On The Radar
Vertical Aerospace has published its first annual report and shareholder letter since the eVTOL aircraft developer became a public company in December 2021 through a business combination with Broadstone Acquisition and the resulting New York Stock Exchange flotation. Generally speaking, the balance sheet presented for 2021 seems pretty consistent with what might be expected from an ambitious, well-funded start-up still three years away from a sustained revenue flow, with its four-passenger VX4 vehicle planned to enter commercial service in 2025.
Predictably, in the face of rising research and development costs of £24.3 million ($30.4 million) and expenses associated with ramping up the business, UK-based Vertical sustained a net loss of just over £245 million last year. Cash flow was bolstered by the proceeds from the business combination and the public investment in private equity backed by several leading investors, including Honeywell, Rolls-Royce, and Microsoft. As of December 31, the company had £212.7 million in cash, having started 2021 with just £839,000.
In a letter to shareholders, founder and CEO Stephen Fitzpatrick and chairman Domhnal Slattery confirmed that the long-awaited first flight of the first full-scale VX4 prototype is now expected to take place this summer. While this represents a delay to the program timeline, given that the all-electric vehicle had been expected to be airborne before the end of 2021, Vertical stressed that its engineering team has made significant progress from hundreds of pilot-in-the-loop simulator "flights" that have incorporated the flight controls developed by Honeywell and also computational fluid dynamics used to refine the design.
Vertical says it is making progress in its application to the UK Civil Aviation Authority (CAA) for the Design Organization Approval it needs to complete type certification. EASA recently agreed to concurrently validate the UK approval process.
Meanwhile, the company has established joint working groups with prospective operators of its aircraft spread across the Americas, Asia, and Europe to help prepare for the launch of commercial services. It is also engaged in a case study to assess all aspects of the proposed eVTOL air taxi operating model, involving UK air traffic management provider NATS, the CAA, London Heathrow Airport, ground infrastructure specialist Skyports, and leasing group Avolon, which is one of its largest prospective customers.
The VX4 program is now backed by 1,350 “preorders” that Vertical says represent provisional revenues, on delivery, of $5.4 billion. One of these prospective customers is leasing group Avolon, led by its CEO Domhnal Slattery, which has now placed all 500 VX4s that it agreed to buy last year.
On April 26, Slattery said that Avolon plans to establish a company in Brazil to support its previously announced agreement with Gol Airlines and Grupo Comporte to offer ridesharing services in Sao Paulo with the Vertical aircraft. Last September, Gol announced plans to buy or lease as many as 250 of the aircraft to support the network. Speaking during an online “Hardtalk” session organized by Eurocontrol, Slattery noted that the partnership will also include a “major Latin American infrastructure player,” the identity of which he said he’d likely announce “in a few weeks’ time.”
Slattery stressed the importance of the infrastructure element of the urban air mobility development in particular as part of the partnership model he sees arising in several cities around the world. He noted that Japanese partners, for example, have identified a vertiport site to support Japan Airlines’ planned eVTOL network using VX4s leased from Avolon. Plans call for the establishment of eVTOL services in and around Osaka in time for the city’s 2025 Expo.
“It’s a big deal for Japan,” said Slattery. “That particular site is between 15 and 30 kilometers between Kansai Osaka Airport, Osaka downtown, and Kobe. So imagine in three or four years shuttling these people from these airports into Osaka, which is a huge, huge city. We flew over in a helicopter just to have a look at how many landing pads are on the office buildings, most of which are not used. So there is already significant infrastructure in place that is just underutilized.”