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.
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?
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