Archer Aviation and Japan Airlines Joint Venture

By Anshuman Tripathy and Abhijith Ganapavaram

(Reuters) – Archer Aviation announced that a joint venture between Japan Airlines and Sumitomo Corp has secured the right to order up to 100 electric air-taxis valued at $500 million.

Shares of Archer Aviation increased by 7% in morning trading following this announcement.

If realized, the order from the joint venture, named Soracle, will include pre-delivery payments contingent upon Archer meeting specific milestones prior to aircraft delivery, as stated by the companies.

Several airlines have begun placing orders for air-taxis, or electric vertical take-off and landing (eVTOL) aircraft, anticipating a surge in urban travel demand.

Nevertheless, this industry faces numerous challenges, including funding, technology, infrastructure, and regulatory roadblocks before these aircraft can transport passengers in urban areas.

Certification timelines have been extended to the latter part of this decade due to ongoing developments in regulations regarding air-taxis in the West.

Lilium, a German air-taxi manufacturer that went public in 2021 via a $3.3 billion reverse merger, recently announced plans to file for insolvency amid financial troubles.

Archer CEO Adam Goldstein remarked, in reference to Lilium's insolvency, that it underscores the complexities involved in their endeavors.

Backed by automaker Stellantis (NYSE:STLA), Archer is working on its air-taxi model 'Midnight', designed to accommodate four passengers and a pilot.

The company claims that the aircraft is fine-tuned for consecutive short-distance trips typically around 20 miles, requiring minimal charging time between flights.

Soracle indicated they would initiate the development of a range of flight routes encompassing Tokyo, Osaka, Nagoya, Hokkaido, Setouchi, and Okinawa, with operations expected to commence once they receive certification from relevant Japanese authorities.

While there is no specific deadline for Soracle to finalize the order, Goldstein confirmed that a “seven-digit” pre-delivery payment has been made.

Archer’s stock has dropped 47.7% this year.