Four projects intended to study potential AAM use cases and guide Michigan lawmakers as they regulate the industry have received a total of $6.25 million in funding. AAM is an umbrella term used by the FAA to denote new forms of passenger- and cargo-carrying aircraft, from drones to electric vertical takeoff and landing (eVTOL) air taxis.

The $2.6 million will be allocated to electric aircraft and charging station developer Beta Technologies. The remaining funds will be divided among drone infrastructure developer Skyports ($512,000); Traverse Connect, the economic developer for the state’s Great Traverse region ($689,500); and Michigan Central, a transportation technology campus located in Detroit ($2.45 million).

The money comes from the Michigan AAM Activation Fund, which has the combined backing of the state’s Department of Transportation (MDOT), Office of Future Mobility and Electrification (OFME), and Economic Development Corporation (MEDC). The fund aims to prepare Michigan for the arrival of AAM aircraft by coordinating state agencies.

“Advanced air mobility is an incredible economic opportunity for the state of Michigan,” said Gilchrist. “These investments create high-tech jobs, grow cutting-edge businesses, and enhance quality of life for our residents. These innovative advancements will elevate the way our companies operate, making air transportation more efficient and changing the way we move both people and cargo.”

Added Bradley Wieferich, Michigan state transportation director: “This new investment complements the state’s strategy to find safe and cost-efficient ways to capitalize on a robust network of aviation infrastructure serving Michiganders today.”

Beta will use its $2.6 million appropriation to install electric aircraft chargers statewide, including at Cherry Capital Airport (KTVC), Capital Region International Airport (KLAN), West Michigan Regional Airport (KBIV), and Willow Run Airport (KYIP).

The company is developing systems that adhere to the combined charging standard (CCS), a set of design protocols endorsed by Beta, the General Aviation Manufacturers Association (GAMA), and other manufacturers such as Archer Aviation and Boeing’s Wisk Aero. So far, Beta has about 20 chargers installed and online in the Eastern U.S., with another 50 or so in the construction or permitting process.

Skyports will use its money to launch a trio of proof-of-concept, ship-to-shore drone delivery services in the cities of Sault Ste. Marie and Detour Village, in partnership with local shipping provider Interlake Steamships. The ships will be anchored while drones arrive to pick up deliveries.

Traverse Connect, with an assortment of partners, will examine the use of drones to deliver critical medical supplies to rural areas, which typically have less access to the U.S. healthcare system. The drones will also be deployed for marine surveying, water sampling and testing, bathymetric mapping, and emergency response in the Lake Michigan area.

Michigan Central, meanwhile, has been tasked with improving Michigan’s recently announced advanced aerial innovation region, an urban campus that was opened to bring AAM companies and jobs to the state. It will also work alongside Brooklyn’s Newlab, a technology center best known for revitalizing the Brooklyn Navy Yard, to test beyond visual line of sight (BVLOS) drone use cases across building inspection, cargo delivery, and medical delivery.

“Michiganders have always been pioneers in the mobility space, and now we’re taking to the skies, finding new ways to use next-generation transportation to deliver critical resources like medical supplies and food, reinforcing international partnerships and cross-border collaboration, and so much more,” said Justine Johnson, Michigan chief mobility officer.

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XTI on Monday announced it signed a capital distribution agreement with investor FC Imperial Limited worth as much as $55 million, giving the firm a post-money valuation of around $275 million should the transaction go through.

“Assuming the completion of the proposed investment, we believe the additional capital will help accelerate the development of the TriFan through several major milestones, including completion of the updated preliminary design review along with launching the critical design review phase in preparation for the assembly of XTI’s Test Aircraft No. 1,” said Scott Pomeroy, chairman and CEO of XTI.

XTI, which is publicly traded on the Nasdaq, was borne out of a merger between manufacturer XTI Aircraft Company and Inpixon, a developer of real-time location systems. That transaction went through in March.

The company’s proprietary aircraft design has received patents in the U.S., Canada, Japan, China, and Europe. In 2019, a two-thirds scale prototype aircraft made its maiden voyage.

The TriFan design was inspired by the hummingbird using its wings to suspend itself in air while collecting nectar: fast, quiet, and able to hover. In the same way, the aircraft uses tilting fans to easily transition from hover to forward flight, much like the tiltrotors on the Bell Boeing V-22 Osprey or Leonardo AW609.

Unlike the cylindrical shape of most commercial airliners, the design takes the form of a bird in flight to provide lift, similar to the Boeing B-52 or Lockheed SR-71 Blackbird.

The TriFan seats a pilot and as many as six passengers. It can operate from a helipad, airport, or any “improved surface,” with no need for new infrastructure or airspace regulations.

Two massive ducted fans on either side of the aircraft’s fixed wing aid in hover and cruise flight, while a third rear fan—which stows during flight—provides power and stability during vertical takeoff. The fans are controlled using simple fly-by-wire controls and powered by a pair of turboshaft engines. The company says it will later switch to hybrid-electric and eventually full electric power to enable zero-emissions operations.

According to XTI, the aircraft’s 700 sm (600 nm) range from helipad to helipad—equivalent to the distance between Dallas and Denver or San Francisco and Portland, Oregon—is double that of most helicopters and seven times that of battery-only VTOL designs. It can also use its fans to perform a short takeoff and landing (STOL) from an airport runway for increased range (750 nm) and payload.

XTI says the TriFan’s 345 mph (300 knots) cruise speed is also twice that of a typical helicopter and will save passengers time compared to business jets and airliners. It will fly at around 25,000 feet and have a configurable fuselage for executive, commuter, and medical use cases.

At the same time, the aircraft is expected to be affordable. In 2021, XTI estimated that an eight-passenger TriFan configuration flying from Manhattan to John F. Kennedy International Airport (KJFK) would cost 80 cents per seat-mile, compared to $3.19 for the average eVTOL and $3 for the typical Uber ride.

The TriFan will be certified as a single-pilot design with IFR permissions, including flights in inclement weather. XTI is collaborating with AVX Aircraft Company on the aircraft’s design, development, and certification.

As of March, the company has a total of more than 700 conditional aircraft purchase agreements, non-binding deposit agreements, options, and letters of intent for the model.

Last month, regional airline Mesa Airlines, which works with United Airlines, placed a conditional preorder for up to 100 aircraft, the value of which XTI estimates at $1 billion. The firm also became an investor. The pending transaction represents one of the most significant so far for the young company.

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Archer on Wednesday received the Air Force’s initial installment of nearly $1 million, the first of what is expected to be many payments under the agreement valued at up to $142 million. In return, Archer sent the Air Force a mobile flight simulator, specified as a deliverable under the contracts.

The transaction marks the beginning of Archer’s relationship with AFWERX, the Air Force’s innovation arm, and its vertical lift division, Agility Prime, which also works with advanced air mobility (AAM) rivals Joby Aviation and Beta Technologies. 

The arrangement will eventually culminate in flight testing of Archer’s five-seater Midnight eVTOL with Air Force pilots on board. First, the company will deliver up to six of the aircraft to an unnamed Air Force Base. A time frame has not yet been specified, but the first contracted payment sets things in motion.

Archer hopes to begin ferrying up to four passengers at a time (plus a pilot) to and from airports in partnership with United Airlines in 2025. It will start with air taxi routes near O’Hare International Airport (KORD) in Chicago and between Downtown Manhattan and Newark Liberty International Airport (KEWR) in New Jersey.

“Archer’s eVTOL technology can help maintain the United States’ position as a global leader in aviation,” said Adam Goldstein, the company’s founder and CEO. “To see our historic contract with the U.S. Air Force move from signature to execution at a rapid pace is a reflection of the strong commitment that the U.S. Department of Defense has made to securing our country’s future by investing in transformational technology.”

Getting the Ball Rolling

Initially, Archer and the Air Force will use the mobile simulator to begin training pilots on Midnight’s flight capabilities. The partners will use it to assess the air taxi’s flight controls and familiarize Air Force personnel with the operational capabilities of Archer’s commercial platform. And down the line, there is potential for the military to develop a Midnight variant for its own use.

Archer will also deploy its mobile simulator to public and industry events to raise awareness of eVTOL designs and encourage more engagement with the novel tech. Other deliverables on the way to the Air Force include wind tunnel testing reports, as well as project specific certification plans (PSCPs) and subject specific certification plans (SSCPs) submitted to the FAA.

Once training in the simulator is complete, Archer will move to piloted flight testing, a milestone rival Joby announced it had reached Wednesday. But first, it will need to deliver the first Midnight aircraft to the Air Force. Joby hit that mark last month with the ahead-of-schedule delivery of its own air taxi to Edwards Air Force Base in California.

Billed as “a safer and quieter alternative to helicopters,” Midnight runs on a proprietary electric powertrain with six independent battery packs, creating a low-noise profile. It combines six rigid propellers for vertical lift with a half dozen tilt props that rotate toward the nose as it transitions to forward flight.

Archer believes the aircraft’s 1,000-pound target payload and 150 mph (130 knots) top speed—combined with its ability to take off vertically like a rotorcraft—could make it ideal for military rapid response, personnel transport, logistics support, or rescue operations. The firm also said Midnight will be more agile and cost-effective to transport, operate, and maintain in the field than the present aircraft deployed for these missions.

While the air taxi will have a maximum range of 100 sm (87 nm), Archer has optimized it for short hops with its planned commercial service in mind. Competing with on-demand rideshare firms, Midnight will primarily make back-to-back 20 sm (17 nm) flights, charging for about 12 minutes between trips. Archer asserts the model will make its air taxi business competitive with ground-based counterparts such as Uber and Lyft.

Where Archer Stands

Midnight’s lightweight carbon fiber composite airframe is developed by automaker Stellantis, which in January announced an exclusive mass production deal with the eVTOL manufacturer. Stellantis also boosted Archer with a $70 million acceleration investment, part of an August funding round.

In June, the partnership advanced from “concept phase” to “execution phase” as the companies ramped up construction on Archer’s high-volume manufacturing plant in Covington, Georgia. The facility at Covington Municipal Airport (KCVC) will initially span 350,000 square feet and produce up to 650 units per year, beginning in 2024. Eventually, though, the plant could more than triple in size and churn out as many as 2,000 aircraft annually.

Joby, however, may have it beat. Last month, it selected Dayton, Ohio—once home to the Wright brothers—as the site for its 200,000-square-foot scaled manufacturing plant. But the company said the 140-acre plot at Dayton International Airport (KDAY) could one day allow the facility to span 2 million square feet.

Short term, Joby’s manufacturing plant is expected to begin full-scale operations in 2025 and produce 500 air taxis per year. The company put down $500 million of its own money and could leverage up to $325 million in state and local incentives to support construction.

Archer and Joby, along with Boeing-owned Wisk Aero, are considered the leaders in the U.S. eVTOL air taxi space. Germany’s Lilium and Volocopter are also key players. All of them are awaiting type certification of their aircraft before they can launch commercial operations, but some are further along than others.

Joby appears to have a slight edge on Archer in terms of flight testing, but both are eyeing entry into service in 2025. Wisk, which plans to fly its air taxi autonomously from the jump, is looking a bit further out to 2028.

Lilium, also targeting a 2025 entry, has made the most progress of the firms when it comes to certification on both sides of the Atlantic. It’s the only eVTOL manufacturer with individual certification bases from both the FAA and the European Union Aviation Safety Agency (EASA). However, Joby and Archer appear to be fully focused on the U.S. market before thinking about an international expansion.

While entry into service is not the be-all and end-all, Volocopter looks like the leader on that front. It flew its first crewed tests at EAA AirVenture in Oshkosh, Wisconsin, in 2021, long before its rivals. It’s also done piloted tests in Germany, South Korea, and France, where it expects to launch commercially in Paris following AAM demos at the 2024 Paris Olympic Games.

Notably, Volocopter just signed a deal with Houston-based helicopter operator Bristow Group to deliver two VoloCity eVTOLs to the U.S., with an option for 78 more. The partners are aiming to launch in the U.S. after Volocopter receives EASA type certification in 2024. Unlike Lilium, the company has a concurrent certification path with the FAA, which should allow it to receive approval to fly in the U.S. shortly after EASA gives its greenlight.

Volocopter could hamper Archer and other U.S. eVTOL manufacturers by gobbling up early market share, if it can stick to its timeline. Or, it could assist them by introducing the U.S. market to the novel technology, potentially increasing the base demand for AAM services when they do enter the market. Either way, expect Archer to leverage its relationship with the Air Force to gain the upper hand.

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Per a press release viewed by FLYING, the New York City-based company, which last week sought and received $15 million in emergency funding from the airline, will cede 95 percent ownership in exchange for a $500 million capital infusion from Delta, Knighthead Capital Management, Certares Management, and others.

The raise will save Wheels Up—plus the 11,639 active members who would have become unsecured creditors—from bankruptcy, which it said Monday it was considering as a “strategic alternative.” But the company’s survival, and potentially that of the industry, will come at the cost of equity.

“If a brand as important as Wheels Up were to fail, it would have had trickle-down impacts across private aviation,” Lance Tweden, vice president of membership for private aviation firm Jet Agency, told FLYING. “Wheels Up’s failure would have caused concern and anxiety among customers, whether they are with Wheels Up or not.”

The nonbinding agreement comprises a $400 million term loan (including $150 million from Delta) coupled to a $100 million liquidity facility from the airline. Delta and other investors will in turn receive newly issued Wheels Up Class A common stock representing the lion’s share of the company.

Ironically, Delta once owned Wheels Up’s private jet management business in full—it sold its Private Jets unit to the startup in 2020 in exchange for a 20 percent stake. The business changed hands again last week, when Wheels Up sold it to Airshare for an undisclosed fee.

“The partnership will create new opportunities for Wheels Up to drive strategic, operational, and financial improvements for its customers in the months and years ahead,” said Delta CEO Ed Bastian. “Delta’s unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability, and aircraft maintenance, combined with Certares’ and Knighthead’s experience and global reach, are expected to speed Wheels Up on its path to profitability.”

Wheels Up CFO Todd Smith will continue to serve as the firm’s interim CEO, while Delta CFO Dan Janki is replacing Wheels Up chairman Ravi Thakran.

“Over the past few months, we have been intensely focused on taking clear steps to improve our product offering and our operational delivery,” said Smith. “Those actions are already showing results, and we look forward to continuing and accelerating that progress with the support of our new partners. Our continued close work with the Delta team will enable us to further integrate our digital experiences, member benefits, and our operations.”

Similar to on-demand rideshare services such as Uber and Lyft, the private aviation business has struggled to reach profitability while burning through cash. Since filing for an initial public offering in 2021, it has consistently posted quarterly net losses. In the second quarter, that net loss widened to $160 million, a 73 percent increase year over year.

Wheels Up reported $152 million in cash on hand at the end of Q2, a fraction of the $586 million it had at the end of 2022 and even the $363 million reported in Q1. In that same period, adjusted earnings before taxes, interest, depreciation, and amortization (EBITDA) have held relatively flat.

The company’s woes could be in part because of its string of acquisitions over the past five years. Since 2019, it has added five different charter operators—Delta’s Private Jets, Mountain Aviation, Alante Air Charter, Gama Aviation Signature, and TMC Jets. But not all fly under the same certification, which limits its ability to reallocate crews across providers.

Wheels Up has also continued to add members and maintain certain policies—like its capped hourly rate—as its competitors have pulled back due to macroeconomic conditions. That’s driven more revenue for the company but at the expense of inflated operating costs.

For example, in the case of a mechanical issue, Wheels Up guarantees a replacement aircraft to the customer free of charge. That means if the charter rate rises between the time of booking and the mechanical issue, Wheels Up has to eat that cost. The issue can be exacerbated during stretches where demand is strong, as was the case with fractional jet ownership company Jet It, which folded in May.

The COVID-19 pandemic also had an impact on Wheels Up’s ability to crew flights. But on the flip side, the business likely would not be viable today had the pandemic not driven an uptick in private jet demand.

Luckily for new majority owner Delta, that volume is expected to be sticky. An eye-popping 93 percent of customers who began flying privately during the pandemic say they have continued to do so. The question now is what Delta and the other investors will do with that demand.

With the sale of its private jet management business, Wheels Up’s fleet is largely composed of King Air turboprops, Citation Xs and XLs, and Hawker 400 light business jets. Prior to the $500 million investment, the company was reportedly looking to grow its corporate business, its fastest-growing segment responsible for about one-quarter of all sales.

Currently, Wheels Up and Delta have an exclusive partnership through which customers can receive Delta benefits with a Wheels Up membership. Part of that arrangement focuses on business charter customers, which Delta could leverage to continue building out the more lucrative area of the business. However, Wheels Up’s membership program may require an overhaul to eliminate the issues that landed the company in a cash-strapped position in the first place.

“It will be interesting to see how they change the structure of the membership program going forward,” said Tweden. “There is no way it could be status quo.”

The new management team may also shed some of Wheels Up’s previous acquisitions to build stronger synergies. And Certares, which owns Internova Travel Group—ranked as the 11th largest U.S. travel agency with more than 100,000 advisers—could open new sales channels.

“Delta will likely make a lot of these changes quickly, as another challenge will be trying to maintain [Wheels Up] members that may be just now becoming aware of the precarious place the company is in,” said Tweden. “Despite this bailout, ultimately Wheels Up did fail, so how do they win that customer confidence back?”

Whether Delta is able to restore confidence in the Wheels Up brand or not, the latter’s struggles could have wide implications for private aviation as a whole. Given its size and high profile, rivals will likely look to the company as a case study of the industry’s challenges and how (or how not) to overcome them.

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Archer Aviation and rival Wisk Aero, the eVTOL subsidiary of aviation giant Boeing, jointly announced an agreement to settle a bitter, yearslong trade secrets dispute on undisclosed terms. Archer will issue warrants to Wisk for up to 13.2 million shares as part of the settlement.

But the agreement is twofold. In a twist nobody saw coming, the longtime competitors will actually enter a collaboration to make Wisk the sole provider of autonomy technology for Archer. Not only that, but Boeing—which bought out Kitty Hawk’s remaining shares in Wisk to become its sole owner in June—will fund the integration of the tech on a future variant of Archer’s Midnight eVTOL.

“This collaboration puts Archer in a unique position—to be able to source autonomy technology from a leader in the industry,” the company said in a press release. “Over the long term, autonomy is seen as one of the keys to achieving scale across all AAM applications, from passenger to cargo and beyond.”

The settlement gets a monkey off Archer’s back, and Boeing’s investment could one day allow the company to shift to autonomous flight, which has been the goal since the beginning. But that’s just the tip of the iceberg.

Separately, Archer announced a $215 million investment from Stellantis, United Airlines, and ARK Investment Management, raising Archer’s valuation to a whopping $1.1 billion. The funding includes Boeing’s money as well as a $70 million acceleration from Stellantis, part of the exclusive manufacturing partnership the automaker signed with Archer in January.

And there’s even more. In its second-quarter shareholder letter, Archer revealed the FAA has greenlit Midnight for initial test flights. The approval keeps the company on track for type design flight testing in 2024 and a commercial launch the following year. Additionally, the first delivery of Midnight aircraft to an Air Force base—part of the firm’s recent $142 million AFWERX contract—is on schedule.

The trio of announcements comes just over a month before Archer and Wisk’s legal dispute was set to head to trial.

In May 2021, Wisk sued Archer for the “brazen theft” of over 50 trade secrets. It alleged that a former Wisk employee had downloaded sensitive information before departing for Archer and that Archer knowingly used Wisk intellectual property to develop Maker, the precursor to Midnight. Supporting its case were the similarities between the two designs.

Archer, predictably, disagreed. That August, it escalated the dispute with a countersuit for $1 billion in damages, claiming defamation. It referred to Wisk’s claims as an “extra-judicial smear campaign.”

Each side secured small victories in the disagreement. Wisk had a motion for injunction denied, allowing Archer to continue developing Maker. But when Archer responded by trying to have the case dismissed, Judge William Orrick III blocked it, arguing that Wisk’s allegations were plausible.

Still, Wisk’s allegations would have been difficult to prove. It needed to show not only that employees downloaded trade secrets, but also that Archer knew this when it began working on Midnight. In February 2022, federal prosecutors declined to charge Jing Xue, the former company engineer at the center of the case, dealing a blow to its efforts.

Archer and Wisk entered a second round of mediation this past March, but to no avail.

Now, however, both companies will be free to focus entirely on certifying their aircraft. That should happen for Archer before it does for Wisk, given the latter’s decision to fly autonomously from the jump.

Like rival Joby Aviation, Archer’s net loss widened significantly in Q2 as it prepares to ramp up manufacturing and flight testing. But while Joby reported about $1.2 billion in cash and short-term investments on hand, Archer has less than half that, about $407 million. That’s still a boatload of money. But its main rival—which has already begun flight testing its production prototype—appears to have a slight edge.

Archer, Joby, Wisk, and others will compete in the emerging advanced air mobility (AAM) market, flying passengers on short trips to and from airfields. Archer has agreements to fly in Chicago and New York City with United, while Joby plans to fly in New York and Los Angeles with Delta Airlines.

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The company last week announced it secured an undisclosed investment from climate technology fund Statkraft Ventures to support the development and commercialization of its production aircraft, which is expected to require just 150 feet of takeoff and landing space.

Statkraft, a venture capital fund focused on sustainable energy transition, is committed to decarbonizing transportation by investing in emerging technologies that reduce emissions and will bolster Electra’s efforts to launch as soon as 2028.

“Statkraft brings a deep commitment to supporting companies and technologies that reduce emissions and address the threat of climate change,” said John Langford, founder and CEO of Electra. “We are honored to have Statkraft on our team and look forward to learning from their insight and experience.”

Concurrently, Electra said it has now signed and fully executed its partnership with the U.S. Air Force’s AFWERX innovation division. The agreement will award the startup a Strategic Funding Increase (STRATFI) worth up to $85 million and support development and testing of its full-scale, preproduction prototype, which the Air Force will use to validate requirements and operational use cases.

The STRATFI deepens Electra’s relationship with Agility Prime, a subdivision of AFWERX dedicated to emerging lift technologies. It also builds on the firm’s six active Air Force Small Business Innovation Research and Small Business Technology Transfer Phase II and III contracts. Those agreements allowed Electra to mature its eSTOL’s hybrid-electric powertrains, blown-lift aerodynamics and acoustics, flight controls, and other features.

In June, Electra unveiled its full-scale, hybrid-electric technology demonstrator, which is expected to begin flying this summer, a year later than originally planned. While the demonstrator features two seats, the company’s full-scale production model will carry up to nine passengers and a pilot, or up to a 2,500-pound payload.

The full-scale design will be built for operations from soccer field-sized spaces. It achieves this through a technology called blown-lift: Eight electric propellers mounted under the leading edge of the aircraft’s fixed wings direct slipstream flows back over the wing into large flaps and ailerons. This directs the flows downward, giving the aircraft enough lift for STOL from runways as short as 150 feet—despite its 9,000-pound weight.

For power, the design’s engine relies on a hybrid-electric powertrain with internal battery-charging capabilities, eliminating the need for ground infrastructure. It is expected to have a 400 nm range and a top cruise speed of 175 knots, creating just 75 dBA of noise when flying at 300 feet—that’s around the volume of a typical vacuum cleaner.

Electra’s aircraft will fly short regional routes in both urban and remote locations, offering a quicker, eco-friendly alternative to road trips. It will occupy the same spaces as vertical takeoff and landing (VTOL) air taxi services such as Joby Aviation and Lilium. But the company claims its aircraft will deliver more than twice the payload and 10 times the range of “vertical alternatives,” while operations will cost 70 percent less.

In addition to passenger transport and on-demand urban air mobility services, the startup expects its aircraft to handle cargo logistics, executive transport, humanitarian aid, disaster response, and a variety of other use cases.

To certify it, Electra is working with the FAA’s Center for Emerging Concepts and Innovation (CECI) and its Atlanta Aircraft Certification Office to define specific plans, checklists, and safety considerations. 

But unlike many eVTOL aircraft, Electra’s design has no tilting wings and rotors and no hover or transition phase, charting a simpler path to certification. The goal is to certify it as a multiengine, Level 3, low-speed airplane under FAA Part 23. And to fly it, Electra expects pilots will only need a standard fixed-wing license.

An initial prototype of Electra’s production aircraft is planned to fly in 2025. FAA certification is expected to follow in 2028, two years later than the original target.

“We are excited to partner with Electra as they are leading the change towards more sustainable aviation,” said Alexander Kueppers, managing director at Statkraft. “Their visionary approach and groundbreaking technology to electrify aircraft, reducing operating costs and emissions at the same time, align perfectly with Statkraft Ventures’ mission to support innovative startups that drive the transition to a low-carbon economy.”

The Norwegian venture capital firm’s funding will add to a January 2022 investment by aviation titan Lockheed Martin. Electra has also seen a growing number of preorders, with commitments for over 1,200 deliveries to more than 30 global customers, including existing operators and new entrants.

At launch, Electra has agreements to fly in the Middle East, Asia, Latin America, and Australia, among other locations. It ranked 25th on the most recent AAM Reality Index from SMG Consulting, which assesses the funding, leadership, technology, certification, and production capabilities of AAM manufacturers.

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The Santa Cruz, California-based firm on Wednesday reported earnings for the second quarter of 2023, reflecting a net loss of $286 million. But the company’s recent milestones, as well as its strong liquidity position of $1.2 billion in cash and short-term investments, hold promise for its planned entry into service in 2025.

Joby’s net loss “reflected the loss on the revaluation of derivative liabilities of $181 million and operating expenses of $116 million, partly offset by interest and other income of $11 million,” the company said in a letter to shareholders. That’s $236 million more than in Q2 2022 and a $173 million increase quarter over quarter. The company’s net loss per share of 45 cents missed consensus analyst estimates by 30 cents.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also fell $9.2 million year over year to $83 million, which Joby attributed to growing operating expenses. Those costs rose $16.3 million over the previous quarter to support employee expenses related to the certification and manufacture of its eVTOL.

However, Joby did report a whopping $1.2 billion in cash and short-term investments at the end of the quarter. That’s crucial because, like other air taxi manufacturers, it does not yet generate revenue. The company’s strong cash position was buoyed by a $180 million investment from Baillie Gifford in May and a $100 million cash infusion from SK Telecom in June.

So, while Joby’s net loss widened, it has plenty of cash on hand to support its certification and manufacturing activities. And in Q2, it made significant progress on both fronts.

Joby’s Q2 Highlights

Joby’s most crucial milestone in Q2 was the rollout of its first production aircraft from its assembly line in Marina, California. Manufactured to production specs for FAA type certification, the latest iteration of the Joby eVTOL has a payload of one pilot and four passengers, a carrying capacity of 1,000 pounds, and can fly up to 100 sm (87 nm) at 200 mph (174 knots). During flight, it produces just 45 dBA of noise, somewhere between the volume of rustling leaves and normal conversation.

Joby also recently released a few performance metrics for the aircraft. Its six electric motors combined generate 236 kilowatts of power at peak performance, twice that of the most powerful Tesla model available.

The aircraft is expected to become the first eVTOL to be delivered to a customer when it reaches Edwards Air Force Base in early 2024. There, it will be flown as part of Joby’s Air Force Agility Prime contract worth up to $131 million. Already, the company has begun training Air Force pilots to fly the eVTOL and installing charging infrastructure at the base.

On Joby’s Q2 earnings call, CEO JoeBen Bevirt confirmed that the air taxi completed its first flight last week, following the FAA’s blessing in June. Bevirt added that the company recently hosted 70 members of the Federal AAM Interagency Working Group—composed of representatives from 22 government departments and agencies—to witness an airborne test. California Governor Gavin Newsom also paid a visit.

Bevirt said Joby is still evaluating sites for its scaled manufacturing facility. But the company said its second production aircraft is already being built.

“We’re proud to have launched production in our home state of California,” Bevirt said in Joby’s Q2 letter to shareholders. “I’m incredibly grateful to the Joby team for their commitment to ensuring Joby remains a clear leader in this new sector and to Toyota for sharing their knowledge and experience with us over many years.”

While these early flights will help Joby validate its technology ahead of FAA testing, the company also made progress on the paperwork side of certification. 

It has now submitted all of its certification plans—which specify the tests, analyses, and design reports it will perform to show its design conforms with the safety regulations outlined in its G-2 Means of Compliance—and seen two-thirds of them approved by the FAA. Certification plans are the third of five steps in type design approval. Now, Joby will use the bases accepted in stage three to move to the testing and analysis phase, in which it will write and execute test plans.

“The vast majority of our certification basis is now in place, which means the vast majority of our effort is now focused on the implementation stage of our certification which starts with stage four,” Didier Papadopoulos, head of aircraft OEM at Joby, said on the Q2 earnings call.

In addition, Joby established its new headquarters in Santa Cruz and stands to benefit from Innovate28, the FAA’s latest plan for the integration of advanced air mobility (AAM) aircraft. The blueprint lays out the agency’s efforts to get eVTOL operations in the sky within the next few years, with operations at scale expected a few years after that.

“This is a remarkably positive step, with the FAA effectively pulling forward the date it is planning to support scaled operations from the 2030s to 2028, in time for the LA Olympics,” Bevirt said on the earnings call.

All in all, while Joby’s financials were unspectacular, the company made significant strides toward entry into service. The hope is that those milestones will keep it on track to fly air taxi routes with Delta in 2025.

“Back on our fourth-quarter call, we outlined goals for the first half of 2023,” Bevirt said. “We said we would submit all of our certification plans to the FAA, and we did. We said we would roll out our first production prototype and fly it, and we have. Each of these goals is a huge milestone for Joby and reflects our relentless commitment to execution.”

Joby’s main competitor, Archer Aviation, will report its own Q2 earnings next Wednesday, while German rival Lilium released its Q2 shareholder letter in July.

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The post Joby Q2 Net Loss Widens as eVTOL Manufacturer Gears Up for Certification appeared first on FLYING Magazine.

The report stemmed from a regulatory filing accessed by FLYING. Within the filing is language indicating that the company does not intend to register with the Securities Exchange Commission nor solicit U.S. investors:

“This announcement (and the information contained herein) is for information purposes only and shall not constitute or form part of any offer to issue or sell, or the solicitation of any offer to purchase, subscribe for or otherwise acquire, any securities of the Company in the United States (including its territories and possessions, any state of the United States and the District of Columbia) or any other jurisdiction were such offer or sale would be unlawful. The Company believes that it is a “foreign private issuer” (“FPI”), as such term is defined in Rule 405 under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and intends to conduct its business so far as possible to maintain its status as a FPI. 

“The securities of the Company (the “Securities”) have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, resold, pledged, transferred or delivered, directly or indirectly, into or within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities laws of any relevant state or other jurisdiction of the United States. There has been and will be no public offering of the Securities in the United States.”

FLYING reached out to Cirrus for comment, and received the following statement from the company, which is in a quiet period after the filing:

“From time to time, Cirrus Aircraft explores options to raise additional capital. Our current work, made possible by the contributions of the Cirrus Aircraft team, has positioned the company as a global leader in personal aviation. A natural next step in that journey is exploring additional business and capital funding structures that enable even larger and more stable growth ahead. 

“Raising additional capital will allow us to further invest in our people, new product development, production capabilities, facilities and efficiencies, as well as enable and expand global service capabilities and strengthen our IT and business infrastructure. 

“We do not have a definitive timetable for our listing plan as our listing application is still under the vetting process of the Hong Kong regulators. Further announcements will be made in accordance with the listing rules of the Hong Kong Stock Exchange. We stay committed to elevating our customers’ ownership experience and staff member experience for many years to come. 

“This communication does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States or any other jurisdiction in which such offer or solicitation is unlawful. The securities of Cirrus Aircraft Limited (the “Company”) may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The securities of the Company have not been, and will not be, registered under the Securities Act. The Company does not intend to register any part of the present or proposed offering in the United States.”

READ MORE: Cirrus Completes Merger With Chinese Firm CAIGA

Cirrus Aircraft merged with China Aviation Industry General Aircraft (CAIGA) in 2011 to fund and support its global expansion. CAIGA, a division of the Chinese state-owned AVIC (Aviation Industry Corporation of China) is a consortium of aerospace companies in China, including other general aviation and pilot training enterprises. CAIGA is headquartered in Zhuhai, where Cirrus manufactures aircraft for the Asian market. The Cirrus portion of AVIC General delivered 2 SR20s in the first quarter of 2023, while Cirrus Aircraft in the U.S. delivered 13 SR20s, 5 SR22s, 54 SR22Ts, and 18 SF50 Vision Jets.

The post Docs Filed for Cirrus Aircraft IPO in Hong Kong appeared first on FLYING Magazine.

When I started on the FLYING journey, I could not imagine how rewarding it would be. In the past year, we have made significant improvements across FLYING. 

Focus on the Highest Quality 

Earlier this year, we upgraded the print edition of FLYING with high-end paper, a new design, and award-winning photography. We also required all advertisements to run full-page ads in order to ensure that the magazine delivered a positive experience for the reader. 

Our focus continues to center around publishing the highest quality print aviation magazine in the market. 

Print Returning to Monthly 

Initially, we rolled out the new FLYING as a quarterly publication, but in response to the overwhelmingly positive feedback we received from our readers—and enormous support from our advertisers—we have decided to take FLYING back to a monthly frequency. 

FLYING subscribers will receive the 2022 Buyers Guide in October, followed by the Q4 2022 issue of FLYING in November, and finally a special December issue. Beginning in January, subscribers will receive 12 issues in 2023, and we will maintain the same high quality of our recent redesign. 

Significant Investment in the Digital Experience Across Web and Mobile

In addition to our investments in the magazine, we have also made significant upgrades to the FLYING website. I hope you have noticed how much more content is there, with special attention paid to pilot-oriented topics such as Destinations, Maintenance, Aircraft Ownership, Careers, and Student Guides. We have also expanded our coverage of aviation history, military, and aerospace topics. We plan on doubling the number of contributors in 2023, and they will provide a wide array of aviation content. 

As part of the website upgrades, we’ve made the reader experience more intuitive. We eliminated the programmatic ads that were on the site and replaced them with aviation-relevant, direct-sale ads that don’t interfere with your reading experience. 

Response From the Market? Overwhelmingly Positive 

We have invested nearly $10 million in the new FLYING, and the market has responded very positively to the changes and upgrades. Revenues are up 88 percent year-over-year and we are starting to see real momentum in the business. As a growth-oriented CEO, I plan on investing the increased revenue right back into FLYING. We have big plans in 2023 and beyond to expand FLYING with more high-quality content, experiences, and applications. 

Back at the FBO—and Back on the Newsstand

As a supply chain executive, I was appalled by how challenging the print supply chain was for FLYING when I first arrived. Over the past year, we have overhauled the supply chain and created a streamlined process over which we have direct control. This process is complete and we are expanding our distribution to fixed-base operators (FBOs) and retail newsstands. 

Beginning in October, FLYING will be available at FBOs nationwide. We believe that being in FBOs is important—they are the central meeting and “refueling” place for all pilots. If you haven’t seen the new print version of FLYING, it’s likely to be at your local FBO starting next month. I hope you will take advantage of the opportunity to check it out and if you like it, please subscribe. We will continue to invest in new content creation—and we are also working on a subscriber rewards program. We want to develop a community with our readers, one in which we have relationships based on a love of flying—and FLYING. 

In November, FLYING is also returning to select retail newsstands. The print version of FLYING will be available at Barnes & Noble and more than 970 Hudson News stores. We believe this gives FLYING the opportunity to reach prospective pilots and aviation lovers in airports and bookstores nationwide. 

We are committed to bringing FLYING back to greatness and are preparing the magazine for the next generation of aviation. In addition, we are working on a number of new initiatives and products that will make FLYING an even greater part of the aviation community. 

Subscribe today to never miss an issue. 

The post FLYING’s Significant Improvements and Smashing Success appeared first on FLYING Magazine.

Taking advantage of the high-profile venue at EAA AirVenture 2022 at Oshkosh, the company announced its intention to sell shares to anyone interested in helping the manufacturer reach new heights of innovation. IPO, the three magic letters for “Initial Public Offering” often heard throughout Wall Street, also began to circulate at Oshkosh. Is CubCrafters headed into IPO-land?

Meeting the IPO Criteria

The buzz started to circulate after the company—which has been in business for 40 years—made an announcement to sell shares. This sparked a lot of interest from potential investors, and CubCrafters’ leadership claims its first 48 hours of taking reservations was highly successful. Thinking of IPOs may conjure up images of executives in snappy business suits ringing the morning bell at the New York Stock Exchange (NYSE). Getting there, however, takes a lot of time (and bureaucratic red tape).

IPOs are not the only ways to raise capital. Direct listings and SPACs are other common ways of doing so. In a direct listing, employees and investors sell their existing stocks to the public, while in an IPO, a company sells part of the company by issuing new stocks. We will talk about SPACs later on.

Is CubCrafters pursuing an IPO or another type of investment opportunity? According to the Securities Exchange Commission (SEC), an IPO is “the first time a company offers its shares of capital stock to the general public.” Uncle Sam also clarifies the first steps required, stating that “under federal securities laws, a company may not lawfully offer or sell shares unless the transaction has been registered with the SEC or an exemption applies.” Has CubCrafters done so? Well, the company has started its takeoff roll along the IPO runway but it hasn’t rotated just yet.

• READ MORE: CubCrafters’ Effort To Go Public Generates Buzz

Where is CubCrafters in the Process?

The company’s aim to raise $50 million in capital can follow different IPO paths, so choosing a Regulation A+ filing with the SEC makes sense. This option allows smaller companies (like CubCrafters) in earlier stages of development to more cost-effectively raise money while following more limited disclosure requirements than what is stipulated for publicly reporting companies.

So, what regulatory “waypoints” lie ahead on CubCrafters’ financial flight plan? It’s already begun the Regulation A+ process by filing an “offering statement” (known as Form 1-A) with the SEC. We can think of this procedure using an IFR analogy, where departure routing is based on Standard Instrument Departures (SIDs). Each SID has its own charted transitions.

In the case of an SEC filing, think of Regulation A+ as a type of SID, and the available transition routes are “Tier I” and “Tier 2.” CubCrafters has “filed” (pun intended) for Tier 2. This option allows the company to offer up to $75 million per 12-month period. Since the company’s leadership is planning for a total of $50 million, that fits well within the SEC’s requirements. 

Other benefits make Tier 2 the preferred routing of choice. It allows the company to publicly advertise its intentions while bypassing state-related regulatory processes. In terms of financial disclosure, two years of auditing must be in place. The SEC doesn’t guarantee the accuracy of those records, so would-be investors are always cautioned to do their homework when looking into a Tier 2 offering. 

Looking at Page 16 of CubCrafters’ investment presentation offers a small glimpse into its financials. The last 20 years have seen explosive growth of $5 million to $30 million in annual revenue, with average aircraft revenue per customer doubling over the previous 10 years. These numbers are impressive, but the presentation does not provide income statements or balance sheets that offer a comprehensive financial health indicator. Comparing cash on balance sheets, expenditures and liabilities will help investors get a better idea of how much money the company already has on hand to weather financial storms and set aside for reinvestment.

What Comes Next?

Regulation A+ allows potential investors to express interest during the company’s early filing stage. In SEC parlance, this is referred to as “testing the waters,” which is communicating to the public to identify potential investors before formally launching the offering. CubCrafters has expressed this intention in the fine print of the presentation developed by Manhattan Capital.

At this point, the company has clearly stated that it’s not asking for money, simply a “Reservation of Investment,” which is non-binding for the investor. This means that stock purchases cannot yet be made, but the reservation does provide the benefit of locking in any future purchase at the issued price. The current price for this reservation period is $5 per share, with a minimum investment of $400 required. 

This is a required step where the company cannot sell shares while the SEC reviews the Form 1-A offering statement. However, once the statement is declared “qualified” by Uncle Sam via a “notice of qualification,” the company will have the option to begin selling its securities under the stipulations of Regulation A+. This is mutually beneficial for Cubcrafters and potential investors since it enables the manufacturer to “test the waters” and allows interested parties to examine the company’s financials.

• READ MORE: CubCrafters NXCub gets FAA Certification

The Ever-changing GA Market

Investment headlines have traditionally favored the large business aviation market, such as IPOs by General Dynamics (which owns Gulfstream), Textron, and Berkshire Hathaway’s Netjets. Nevertheless, the general aviation (GA) industry has seen sizable cash injections into companies, often from venture capitalists.

Some interesting trends have emerged in recent years within GA’s piston segment. Since 2006, several American manufacturers have been acquired by Chinese investors through mergers and acquisitions. A Rand report studied this trend, including several household names such as Cirrus, Enstrom, ICON, and Mooney. Even some flight training academies have followed suit.

On the other hand, U.S.-backed funding for GA projects has included massive amounts of investment cash accrued by up-and-coming players in the aeronautical landscape. Joby Aviation became the first U.S.-based eVTOL developer to go public on the NYSE. Using the trading symbol JOBY, the California-based startup’s merger with Reinvent Technology Partners reportedly gave the business a valuation of $4.5 billion. Pretty good for a relatively new kid on the aeronautical block.

Such a merger is a great example of a SPAC (special purpose acquisition company). This process involves a company without commercial operations formed strictly to raise capital through an IPO to acquire or merge with an existing company. This option wouldn’t work for CubCrafters since they already have an existing commercial operation with a long track record in the GA industry.

CubCrafters’ Grassroots Approach

CubCrafters’ path to raising capital does not involve billions of dollars, SPACs, or foreign investors…so far. They have opened the door for all types of interested parties, including accredited investors, which is a classification that includes several types of legal entities and some high net worth individuals. So while a foreign-based party may like to chip-in some capital, one of the company’s selling points is its American grassroots market.

Founded in 1980 by Jim Richmond, the company prides itself on having a portfolio of U.S.-built aircraft in an ever-changing industry. CubCrafters celebrates grassroots aviation with aircraft designed for backcountry flying and the freedom to explore wherever your aircraft can go. This is not exclusive to the United States, but certainly forms a core American aeronautical pastime.  

Forecasting Financial Progress

The company has captured an important market and is hungry for more. This appetite for growth was the impetus for the NXCub design, which offers a nosewheel configuration on the already Part-23-certificated XCub airframe. The manufacturer’s market research shows that 85 percent of airplane pilots fly this type of gear arrangement compared to a much smaller 15 percent flying those with tailwheels. Backcountry flying is growing, and so are the light sport (LSA), experimental, and Part 23 aircraft markets, all of which are represented by CubCrafters models. 

The $50 million will be focused on infusing cash into manufacturing, research and development, infrastructure, and market expansion. As outlined here, CubCrafters’ path to this funding is via an IPO, which it has already initiated by filing an offering statement following its announcement at AirVenture. CubCrafters seems to have garnered initial interest from potential investors, but the ceremonial bell-ringing at the stock exchange will have to wait a little longer. 

The post CubCrafters Launches A ‘Grassroots’ Capital Funding Effort appeared first on FLYING Magazine.