over 200 miles per hour in near silence. It can carry five people — the pilot and four passengers.

Vertical plans to conduct its first test flight of that air taxi this year. Certification, according to a release from American Airlines, could come as soon as 2024.

Vertical Aerospace says it has landed “up to 1,000” preorders of its aircraft from American and aircraft leasing company Avolon. Virgin Atlantic has a pre-order option.

American agreed to pre-order up to 250 aircraft, a commitment worth $1 billion. It also has an option to order an extra 100 aircraft. The airline expects to invest $25 million in Vertical.

“With the investment, American is demonstrating its focus on emerging technologies to reduce carbon emissions, and investing in innovative ways that could improve the customer journey,” American said in a statement.

Avolon preordered up to 500 aircraft for $2 billion. The move, it said, would “introduce the ultra-short-haul aircraft category to commercial aviation, a game changing development that will revolutionize air travel with zero emissions aircraft.”

Vertical says that Microsoft’s M12 — the software giant’s venture capital arm — American Airlines, Avolon, Honeywell and Rolls-Royce have invested in the company via a private investment in public equity transaction.

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