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American Airlines and Virgin Atlantic invest in eVTOL startup with potential aircraft orders

June 10, 2021
3 min read
American Airlines and Virgin Atlantic invest in eVTOL startup with potential aircraft orders
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American Airlines and Virgin Atlantic each said Thursday that they are investing in Vertical Aerospace, a U.K.-based electric vertical takeoff and landing (eVTOL) startup.

Vertical is one of a number of companies racing to develop and certify an eVTOL vehicle, which startups argue could transform the future of urban mobility, shuttling passengers into, out of, and around cities with little noise and virtually no carbon pollution, replacing helicopters and potentially some cars.

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Critics, however, say that the actual impact of eVTOLs will be minimal, as most designs currently in development can only carry four to five passengers and will have limited range, along with adding to already-congested airspace around cities. Rather than replacing traditional commercial aircraft, which are harder to electrify due to the scale of battery needed, they could replace cars in some use cases — "flying taxis," in essence.

American said that as part of the investment, it had pre-ordered up to 250 aircraft from Vertical — a potential preorder commitment of $1 billion — "subject to certain future agreed upon milestones and other terms." The airline also has an option to order 100 additional aircraft.

American said it also planned to give Vertical $25 million in funding through a private investment in public equity (PIPE) transaction, although it was not immediately clear whether this was the investment being announced today, or an additional future investment.

Virgin Atlantic, meanwhile, said it had agreed on an option to purchase up to 150 aircraft from Vertical, and that it was exploring the possibility of a joint venture to create a Virgin Atlantic-branded short-haul eVTOL network in the U.K.

Image courtesy of Virgin Atlantic.

Virgin said that it expected to use the aircraft to "enable sustainable, price competitive, regional connectivity across the first and last 100 miles of the customer journey," for instance, transporting a passenger from London's Heathrow airport to Cambridge.

Avolon, an aircraft leasing company, also announced that it would order up to 500 eVTOLs from Vertical, and would be the launch customer for the aircraft.

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Vertical's VA-X4 aircraft seats up to four passengers and can fly over 100 miles at speeds of up to 200 miles per hour. According to American Airlines, the aircraft will be "zero-carbon," presumably as long as it is charged from green electricity sources.

More: Boom’s supersonic jet could one day fly the president of the United States

American described the investment as "the latest in the airline’s commitment to sustainability." However, it is notable that the VA-X4 could not replace any current aircraft, due to its limited capacity and range. Rather, should it come to fruition, it would likely represent a new avenue of business for American, such as small charters or transporting passengers to or from airports. The airline declined to comment on potential future use cases for the aircraft.

American is not the first U.S. airline to invest in an eVTOL startup. United Airlines said in February that it would purchase 200 aircraft from Archer Aviation. The news also comes a week after United said it would invest in Boom Aerospace, a company attempting to develop a supersonic commercial aircraft that could meet airlines' economic and environmental requirements.

Featured image by Image courtesy of Vertical Aerospace
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

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  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023