Air taxis: raising funds on a wing and a prayer

Ignoring Lex’s advice that whipped cream is a better store of energy than lithium-ion packs, Lilium has pressed ahead with plans for its electric planes. The German air taxi service wants more cash to get off the ground. A deal with Qell, the Spac announced by former GM executive Barry Engle, should do the trick. A New York listing plans to raise $450m from external investors.

For Lilium, the deal could provide total proceeds of $850m, including existing Spac cash, at a $3.3bn equity valuation. It will use these funds to develop its air taxis. The plan is to launch a service in 2024. Rivals Archer and Joby believe they will launch in the same year. All three claim they will be reporting positive ebitda by 2025. Bold forecasts for companies that do not yet have a product for sale.

Success will rest on the ability to transport passengers safely at a reasonable price. Unlike Archer and Joby, which are also listing through Spac deals, the Lilium Jet uses an electric thrust engine similar in design to conventional planes. A fixed wing is supposed to provide greater capacity and the design is quieter than propeller driven models.

Lilium thinks it can get 130 miles of service range out of batteries with an energy density of 350 watt-hour per kilogram — which it says should be available at launch. It also thinks each jet could generate up to $15,000 a day in revenues, assuming three-quarters of capacity is used.

Bigger vehicles flying longer distances would mean more sales. Lilium thinks revenues will be $3.3bn by 2026, against projections of slightly more than $2bn of sales for Archer and Joby. If those estimates are correct then Lilium is modestly valued at the same as its 2026 sales estimate — about half of what rivals have priced at. But these estimates are all based on a technologically complicated design that has not yet been manufactured or secured customers. Investors with big imaginations and bigger pockets are needed to keep air taxi ambitions aloft.

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