American Airlines and Vertical Aerospace
- American Airlines will invest $25 million in Vertical Aerospace for up to 250 electric vertical takeoff and land aircraft.
- Vertical Aerospace's VA-X4 is slated to fly up to four passengers distances of more than 100 miles.
- More airlines are expected to invest in eVTOLs as more firms develop the new type of aircraft.
- See more stories on Insider's business page.
American Airlines is making an investment in the future of aviation with a $1 billion pre-order for a new type of aircraft to fly over congested cities.
The Fort Worth, Texas-based airline is investing $25 million in Vertical Aerospace, a UK-based firm developing electric vertical takeoff and land aircraft, or eVTOLs, in a deal for up to 250 aircraft. EVTOLs are helicopter-like electric aircraft that aim to offer intra-city urban air mobility services and offer an alternative to driving.
Vertical Aerospace's flagship VA-X4 aims to fly up to four passengers to distances exceeding 100 miles while achieving speeds of up to 200 miles per hour. For American, the aircraft will likely be offering airport transportation and flying to and from its largest hubs.
American's $1 billion pre-order for up to 250 aircraft and options for 100 more will only see the airline invest $25 million in the company at present. "It's a relatively low risk, high reward investment and strategy by American," Henry Harteveldt, travel industry analyst and cofounder of Atmosphere Research Group, told Insider.
"The airline is not betting its financial future in these aircraft with this investment right now," Harteveldt said, noting that the airline likely has strict requirements that Vertical Aerospace must meet before more cash is handed over for an aircraft.
American Airlines and Vertical Aerospace
Sustainability is also a key focus in American's order as the VA-X4 is slated to be a carbon-zero aircraft powered by batteries instead of jet fuel.
"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," Derek Kerr, American's chief financial officer, said in a statement.
American's investment follows United Airlines' partnership with Archer Aviation, another eVTOL startup that just unveiled its flagship aircraft, Maker, on Wednesday. United and regional airline partner Mesa Airlines will debut the aircraft in Los Angeles, offering flights to Los Angeles International Airport from vertiports around the notoriously congested city.
"United and American genuinely recognize that the airline of the future will be tangibly different than the airline of today," Harteveldt said.
Harteveldt expects more airlines to invest in the eVTOL space with Delta now the only holdout in the big three US international airlines. And there is no shortage of eVTOL startups in which to invest with firms like Joby Aviation, Lillium, and Volocopter inching closer and closer to the finish line on viable aircraft.
Vertical Aerospace's VA-X4 is on track for certification in 2024 and could be flying American's passengers soon after.