American Airlines Promotes Billion Dollar Order Of Electric Aircraft That May Never Happen

In February United Airlines made a splash ordering electric aircraft with the idea of transporting people from urban centers like Manhattan over to Newark. Now four months later American Airlines announces that it, too, is investing in urban air mobility, maybe. (Emphasis mine.)

American Airlines today announced it will invest in Vertical Aerospace, a leading UK-headquartered engineering and aeronautical business developing electric vertical takeoff and landing (eVTOL) aircraft.

…As part of its investment in Vertical, American has agreed to pre-order, subject to certain future agreed upon milestones and other terms, up to 250 aircraft, representing a potential pre-order commitment of $1 billion, and an option to order an additional 100 aircraft. The airline also expects to make a $25 million investment in Vertical through a private investment in public equity (PIPE) transaction. Vertical is developing the VA-X4, a zero-carbon aircraft that can carry four passengers and a pilot, and fly at speeds up to 200 mph over a range of over 100 miles.

Will we ever see this? Maybe. The aircraft in question hasn’t had a test flight yet, but they’re touting that “certification of the aircraft [could come] as early as 2024” which means it will be farther out into the future than that.

Like United Airlines, American Airlines cannot buy back stock and they cannot pay dividends because of restrictions they agreed to accepting about $10 billion in government subsidies. Now they’re turning around and using taxpayer cash to invest in technologies they argue are green. U.S. airlines are hoping a Biden administration will shell out more taxpayer cash for green investment.

In some ways this feels like American Airlines investing in China Southern (which they already wrote down substantially before the pandemic) after Delta bought into China Eastern.

On the other hand American wrote a big check for that. They may not write one here. It occurs to me their press release doesn’t include any multimedia, doesn’t include much discussion of the potential this brings to customers. It doesn’t talk much about the aircraft. The news hasn’t even been tweeted by American yet. Vertical Aerospace is at least tweeting it, and by the way a conditional pre-order from Virgin Atlantic gets just as much billing.

How long until American follows United with an order for supersonic aircraft.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. This defies logic. The only priority airline management has to focus on is generating profit for shareholders. I don’t see any profitability in running shuttles between Manhattan and Newark. It’s nonsensical. Maybe it could be part of first class service as some Asian/Middle Eastern airlines provide car service from the hotel to the airport. I doubt it as first class on Long Haul may not exist on American in the future and American couldn’t recoup costs. I hate the travel from NYC to Newark but a taxi is a lot cheaper than providing air service. It doesn’t make sense to run shuttles for commercial flights as passengers have to be at the airport 2 hours before a flight. It’s not like private where a couple of rich people take helicopters to their 757.

    This is a publicity stunt but there is no payoff. This won’t make American a dime unless it thinks it can sell the orders for a premium or has some stake in it. Even so, this may not get off the ground.

  2. The nerve of them to ask for volunteers in my dallas morning newspaper to work at dfw airport. They request 6 hours a-day for 3 days a week lol, and you got other businesses complaining about the 300 extra unemployment till you look them up and they all got a ppp loan so where are those employees you got that loan for!

  3. Gary can you at least acknowledge that JetBlue was the first in the game here by investing in Joby, whose aircraft has already undergone extensive inflight testing and is already working on FAA certification? Furthermore JetBlue has already profited handsomely when Joby went public via SPAC? This isn’t a pipedream.

Leave a Reply

Your email address will not be published.