Lufthansa agrees with Lilium to develop electric air transport, but will there be a future for the sector?
Lilium, a German company that until now has tried to develop vertical take-off electric air taxis capable of carrying up to six passengers, has decided to take the next step and develop electric regional planes, with conventional take-off and landing, capable of to carry 50 to 100 passengers. With this in mind, the Bavarian-based company has concluded a very important partnership with the largest European airline, Lufthansa.
Brazilian airline Azul also reported a strategic partnership with the German start-up in August 2021 and announced the prospect of purchasing up to 220 models. These are general agreements, for now without significant financial implications, but important to underline the possibility of development of these projects.
In spring 2022, a strategic partnership with commercial airline NetJets and the purchase of up to 150 models was announced. In the United States there have already been orders from well-known airlines for some time, even if from Lilium's competitors. For example, from Delta Air Lines to Joby or from United Airlines to Archer.
The letters of intent and preliminary contracts show that in the future there will be a market for electric models launched vertically in urban areas or for regional connections. Lilium currently talks about a range of 175 kilometers and the range is expected to increase as better batteries are developed, which would make regional aircraft and air taxis useful for so-called “Feeding” of major airports. . The key question that still remains unanswered is how big the market actually is and when authorities will allow the models to fly commercially. Lilium assumes a global market volume of 42,000 vertical take-off electric vehicles in 2035.
The problem that puts the entire electric air mobility sector at risk is that start-ups in the sector are recording losses because, in reality, real sales are very low and the field of product design-prototyping and industrialization is permanent, but not in that of sales which generates the flows requested by investors. Analysts predict that Lilium will suffer triple-digit million annual losses through at least 2026. Lilium's financial market prospectuses are full of risk warnings.
To satisfy investors, all positive events are heavily publicized. Lilium recently obtained permission to build aircraft from regulator EASA and production of the first series model began a few days ago. Lilium's latest prediction remains valid: approval of the model is expected at least in Europe by the end of 2025. The first manned flight is scheduled for the end of 2024, but delays would not surprise experts.
The mission statement with Lufthansa is broad, but phrased in very general terms. The operation of electric vertical take-off aircraft in Europe is to be explored. “Aviation innovation opportunities” should be explored together and other topics should be discussed or analysed. Instead of concrete orders we have a non-binding agreement.
Curious relationships
The Lufthansa-Lilium relationship also has something strange and special. The chairman of the board of directors of Lilium is former Airbus boss Tom Enders , who in turn sits on the supervisory board of Lufthansa. There is currently speculation that Enders could become the new chairman of the supervisory board of Lufthansa in the future. Enders also holds shares of Lilium. It can be assumed that he will hold back during the discussions on Lilium in the supervisory board of Lufthansa. T
Although Lilium is currently laying out all the progress in a press release, there are also events that the company does not actively report on, evidently worried about the fallout of this news. For example, the US data analytics company Palantir provides services to Lilium, which pays for these transactions with its own shares, making Peter Thiel's company, a supplier to the Pentagon , its shareholder.
According to a recent announcement on the US stock exchange, Palantir now plans to sell a block of five million shares worth approximately five million dollars. The news was not disclosed, evidently, to avoid repercussions on stock prices.
This represents only about 1% of the total number of Lilium shares that Palantir wants to part with. One can only speculate as to the reasons. According to financial market experts, trading in shares previously registered as payment or that fall into certain risk classes is part of the normal financial activities of companies like Palantir.
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The article Lufthansa agrees with Lilium to develop electric air transport, but will there be a future for the sector? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lufthansa-si-accorda-con-lilium-per-sviluppare-il-trasporto-aereo-elettrico-ma-ci-sara-un-futuro-per-il-settore/ on Mon, 11 Dec 2023 09:00:51 +0000.