United Airlines orders vertical vertical aircraft and invests in SPAC for urban air mobility

Archer Air

Source: Archer Air

United Airlines believes that one day you can take a small electric plane to get to the airport.

The airline joins other investors backing Archer, a start-up developing electric vertical take-off and landing aircraft. If Archer can get its eVTOL certified by the Federal Aviation Administration, it is expected to deliver the first aircraft in 2024.

“It’s pretty incredible to think how big this market can be,” said Adam Goldstein, Archer co-founder and co-CEO. “The partnership with United really gives us the chance to get to market first and really helps us speed up our schedule.”

Archer, based in Palo Alto, California and founded three years ago, will unveil its first full-fledged eVTOL aircraft later this year. The company also plans to develop and manufacture the battery that powers the aircraft. Archer said his piloted eVTOL is designed to carry up to four passengers up to 60 miles at speeds that could reach 150 miles per hour.

Archer Air

Source: Archer Air

To move from concept to certified aircraft, Archer is collecting through a SPAC merger with Atlas Crest Investment Corp. $ 1.1 billion. The merger is valued at $ 3.8 billion. Two companies stand out among those backing the deal: Stellantis and United Airlines.

Stellantis, the new name for the recently merged PSA Peugeot and Fiat Chrysler, is working with Archer to manufacture the carbon fiber fuselage of the eVTOL aircraft. United has ordered 200 Archer eVTOL aircraft valued at $ 1 billion and purchased 100 more for $ 500 million.

“By working with Archer, United is showing the aviation industry that the time has come to use cleaner, more efficient means of transportation,” said Scott Kirby, United CEO, in a press release announcing the Archer SPAC. Investing in clean initiatives has become part of Kirby’s strategy to reduce United’s carbon footprint. In December, the airline announced a multi-million dollar investment in a carbon capture joint venture.

Archer Air

Source: Archer Air

United estimates that passengers taking the 13-mile journey from Hollywood to Los Angeles International Airport on an Archer eVTOL aircraft could cut carbon emissions by 50%.

“Archer’s eVTOL design, manufacturing model, and engineering expertise has clear potential to change the way people commute in major metropolitan areas around the world,” said Kirby.

The eVTOL market has exploded in recent years. Deloitte estimates that 200 companies worldwide develop aircraft. Many are dedicated to freight operations, while others focus on passenger transport, which Deloitte says will have a market of $ 4 billion by 2025 and a market of $ 57 billion by 2035.

In December, California-based Joby bought Uber Elevate with a plan to bring eVTOL aircraft into service as early as 2024.

In a research note last month, Morgan Stanley analyst Rajeev Lalwani said the urban air mobility market is likely to begin as a niche service, but “could later transform into an inexpensive, time-efficient method for short to medium distances and eventually take part from automobiles and airlines. “

Archer Air

Source: Archer Air

Archer co-founder and co-CEO Brett Adcock believes his company’s eVTOL will disrupt the ridesharing market. “We want this to be a really affordable, mass-market transportation solution,” said Adcock. “Our entry point in these markets is around $ 3 per passenger mile, which is roughly the equivalent of today’s carpooling service.”

While the cost of one day may be attractive to United passengers looking for a quick, inexpensive way to get to the airport, the airline is far from receiving an Archer eVTOL or determining how it would fit into their network. It remains to be decided whether United pilots would fly the electric powered aircraft or whether they would be operated by Mesa Airlines, which handles United’s regional service to many smaller markets.

– CNBC’s Meghan Reeder contributed to this report.

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