United to invest in eVTOL start-up, eyes 200-unit order

United Airlines (UA, Chicago O’Hare) has announced an agreement with California’s Archer Aviation, a start-up developing electric vertical take-off-and-landing (VTOL) aircraft, wherein it will invest an undisclosed amount in the company and potentially acquire up to 200 of its aircraft. “By working with Archer, United is showing the aviation industry that now is the time to embrace cleaner, more efficient modes of transportation. Archer’s eVTOL design, manufacturing model and engineering expertise has the clear potential to change how people commute within major metropolitan cities all over the world,” Chief Executive Scott Kirby said. The airline committed to adding 200 Archer’s eVTOL aircraft once they meet United’s operating and business requirements. The electric air taxis will be operated by Mesa Airlines (YV, Phoenix Sky Harbor), a regional capacity provider which is not owned by United Airlines. The carrier said that the eVTOLs would allow it to “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”. One of the initial markets where the new aircraft may be deployed is Los Angeles Int’l, where electric air taxis would provide a cost-, time-, and emission-efficient way to ferry passengers from places such as Hollywood. Archer’s aircraft are initially designed with a range of up to 100 kilometres/60 miles and capacity for four passengers. The start-up plans to unveil a full-scale eVTOL aircraft later this year, begin production in 2023, and launch consumer flights in 2024. Besides committing to the acquisition, United also pledged to provide its expertise in airspace management. The carrier will also invest an undisclosed amount in Archer Aviation during its proposed listing on the New York Stock Exchange (NYSE). Mesa Air Group said in a stock market filing that United will subscribe to purchase warrants for 14,645,614 shares in Archer Aviation, of which 20% (2,929,123) will be transferred to Mesa. Mesa said its warrants will be subject to vesting in stages: 40% immediately upon the completion of the transaction, 20% upon the closing of Mesa’s USD5 million investment into Archer’s newly-listed stocks, 10% upon the reception of FAA type certificate for its VTOL aircraft by Archer, and the remaining 30% on a pro-rata basis during the delivery process of the 200 aircraft. It is not certain that United’s warrants will be vested under the same scheme. Archer Aviation plans to list through a reverse merger with a special purpose acquisition vehicle, Atlas Crest Investment Corp. The start-up expects this process to yield it around USD1.1 billion in fresh capital, including USD500 million from Atlas Crest Investment Corp. and a fully committed USD600 million through private placement (PIPE) common stock. United will contribute to this amount alongside various financial investors.