Vertical Aerospace has become the latest eVTOL aircraft developer to go public as it plans to merge with blank cheque company Broadstone Acquisition Corp.
The deal, which values the combined company at a pro forma enterprise of approximately $1.84 billion, also has a pro forma equity value of $2.2 billion at a $10.00 per share PIPE price. The transaction is expected to close in the second half of 2021 under the ticker EVTL and will result in gross proceeds of $394 million.
The ordinary share PIPE includes commitments from institutional investors, 40 North and Microsoft’s M12, as well as American Airlines, Avolon, Rolls- Royce and Honeywell.
Commenting on the news in a press release issued yesterday (Thursday), Stephen Fitzpatrick, Vertical Aerospace CEO and Founder, said: “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.”
As well as the announcement to go public, Vertical Aerospace has also confirmed up to 1,000 pre-orders for its VA-X4 eVTOL aircraft with launch customers American Airlines and Avolon and a pre-order option with Virgin Atlantic, valued at up to $4 billion.
American Airlines is expected to work with Vertical Aerospace on passenger options and infrastructure development in the USA. It has agreed to pre-order, subject to certain conditions precedent and future agreed upon milestones, up to 250 aircraft with an additional option to order 100 more.
Derek Kerr, Chief Financial Officer of American Airlines, added: “Emerging technologies are critical in the race to reduce carbon emissions and we are excited to partner with Vertical to develop the next generation of electric aircraft.
“For years, American has led the industry in investing in newer, more fuel-efficient aircraft. Today’s partnership is another example of that commitment, and an investment in the future of air mobility. We are excited about the prospect of what this could mean for our customers, and our company.”
Avolon – the international air crafting leasing company – has announced a ground-breaking deal worth $2 billion for 500 aircraft. Through its newly incorporated affiliate Avolon-e, it will order aircraft valued at US$1.25 billion and has an option to acquire additional aircraft up to a value of US$750 million. Avolon-e has been established by Avolon to focus on investment in the eVTOL sector.
Dómhnal Slattery, Avolon CEO, said: “Avolon is proud to be a launch customer for the VA-X4 aircraft, demonstrating our commitment to a net zero carbon economy and to driving innovation in the global aviation sector.
“With Vertical, we will revolutionise air travel and continue to reduce the impact of our industry on the environment. As we emerge from the COVID-19 pandemic, air travel will be materially reshaped with airlines needing to embrace emerging technologies that decarbonise air travel. We strongly believe that the VA-X4 will lead this transformation.”
As well as Avolon, Virgin Atlantic also has an option to order between 50 and 150 aircraft and plans to work with Vertical as part of a joint venture to develop a Virgin Atlantic-branded short haul eVTOL network in the UK. This will look connect UK airport hubs, starting with London Heathrow as well as Manchester and London Gatwick.
Shai Weiss, CEO of Virgin Atlantic, said: “With innovation and sustainability leadership firmly in our DNA, we are excited to be partnering with Vertical Aerospace to pioneer sustainable and zero emissions air travel in the UK.
“We pride ourselves on building enduring strategic partnerships and are thrilled to be working alongside Vertical in its mission to bring eVTOL travel to the UK. Combining the design, engineering and manufacturing expertise of Vertical with the award-winning customer experience and operational excellence of Virgin Atlantic.”
Broadstone was founded by British entrepreneurs Hugh Osmond, Marc Jonas and Edward Hawkes, who have led and managed investments in excess of £10 billion over a 20-year period and delivered an IRR of 48 per cent and equity multiple of 3.5x (based on the weighted averages from investments during the period March 1993 to date).
Osmond, who is Chairman of Broadstone, said: “Transportation is one of the next big sectors of the global economy to be disrupted at scale. 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.
“Stephen has built an outstanding management and engineering team with extensive experience in navigating the aviation regulatory approval processes. 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.”
It has since build up strong partnerships with the likes of Honeywell, which will be building the flight deck technologies, while Rolls-Royce’s electrical power system will be used to power the VA-X4 and Solvay will develop the composite structure. The first flight tests are expected to start later this year.
As a result of this, Vertical Aerospace says it is able to achieve profitability and cash flow breakeven with annual sales of less than 100 aircraft, calculated as number of aircraft sales required to reach positive net income and cash flow in 2024.
Its VA-X4 eVTOL is on course to be certified with EASA by 2024 and when operational, will fly at speeds of 200 miles per hour for 100 miles. It will carry four passengers and a pilot and Vertical Aerospace has said it will be 100 times quieter than a conventional helicopter.