UK’S VERTICAL AEROSPACE TO GO PUBLIC
Updated: Jul 16
In news that indicates strong prospects for near-future growth, Bristol, UK-based eVTOL operator Vertical Aerospace has announced plans to go public in the second half of 2021, via a merger with the NYSE listed Special Purpose Acquisition Company (SPAC) Broadstone Acquisition Corp (BSN), valuing the company at $2.2 billion. The proposed deal includes a ‘PIPE’ from companies including American Airlines, lessors Avolon, Honeywell and Rolls-Royce. Microsoft’s venture capital arm M12, along with German tech giants Rocket Internet and Standard Industries’ 40 North are also investing.
Vertical has unveiled a hugely impressive slate of pre-orders, which, combined with its strategic partnerships, will provide a direct route to market, and shows the company is rolling up its sleeves for the challenges of certification and gearing up for production.
The VA-X4 - source: vertical-aerospace.com
Vertical believes it can achieve profitability and cash flow break-even with annual sales of fewer than 100 aircraft. Yet it has reported conditional orders alone for up to 1,000. These include 250 for American Airlines, with an option on 100 more; 50-150 for Richard Branson’s Virgin Atlantic, and between 310 and 500 for Avolon, headquartered in Ireland.
But that’s far from all. The parties involved have also agreed to collaborate on certification and deployment of aircraft for commercial operations. In the United States, that translates to American Airlines working with Vertical on passenger operations and infrastructure development. In the United Kingdom meanwhile, Virgin Atlantic and Vertical plan to explore a joint venture launch of a Virgin Atlantic branded short-haul eVTOL network, including operations and infrastructure development. Shai Weiss, CEO of Virgin Atlantic, has predicted it will mean airports such as London Heathrow, Manchester and Gatwick acting as eVTOL hubs. Promising.
Vertical on the up-and-up
Founded in 2016 by Stephen Fitzpatrick, who is also the founder of leading energy company OVO Group, Vertical Aerospace aims to make air travel personal, on-demand and carbon-free. It has assembled an immensely valuable senior team with some 1,200 years of experience between them, and backgrounds in Rolls-Royce, Airbus, Jaguar Land Rover and the UK Ministry of Defence. Their design of the aircraft, the VA-X4, was unveiled last year to acclaim.
Of the latest news, Fitzpatrick commented: “This is the most exciting time in aviation for almost a century; electrification will transform flying in the 21st century in the same way the jet engine did 70 years ago. Today’s announcement brings together some of the largest and most respected technology and aeronautical businesses in the world and together we can achieve our aim of making the VA-X4 the first zero-carbon aircraft that most people will fly on. The United Kingdom is already a global leader in aerospace innovation and we believe Vertical Aerospace will be the British engineering champion to drive the aviation industry forward.”
Broadstone, listed on the NYSE, is known for a sterling record in identifying markets ripe for innovation, and backing management teams primed for just that to generate high returns for its investors. Hugh Osmond, Chairman, said: “Vertical has a clear commercial plan to challenge short-haul air travel, and to create new markets where neither cars nor public transport can cope with demand... The team also has an outstanding track record of delivering projects commercially. In our assessment, Vertical has a considerable lead over competitors in this field – and has a clear business model to achieve commercialisation and significant growth.”
Vertical is taking a strategic ecosystem approach to the VA-X4’s development, drawing on the R&D and manufacturing expertise of its partners, which include Rolls-Royce (electric powertrain), Honeywell (flight control systems), Microsoft (fleet management software), GKN (electrical harness) and Solvay (airframe). This is an asset-light business, but one with a lean cost structure, and well-positioned to scale up production rapidly when the time is right, as well as to smooth the path towards certification.
The VA-X4 is said to be up to 100x safer, and 100x quieter, than a helicopter, with dramatically lower production and maintenance costs. Seating one pilot and four passengers, it has an estimated range of 120 miles on one charge, at speeds of 200mph and over, producing zero emissions in flight. It’s expected that the aircraft will be certified to stringent European Aviation Safety Agency (EASA) standards.
The Broadstone deal is far from the end of it, with an investment call being issued at the moment. The cost of certifying aircraft such as this, and upscaling production, is intimidating. Currently still in the development phase, the VA-X4 is expected to begin flight testing later in 2021, with an eye on certification in 2024, to be followed by commercial operations not long afterwards. An ambitious schedule, certainly, but looking at the funding in place already and Vertical’s network of partnerships, an achievable one.
Long a dream of science fiction, air taxis may soon be a common sight over urban landscapes, transforming our options for affordable, quiet and eco-friendly transport. There’s no shortage of competition in this sector, given the rewards on offer, but this is definitely Vertical setting out its stall with confidence.