Archer Aviation Secures $1 Billion United Airlines Order & SPAC Deal

Archer Aviation to Go Public via SPAC Merger with United Airlines Investment

Archer Aviation, a startup focused on developing electric aircraft for the urban air mobility sector, has secured both a customer and an investor in United Airlines as it moves towards becoming a publicly listed company. This transition will be facilitated through a merger with a special purpose acquisition company.

SPAC Merger Details and Financial Projections

Archer Aviation announced on Wednesday an agreement to merge with Atlas Crest Investment Corp., a financial strategy gaining popularity as an alternative to traditional initial public offerings (IPOs). The resulting publicly traded entity, slated for listing on the New York Stock Exchange under the ticker “ACHR,” is projected to have an equity valuation of $3.8 billion.

The company anticipates receiving $1.1 billion in gross proceeds. This includes $600 million through a private investment in public equity (PIPE) round, with participation from investors like United Airlines, Stellantis, Exor’s venture arm, Baron Capital Group, Federated Hermes Kaufmann Funds, Mubadala Capital, Putnam Investments, and Access Industries.

Furthermore, Ken Moelis and associated parties, alongside Marc Lore – a key initial backer of Archer – are contributing $30 million to the PIPE investment.

The combined company will also benefit from approximately $500 million held in trust. Prior to this SPAC agreement, Archer had already secured $60 million in funding through seed and Series A investment rounds.

United Airlines Partnership and Aircraft Order

In a separate announcement, Archer Aviation revealed a strategic investment from United Airlines. Under the terms of this agreement, United has committed to purchasing $1 billion worth of Archer’s aircraft, with an additional option to acquire up to $500 million more.

Currently, Archer is still in the development phase of its electric vertical take-off and landing (eVTOL) aircraft. The design aims for a range of up to 60 miles on a single charge, achieving speeds of 150 miles per hour.

Archer intends to showcase a full-scale eVTOL prototype later this year and is targeting the commencement of large-scale manufacturing in 2023.

The company believes that its collaboration with United Airlines, alongside a prior partnership with automotive manufacturer Stellantis, coupled with the capital raised through the SPAC merger, will accelerate its path to commercial viability.

Decarbonizing Air Travel

United CEO Scott Kirby framed the investment as a key component of the airline’s strategy to reduce its carbon footprint.

“United is demonstrating to the aviation industry that the time for embracing cleaner, more efficient transportation methods is now,” Kirby stated. “Identifying and supporting the next generation of companies that can make this a reality is crucial, and we are committed to helping them succeed.”

This investment also explores a potential new service line for United, potentially offering passengers transportation to and from airports via Archer’s eVTOL aircraft. United projects that utilizing these aircraft could decrease CO2 emissions by as much as 50% per passenger on routes like the one between Hollywood and Los Angeles International Airport – a key initial launch location for the startup.

Company Background and Recent Developments

This agreement to become a public entity and the order from United Airlines occur less than a year after Archer Aviation publicly launched.

Founded in 2018 by Adam Goldstein and Brett Adcock, Archer’s founders previously sold their software company, Vettery, to The Adecco Group for over $100 million. Marc Lore, who previously sold Jet.com to Walmart for $3.3 billion, has been a primary investor.

Lore served as Walmart’s e-commerce chief until January.

Correction: A previous version of this article incorrectly stated that Lore was still e-commerce chief of Walmart. He departed the company in January.