United just ordered $1 billion worth of eVTOLs from a startup that aims to launch intra-city passenger flights in 2024

·3 min read
United Airlines and Archer.
United Airlines and Archer Matheus Obst/Shutterstock.com and Archer
  • United Airlines and eVTOL startup Archer Aviation announced a $1 billion partnership and aircraft order.

  • United will buy 200 aircraft to be used for eco-friendly airport transportation.

  • Archer Aviation is also going public via a special-purpose acquisition company.

  • Visit the Business section of Insider for more stories.

United Airlines is investing in a new kind of aircraft, one that doesn't fly over oceans but over congested cities.

The Chicago-based airline announced a $1 billion order on Wednesday morning for electric vertical takeoff and land aircraft, also known as eVTOLs, from eVTOL startup Archer Aviation to provide environmentally friendly airport transportation. The startup, founded by Brett Adcock and Adam Goldstein and backed by Jet.com founder Marc Lore, expects to debut its first full-scale model this year and begin passenger flights in 2024.

United will perform the intra-city services in partnership with Mesa Airlines, a regional airline that flies Embraer E175 and Bombardier CRJ900 regional jets for United and Boeing 737 Freighter aircraft for DHL. The $1 billion order with options for an additional $500 million worth of aircraft will give United and Mesa a fleet of 200 aircraft that can be flying passengers above Southern California in as early as three years.

The partnership with United also gives Archer access to the airline's aviation expertise while also bolstering United's goal of cutting greenhouse gases by 100%. United announced the ambitious plan in December 2020 that calls for millions in investment for new technologies like atmospheric carbon capture and sustainable aviation fuel.

"This deal represents so much more than just a commercial agreement for our aircraft, but rather the start of a relationship that we believe will accelerate our timeline to market as a result of United's strategic guidance around FAA certification, operations and maintenance," Brett Adcock, Archer's co-CEO and cofounder, said.

"These game-changing technologies will significantly reduce our emissions, and measurably reduce the speed of climate change - because buying carbon offsets alone is just not enough," Scott Kirby, United's chief executive officer, said in a December 2020 statement announcing the airline's pledge to become 100% green.

Archer, which was publicly announced in May 2020 after operating in stealth, says its aircraft will be able to fly as many as four passengers with distances of up to 60 miles at speeds of up 150 miles per hour. Los Angeles will be the launch city for the eVTOLs with the duo estimating carbon dioxide emissions will be nearly halved when utilizing the aircraft on a commute between Hollywood, California and Los Angeles International Airport.

The order comes as United announces new furloughs for workers planned for the spring as Payroll Support Program funds are scheduled to end barring congressional intervention. Archer's eVTOLs, however, aren't likely to be delivered before 2023, when aviation is projected to be well into its recovery back to pre-pandemic levels and profits.

Archer also announced its intentions to go public via a special-purpose acquisition company, better known as a SPAC, joining the likes of Blade in shunning the traditional initial public offering route. The $1.1 billion deal backed by Atlas Crest Investment Corp. will give Archer, to be given the symbol "ACHR" on the New York Stock Exchange, $600 million in private equity in public enterprise, with shares starting at $10 per PIPE price.

Among Archer's ranks are veterans of leading urban air mobility companies including Joby Aviation, Whisk, Airbus, and others.

"With the right technology, we can curb the impact aircraft have on the planet, but we have to identify the next generation of companies who will make this a reality early and find ways to help them get off the ground," Kirby said.

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