If executives from the newly minted Eve Holding business combination between Embraer and special purpose acquisition company Zanite felt any disappointment in the less-than-expected proceeds from their $377 million initial public offering (IPO), they certainly didn’t show it as they rang the opening bell at the New York Stock Exchange on May 10. Originally expected to draw closer to $500 million, the IPO, following which the company will trade under the symbol EVEX, confronted an unfortunate set of trading conditions stemming from economic shock associated with the war in Ukraine, interest rate hikes, and continuing global supply chain fragility.
Nevertheless, all on hand at the New York Stock Exchange expressed confidence that the amount raised will fully fund the eVTOL’s certification and entry into service, now expected in 2026. As it continues to build the first full-scale prototype that could fly later this year, Eve continues its work on elaborate exercises to develop the necessary infrastructure and operational concepts for its customers to launch commercial services with more than 1,800 aircraft covered by provisional sales agreements to date.
Executives were eager to argue that Eve’s approach to the advanced air mobility sector is different from many eVTOL aircraft start-ups. They maintained that its close relationship with the Brazilian aerospace group, which holds 90 percent of its stock, is a big part of that difference.
Speaking with FutureFlight on the floor of the stock exchange, Embraer CEO Francisco Gomes Neto confirmed that a higher volume of Zanite stock than expected had been redeemed before the IPO, but also noted that Embraer’s highly competitive engineering cost base will ensure no shortfall in available capital.
Neto explained that Eve’s pedigree as a subsidiary of Embraer since October 2020 will serve the newly independent company well, giving it ready access to the Brazilian company’s extensive aircraft certification and manufacturing knowledge, and air traffic management expertise. Perhaps most importantly, Eve aircraft operators will gain access to Embraer’s global support network, with facilities across 80 locations worldwide already helping operators of its airliners and business jets.
“This is one of the main advantages we believe we have against the competition,” Neto said. “We just need to adapt to support the eVTOLs in the future as well.”
With Embraer’s help, Eve expects its offering to support traditional airline operations, transporting passengers from airports on the outskirts of major metropolitan areas to city centers as well as within the cities themselves, he added. “This will complement the existing network of aircraft and so on,” explained Neto. “So we do believe that…well, the experts say that by 2040 we'll see 100,000 eVTOLs flying around.”
Joining Neto at the bell-ringing ceremony, Eve co-CEO Andre Stein explained that the amount raised reflected market conditions and in no way stemmed from a lack of investor confidence in Eve. “What gives us confidence is that we now have enough cash to go all the way for the years to come,” he told FutureFlight, echoing Neto’s assessment. “We don’t control what happens with the market—everything that has happened out there such as the high interest rates, the war, Covid—but that’s OK because, first, we have the backing of Embraer, second we have our partners that brought cash to this transaction as well. That gives us more than enough to keep proceeding with the development not only of the aircraft but our service and support portfolio as well as our urban air traffic management solution and everything that comes with it.”
Stein stressed the importance of what he characterized as an approach to development that differs from other eVTOL startups that rush to produce and fly a prototype to stimulate interest from financiers. Eve, conversely, will adopt a more considered tack to ensure a smooth path toward certification, he explained.
Under the auspices of Embraer, Eve recently received certification process approval from Brazilian civil aviation authority ANAC, validating the “building blocks” the company has inherited from a half-century of airplane development. The company plans to fly a proof-of-concept vehicle this year, but perhaps as important, it plans to accelerate internal development and increase the number of test rigs it uses to validate design assumptions.
“The important thing is to proceed in the right order and not necessarily rush to fly something that’s just flashy, but to really understand what’s behind it—the fly-by-wire, the control laws that make the aircraft fly,” said Stein. “The final prototype will be on time for our entry into service in 2026.”
Zanite co-founder Kenn Ricci, who is also the principal owner of Directional Aviation which owns private aircraft businesses such as Flexjet, explained his reasoning for getting involved with Eve and advanced air mobility in general. “When you think about the future of what aviation was going to be, with electrification, you realize that these weren't going to be small investments,” he explained. “They had to be big amounts of money…and this is really the only vehicle, the only way to fund these grand ideas. So I wouldn’t say we chose to go this way. It was really the path of least resistance to bring a project like this to market.”
Ricci, who now sits on the Eve holding board of directors, said he and his group examined various ways of approaching their involvement in the urban air mobility market and chose to partner with Embraer because of the program’s likelihood of reaching the market and the Brazilian manufacturer’s breadth of engineering expertise and support infrastructure. The veteran business aviation entrepreneur added that he didn’t believe early entrants will necessarily enjoy a “first-mover advantage,” comparing the eVTOL market to the car industry where many competitors vie for various market niches.
“Everybody talks about certifying these vehicles. That's very nice, but that's meaningless,” he commented. “You have to produce them over and over again, and you have to distribute them.”
Ricci also questioned the wisdom of many other eVTOL manufacturers’ plans to operate their own vehicles, in part due to the immense capital needs associated with building the aircraft. “Now think, if you couldn’t sell them, it’s only capital going out, it’s never capital coming in,” he explained. “So when you start thinking about the capital needs to build the infrastructure to operate them, it’s an enormous bridge to cross…And if your vehicle is not the best vehicle out there, not only does it fail in the market, but it fails your whole business plan.”
Finally, he maintained that if the manufacturer acts as its own customer, there comes a point when people within the organization become comfortable with the competitive status quo. “I did [business jet manufacturer] Nextant Aerospace a while ago and we operated them at Flexjet for a while,” recalled Ricci. “What I realized is that people don’t keep checks on each other. The builders of the plane think, ‘oh, that’s our related company, they’ll pay whatever we have to charge them.' There’s no pressure on them because they know the end-user is their own people.”