I thought United Airlines had cornered the market on investing in things that may or may never fly after having receiving billions of dollars in taxpayer support (between ordering Archer air taxis and the Boom supersonic jet), but it seems like American Airlines now wants in on the action too.
In this post:
American Airlines investing in Vertical Aerospace
It has been announced that American Airlines is investing in Vertical Aerospace, which is a UK-based engineering and aeronautical business that’s developing electric vertical takeoff and landing (eVTOL) aircraft. American Airlines describes this as “demonstrating its focus on emerging technologies to reduce carbon emissions and investing in innovative ways that could improve the customer journey.”
Vertical Aerospace is developing the VA-X4, a zero-carbon aircraft that can carry four passengers and a pilot at speeds of up to 200mph over a range of over 100 miles. The idea is that these aircraft could potentially transport customers quickly around urban city centers and to airports. The first test flight is expected to take place later this year, and certification of the aircraft could come as early as 2024.
As part of this investment in Vertical Aerospace, American has agreed to pre-order up to 250 aircraft, plus a further 100 options, representing a potential pre-order commitment of well over $1 billion. However, this is “subject to certain future agreed upon milestones and other terms.”
American Airlines also plans to make a $25 million investment in Vertical Aerospace through a private investment in public equity (PIPE) transaction.
Here’s how Derek Kerr, American Airlines’ CFO, describes this development:
“Emerging technologies are critical in the race to reduce carbon emissions and we are excited to partner with Vertical to develop the next generation of electric aircraft. For years, American has led the industry in investing in newer, more fuel-efficient aircraft. Today’s partnership is another example of that commitment, and an investment in the future of air mobility. We are excited about the prospect of what this could mean for our customers, and our company.”
My take on American Airlines’ electric air taxi focus
Before I share my personal thoughts, I think it’s worth acknowledging that American does seem to be investing at least $25 million here, so this isn’t purely a mutual publicity stunt. As far as the order for up to 350 aircraft goes, I wouldn’t read too much into that, given that it’s “subject to certain future agreed upon milestones and other terms.” But still, $25 million is a not insignificant amount for American Airlines to invest, especially at this point.
Beyond that, here’s my general take:
- While it’s nice that more environmentally friendly technology like this could eventually replace helicopters, personally I have a hard time imagining these kinds of air taxis will be widely available within the next decade, in terms of technology, economic viability, and/or government approval (I acknowledge that I’m probably a pessimist)
- What I don’t get more than anything is why some airlines are now deciding that they want to get into the business of transporting people to & from the airport with electric air taxis, especially when we’re talking about just four passengers per plane; with that logic, shouldn’t we have seen airlines investing in electric cars and competing with Uber?
Ultimately I think United Airlines deserves a lot of credit for the publicity it generated between the initial electric air taxi order, and now the supersonic jet order. In the past week I’ve had so many non-aviation people say to me “did you see United ordered supersonic jets?” That’s amazing publicity and makes United look like a real market innovator. I’m unsure as to how beneficial American simply following United will be.
Bottom line
American Airlines is investing $25 million in Vertical Aerospace, which is developing electric vertical takeoff and landing (eVTOL) aircraft. American has also in theory ordered up to 350 of these planes, though that’s subject to all kinds of terms, and I sure wouldn’t take that as a sure bet.
While this technology is cool, personally I don’t get why the airline industry is now trying to get into the business of transporting people to & from the airport in this way. I’m curious to see how all of this plays out over the coming years.
What do you make of American Airlines’ investment in Vertical Aerospace?
Well this ought to be really unpleasant for anyone living in the taxi flight paths.
Why
The videos for these air taxis always have the most beautiful music, no real life audio to be heard, because well they're loud af.
Literally zero chance of these ever becoming common in any US city, the only cities with a chance are those in a country where the ultra rich rule and the everyday citizen has no voice. i.e. UAE, Saudi Arabia.
The noise comes from the propellers not the motors so it's impossible...
The videos for these air taxis always have the most beautiful music, no real life audio to be heard, because well they're loud af.
Literally zero chance of these ever becoming common in any US city, the only cities with a chance are those in a country where the ultra rich rule and the everyday citizen has no voice. i.e. UAE, Saudi Arabia.
The noise comes from the propellers not the motors so it's impossible to reduce much. Just imagine the sound of 10s or 100s of these flying overhead.. It'd be like helicopters going past constantly all day.
Agreed 100%. A fantasy of the 0.0001% that's entirely unsustainable, commercially or environmentally - not to mention in terms of public safety - at any meaningful scale beyond that.
Another Silicon Valley-led money pit, although not as big as the increasingly evident autonomous vehicle fiasco.
I drive a plug-in hybrid car but have no illusions about the fact that most US electricity is produced with carbon fuel or huge hydro plants. Yes, there are reduced emissions in electric mode but that is small in comparison. Now if we had more nuclear energy that would be a game changer.
Virgin Atlantic has also announced a partnership with them
This belongs in the trash. How about that first class emirates review Ben ?
Could work if they bundle services in areas with horrible traffic like LA or in remote places without an airport.
Lucky, you know how much money eBay has made over the years investing in companies outside its core auction business? After an initial hit on a partial Skype sale, the percentage it retained eventually netted eBay over $1 billion when they finally sold it. They bought PayPal for $1.5 billion and I don't even know how many billions eBay made when they sold PayPal. I believe there are a couple other transactions like that for...
Lucky, you know how much money eBay has made over the years investing in companies outside its core auction business? After an initial hit on a partial Skype sale, the percentage it retained eventually netted eBay over $1 billion when they finally sold it. They bought PayPal for $1.5 billion and I don't even know how many billions eBay made when they sold PayPal. I believe there are a couple other transactions like that for eBay.
Obviously no guarantee this will work out for United or American, but it's simple risk/reward. If these technologies/products explode eventually they can make a fortune on their investment, to the extent United and American own equity in those companies. Or American might as well kiss that $25 million goodbye. Who knows. Stop sounding like a Luddite!
You can cherry pick winners all day long. Every 1 winner there are thousands more bad investments you never even heard of, for a reason.
If you had invest $100,000 each.
You could have invested in Amazon 25 years ago. Today will be $1.8 billion
You could have said yes when some VC introduced you to Mark Zuckerberg. Today will be $10 billions.
You could have kept 1,200,000 Bitcoins from 2010. 3...
You can cherry pick winners all day long. Every 1 winner there are thousands more bad investments you never even heard of, for a reason.
If you had invest $100,000 each.
You could have invested in Amazon 25 years ago. Today will be $1.8 billion
You could have said yes when some VC introduced you to Mark Zuckerberg. Today will be $10 billions.
You could have kept 1,200,000 Bitcoins from 2010. 3 months ago it would have been $78 billion.
You would be in the top 10 billionaire.
Are you?
Or you're a Luddite too.
Gosh you're dumb. Try rereading what I wrote. American can lose that $25 million, absolutely. Or more if they keep investing. Doesn't make the investment, or any of the other "losers" you mention, a bad idea by default.
LMAO....
Gosh you're dumb. Try rereading what I wrote. You can make that $100 billion, absolutely. Or more if you keep investing. Doesn't make the investment, or any of the other "winners" you mention, a good idea by default.
Too oafish reply. My advice to you always "Plead the Fifth Amendment"
Everything you said was used against you.
The airlines have billions in unused capital from the gov bailouts in the grand scheme of things $25 million is a joke for AA, I can Guarantee you had AA been borrowing loans during COVID they’d not be making such “investments” and this is a prime example of how blank check bailouts lead to more fiscal negligence that the taxpayers pay for
Lufthansa is flying 747-8s and A350s intra-europe this summer.
https://www.aerotelegraph.com/lufthansa-schickt-boeing-747-8-mit-first-class-nach-mallorca
Americans would sooner invest in impractical solutions like this than something as viable as mass transit lol
I feel attacked lmao