California-based Archer Aviation (NYSE: ACHR) and United Airlines (NASDAQ: UAL) are creating a joint advisory committee aimed at supporting Archer’s goals to operate an airline fleet of electric vertical takeoff and landing (eVTOL) air taxis.
The news comes as investment analysts at J.P. Morgan gave Archer an Overweight rating with a target of $7 per share, saying Archer’s “pragmatic approach” to aircraft design and “strong supplier/manufacturing partnerships” may lessen the risk from certification timing.
Both developments bode well for the relative newcomer to the eVTOL space. Archer’s tilt-rotor air taxi demonstrator called Maker flew its first hover test in an uncrewed flight last December. The company has said it expects to enter service by 2024.
Archer’s announcement Wednesday of its new operations advisory committee with United makes sense. United first hitched its wagon to Archer last year, by announcing an agreement to purchase $1 billion in Archer aircraft, pending type certification and other regulatory requirements. In fact, former United CEO Oscar Munoz serves on Archer’s board of directors. The airline has said it envisions using zero-emission air taxis to ferry passengers on short flights over gridlocked cities to hub airports.
Archer said in a statement the committee’s goal will be “to develop maintenance and operational concepts for our eVTOL airline operations,” while leveraging United’s experience with commercial aviation operating strategies.
Vertically Integrated Business Model
Archer’s vertically integrated urban air mobility (UAM) business model—manufacturing an entirely new type of aircraft as well as building, scaling up, and operating an on-demand rideshare air taxi service—will be expensive to execute, industry experts say.
“The formation of this advisory committee further demonstrates Archer’s commitment to building advanced infrastructure to support UAM at scale,” said Archer CEO Adam Goldstein in a statement released Wednesday. “We understand that the adoption of UAM is about more than just the certification of our aircraft. United’s operational experience here will be invaluable as we work towards delivering aerial ridesharing at scale.”
Michael Leskinen, president of United Airlines Ventures, said, “Assembling this group of industry-leading talent, and harnessing the valuable insights it yields, will be a vital step in enabling consumer adoption of eVTOL.”
The committee will be chaired by Archer vice president of engineering, Dave Dennison and Mauricio Angel, United’s managing director, United Express techops strategy and operations.
- Jason Onorati, United Director of Maintenance Programs
- Robert Bernard, United Sr. Manager Maintenance Programs
- Edward Espiritu, United Sr. Manager Corporate Strategy
- Nicole Martin, United Sr. Analyst Corporate Strategy
- Brian Johnson, Director of Materials
- Monal Merchant, Sr. Manager UAX Engines and Engineering
- Adam Goldstein, Archer CEO
- Tom Muniz, Archer COO
- Armando Chieffi, Archer Maintainability Lead
Shares Higher After J.P. Morgan Rating
The new J.P. Morgan Overweight rating for Archer—which opened Thursday at $3.70—apparently energized buyers, sending the price increase percentage into double digits.
“We assume the eVTOL market could well-exceed the size of the helicopter market of about $35 billion within the next decade given noise and safety benefits,” J.P. Morgan’s report said.
Growing markets during the next few decades, according to the report, could result in an “eVTOL passenger market opportunity in a range of $680 billion to 1 trillion.”
About two weeks ago, an investor analysis of the eVTOL sector by Deutsche Bank also favored Archer, designating it as a “buy” with a target of $10.
Last September, another investment bank, Morgan Stanley, rated Archer’s competitor Joby Aviation (NYSE: JOBY) as Overweight with a target price of $16. Joby opened Thursday at $5.21.