American Airlines could pay $1 billion for up to 250 eVTOLs to fly travelers over congested cities and highway traffic

·3 min read
American Airlines Vertical Aerospace eVTOL
A rendering of Vertical Aerospace's eVTOL. American Airlines and Vertical Aerospace
  • American Airlines said it'd invest in Vertical Aerospace and agree to preorder its eVTOL aircraft.

  • Vertical Aerospace's VA-X4 is designed to fly up to four passengers distances of over 100 miles.

  • Experts expect more airlines to invest in eVTOL aircraft as firms develop them.

  • See more stories on Insider's business page.

American Airlines is making an investment in the future of aviation, announcing an agreement to preorder $1 billion worth of a new type of aircraft designed to fly over congested cities.

The airline, based in Fort Worth, Texas, said on Thursday that it also expected to invest $25 million in Vertical Aerospace, a UK firm developing electric vertical takeoff and land aircraft, or eVTOLs, helicopter-like electric aircraft that aim to offer intracity transportation and an alternative to driving.

Vertical Aerospace's flagship VA-X4 aims to fly up to four passengers to distances exceeding 100 miles while achieving speeds of up to 200 mph. American could likely offer airport transportation to and from its largest hubs.

American said it agreed to preorder up to 250 of Vertical Aerospace's aircraft, worth $1 billion, with the option to order 100 more.

"It's a relatively low-risk, high-reward investment and strategy by American," Henry Harteveldt, a travel-industry analyst and cofounder of Atmosphere Research Group, told Insider.

"The airline is not betting its financial future in these aircraft with this investment right now," Harteveldt said, adding that American likely has strict requirements that Vertical Aerospace must meet before it hands over more cash for its aircraft.

American Airlines Vertical Aerospace eVTOL
A rendering of Vertical Aerospace's eVTOL. American Airlines and Vertical Aerospace

American said sustainability was also a focus of its order - the VA-X4 is designed to be a carbon-zero aircraft powered by batteries instead of jet fuel.

"Emerging technologies are critical in the race to reduce carbon emissions and we are excited to partner with Vertical to develop the next generation of electric aircraft," Derek Kerr, American's chief financial officer, said in a statement.

United Airlines this year announced a partnership with Archer Aviation, another eVTOL startup that just unveiled its flagship Maker aircraft. United and its regional airline partner Mesa Airlines are set to debut the aircraft in Los Angeles, offering flights to Los Angeles International Airport from so-called vertiports around the notoriously congested city.

"United and American genuinely recognize that the airline of the future will be tangibly different than the airline of today," Harteveldt said.

Read more: How 2 startup founders with no aviation experience landed a $1 billion deal to make electric aircraft for United

Harteveldt expects more airlines to invest in the eVTOL space, as Delta is the only holdout among the US's big three international airlines. And there's no shortage of eVTOL startups to invest in, with firms like Joby Aviation, Lilium, and Volocopter inching closer to the finish line on viable aircraft.

Vertical Aerospace has said the VA-X4 is on track for certification in 2024, and it could be flying American's passengers soon after.

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