Archer's innovative aircrafts will transform the aviation industry, says Fmr. United CEO

Former United CEO Oscar Munoz and Archer Co-Founder Brett Adcock join Yahoo Finance Live to discuss the company's latest milestones, including the FAA's approval of the G-1 certification basis for Archer Aviation’s four-passenger eVTOL aircraft and expanding Archer's business leadership team amid the pandemic.

Video Transcript

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BRIAN SOZZI: Urban mobility upstart Archer said today it has received G-1 certification from the FAA. It essentially sets the path for Archer to begin commercial operations. The news comes a few weeks after Archer cut its valuation by 38% ahead of its upcoming debut on the New York Stock Exchange.

Joining us for more is Archer co-founder and co-ceo Brad Adcock and former United Airlines chairman and CEO Oscar Munoz who is a board member at Archer. Good morning to you both. Brett, let me start with you on the news here. Big on the G-1 certification from the FAA. What does that essentially allow you to do? And then where will you launch? And when does that happen?

BRETT ADCOCK: Yeah, good morning. So as you're probably aware, we're working to design, manufacture, and operate electric vertical takeoff and landing aircraft. So as you're probably well aware, in the US, the FAA governs all the airspace federally. So what we're doing now is we're certifying our aircraft, say, to commercial aviation standards or to bring this new transportation service to the market.

Part of the process we're going through now with the FAA is to agree on a set of specific airworthiness and environmental standards so that our aircraft we're designing now can meet full FAA type certification as we get to market. The news from today of the FAA accepting our G-1 certification basis is a really important and fundamental step for us to pave the way in order for Archer to bring this new type of vehicle to market.

We plan to use this in cities to help alleviate traffic. The first two launch cities we've announced are Miami and Los Angeles.

BRIAN SOZZI: And Oscar, key to the story here for Archer is that United Airlines has placed orders for a billion dollars worth of the company's products. Why do you think United is making that bet?

OSCAR MUNOZ: I wasn't part of that decision making. But knowing how historically we've made this, there's always been a focus on customers. And one of the last sort of phases we've been trying to accomplish is how do we do stress level for folks. And the commute from your home to the airport has always been one of those issues. So the concept falls along the customer-centricity line.

I suspect that United, having bought a lot of aircraft with the team there, there was thorough vetting. And I guarantee you, for airline experts, simplicity and reliability is what the Archer team has put together with hundreds and hundreds of years of experience in this space the EVTOL space. And so I suspect it's safe, it's reliable, it's really going to be a cost and affordable method of transportation. It's really going to be cool for the customer.

So it's a fun, innovative, new thing. And I'm excited to join. I haven't quite joined the board yet, just for clarification. But I hope to do that fairly soon.

JARED BLIKRE: Well, Brett, this does look pretty exciting. And I'm going through some of your promotional materials here, your brochures. And you're talking about scaling. And one of the lines here says you expect to work with line development partners to build high-throughput Vertiports that can accommodate hundreds of takeoffs and landings per hour, hundreds. And I'm thinking about the noise. How do these compare to helicopters? And what are you doing to kind of reduce any potential noise pollution?

BRETT ADCOCK: It's a great question. I mean, noise is a really important gating mechanism for us to be able do operations inside of cities. And as you know, we're developing a vertical takeoff and landing aircraft. So we can basically fit the aircraft right into the fabric of cities.

And noise is a really important area for us to ultimately drive down. Noise in a helicopter today is, in a lot of ways, limiting their ability to operate in a big way across cities. Helicopters are just too noisy today. They have very loud turbine engines. The tips of the rotors are spinning close to the speed of sound, generating a considerable amount of noise from a helicopter.

We have very different dynamics here for our aircraft. The first is we have electric motors that spin much quieter. And two is we have much smaller propellers that spin at much slower tip speeds that result in considerably less noise. So say at, like, 2,000 feet above ground level, which we'll be flying at, it will be virtually inaudible flying overhead. So we don't disturb anybody on the ground.

And this is really important as we start scaling up operations in a big way across cities. We don't want to annoy the local neighbors and the neighborhoods. And moving to a fully electric version of this allows us to basically reduce the noise considerably versus what's out there today.

BRIAN SOZZI: And then, Brett, for those watching this that are very intrigued by this technology, really like it, understand it, can get on board with it, can you just explain to them the valuation cut that you recently took? Why did you do it? And what does that mean for your path moving forward?

BRETT ADCOCK: Sure. So as you're probably aware, we're going into our shareholder vote next week. So it's a really important time for us. We decided to ultimately reduce the valuation of the business into this as a way to help give ourselves the ability to have better attraction for shareholders as we're coming out of the gate here. I think it's really important for us to not only trade really well but also be able to attract some of the best investors in the world.

I think the valuation we're setting here as we're going into the public markets is highly attractive. If you look at different areas of, like, say, hard tech, even EVTAL, electric vehicles and autonomous vehicles, I think the valuation of where Archer's entering at is highly attractive for investors. And I think today's news really speaks to that.

I think we're one of the only companies in the world that has received, to our knowledge, the G-1 certification basis. And we're working through now moving this with the FAA as we approach commercial operations. And we think the valuation here is highly attractive for folks. And hopefully we can produce a really large business over time.

BRIAN SOZZI: Oscar, I was thinking back this morning before the segment. I think the last time I actually saw you in person was a New York City event in 2017, obviously a different time for the aviation industry. How long do you think the industry will take to recover from the pandemic? I mean, there's just been so much change the past year and a half, given everything that has happened.

OSCAR MUNOZ: Well, that's a loaded question. There are so many factors, right? I mean, I think demand-- you've seen demand peak over the summer. And it's trailed off here in the third quarter. Business travel is the big key instrument, the debate to return to the office and whether people are going to be traveling or not continues to debate.

So I think all of those things above, plus the economic sort of burden that all the airlines have taken with regards to the situation, it'll take a while, I think, financially it'll take a while. But I know again, just knowing the United story, I mean, I think we're the first to get back to a sort of a profitable level and projecting that going forward. So it's going to take a little while.

But I think more importantly, the focus on customers, the focus on service, and the focus on reaching all the different parts of the world are going to be key. And this Archer investment that they've made and the concept, I mean, it's such a cool, fun, innovative thing. And we're so excited about it.

I mean, just think about it. No stress from your home to the airport. For all of us that travel all the time, that's just going to be a set thing. And this is safe, reliable, and really a practical approach to this. So we are very excited. I'm excited to join the team in a little bit.

JARED BLIKRE: Yeah. I think we could all use faster travel to the airport. But we have time for one more. And I just want to ask you. You've had a little bit of time here. Sozzi sent me some of your other projects. You are on a number of boards.

And Oscar, I just want to ask you, what are you doing in your spare time here? Anything else you want to throw out?

OSCAR MUNOZ: No. Again, this is the Archer story as well. It's a kind of interesting part of your career to be in because I get to pick and choose who and what I want to do. And this was one of the cool things.

But I'm also involved in my philanthropies. There's a really cool health tech company that I'm about to announce that I've been involved with. I'm with Fidelity and CBRE, Univision. And so there's my Latino influence, my health issues, and how I'm focusing aviation and customers, the Archer conversation and technology. So yeah, staying real busy with a lot of things. And so it's exciting and fun.

And Brett and Adam are doing an amazing job putting a completely-- I mean, if you think of the group of people that they put together to build this thing, it's just really exciting to see what their future holds.

BRIAN SOZZI: Yeah. This sure doesn't look like retirement, Oscar. But good to see you keeping busy. Please do come back. We'll talk about that tech company that you're getting ready to launch. In the meantime, Archer co-founder and co-CEO Brett Adcock and former United Airlines chairman and CEO Oscar Munoz, good to see you both. Congratulations on the news this morning. Talk to you soon.

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