United pre-pays eVTOL firm Archer $10 million of $1 billion UAM order

Archer Aviation reported passing another milestone in its efforts to develop electric takeoff and landing (eVTOL) aircraft for use in aerial services like air taxis, with the receipt of a $10 million pre-payment from United Airlines as part of its 2021 transaction for 100 urban air mobility (UAM) vehicles.

The $10 million deposit by United represents a very small portion of the estimated $1 billion value of its February 2021 UAM accord with Archer, under which it agreed to buy 100 production-grade eVTOL aircraft. Still, given the quasi-universal conditional hedging common in deals involving aircraft still under development – many of which are memoranda of understanding or other formats with potential exits built in – the pre-payment offers an indication United intends to see their transaction through. 

The United advance payment also provides a non-negligible infusion of cash for Archer’s drive to usher its Maker eVTOL prototype through certification and into production for use by UAM operators.

Read: Archer’s Maker eVTOL completes second phase of test flights 

Another significant, albeit fairly logical aspect of the payment is it further tightening the UAM partnership Archer has built with United in developing its Maker eVTOL.

Their February transaction for 100 craft – with an option to buy more worth $500 million – was part of Archer’s move to take the company public, an operation that introduced United in as a major investor.

Since then Archer and United have worked together in advancing the eVTOL aircraft through the ongoing certification process, and preparing its eventual launch into UAM services. That included the companies forming a joint advisory committee that, among other things, will oversee creation of a maintenance and operational system for Archer aircraft by leveraging the assets and experience United has built up through decades of passenger air transport activity.

Read: Archer CEOs discuss 2022 eVTOL air taxi development goals 

In modern business, of course, nothing is a replacement for cold, hard cash. United’s deposit for Archer’s eVTOL craft – however small a percentage of the broader deal – will provide additional support in driving the vehicle to a waiting UAM market. Even more important, perhaps, is the sign the payment sends that the Santa Clara startup has the solid backing of a Fortune 500 company and aviation heavyweight as it seeks to open a new chapter in air transport.

“I am incredibly proud of the entire Archer team as we reach this milestone in our partnership with United Airlines,” said Archer CEO Adam Goldstein. “To receive a cash deposit is validation of Archer’s achievements to date, not only with flight testing and product development, but also a great signal of confidence in our roadmap to commercialization. We’re thankful to United for their continued partnership as we usher in this new era in air travel.”