Asian Sky Quarterly 2022 Q3

SPAC FEATURE STORY
plans for a SPAC merger in November 2021, citing an “unfavorable”
environment for SPAC transactions at the time. The company also
wanted to avoid the risk of seeing investors redeem shares instead
of remaining invested, which would have decreased the company’s
overall valuation (Joby and Lilium both saw shareholder redemptions
of about 65 percent, while Archer managed to hold redemptions to
48.5 percent).
the US. Activity, however, has eased this year, with only 82 SPAC IPOs
seen in 2022 so far.
Joby is one of six eVTOL aircraft companies that listed on a stock
exchange through a SPAC merger in the last two years; eVTOL
developers Vertical Aerospace, Blade and Eve Air Mobility also went
public through SPAC mergers, raising more than USD$3.75 billion
in total.
Rapid funding
SPAC mergers essentially help companies quickly raise a large
amount of funds, which is crucial for an industry that is as nascent
– and under pressure to succeed – as the advanced air mobility
(AAM) sector. With some companies such as Archer Aviation, Lilium
and Vertical Aerospace hoping to commence operations by 2024,
having ready access to capital will enable eVTOL companies to ramp
up production of aircraft and increase the likelihood of the company
staying solvent, for example.
Lilium, which merged with a SPAC called Qell Acquisition Corp, is
expected to use the funds raised from the SPAC to fund the launch
of its seven-seater Lilium Jet. The company’s existing shareholders
are reported to have rolled 100 percent of their shares into the
combined company, according a press release Lilium issued
following the merger.
Volocopter has opted to raise money through investors, raising more
than USD$579 million in equity from investors including automotive
manufacturers Geely and Mercedes-Benz Group, real estate
developer WP Investment, and investment management companies
Intel Capital and BlackRock.
Regulatory hurdles
Beyond having enough capital to kickstart operations, another
obstacle all eVTOL aircraft companies have to face is the Federal
Aviation Administration’s certification process.
Two main types of FAA certification are required for any commercial
aircraft – the first one is a type certification, under which the FAA
agrees that the design of the aircraft meets all requisite safety and
airworthiness standards, while the second one is an air operator’s
certificate, which is when an aircraft operator receives approval
from a civil aviation authority and is permitted to use aircraft for
commercial purposes.
Though the AAM industry believed that eVTOLs would be subject
to the same FAA certifications – under Part 23 of the federal code,
which is used to certificate conventional commercial aircraft –
the FAA announced in May 2022 its choice to define eVTOLs as
“powered lift” vehicles, meaning that they have to be certificated
under Part 21.17(b) special class rules. The changes take into
account the need to train and certify pilots to safely operate eVTOLs
and the overall safety of these new transportation vehicles.
Joby Aviation, on the other hand, plans to use to proceeds to fund
its business through its commercial operations, including the
certification of its aircraft and the development of manufacturing
facilities. Or as JoeBen Bevirt, Chief Executive Officer of Joby
Aviation, noted in the company’s press release following its listing:
“Today’s transaction lets us look ahead to the next decade and
provides us with the resources we need to bring our vision to life.”
SPAC listings, however, aren’t the only way for eVTOL companies to
raise capital. German aircraft manufacturer Volocopter called off its
THIRD QUARTER 2022 — GLOBAL SKY QUARTERLY | 37