Eve Urban Air Mobility on Tuesday became the latest eVTOL aircraft developer to announce plans to go public via a merger with a special purpose acquisition company. The subsidiary of Brazilian aerospace group Embraer said it has reached agreement to combine its business with Zanite Acquisition Corp. and seek a New York Stock Exchange listing under the name Eve Holding. Talks between Embraer and Zanite were first confirmed on June 11.

In their December 21 announcement, the companies said Embraer will remain the majority shareholder in Eve, with an 82 percent stake, based on its $175 million contribution to a $305 million public investment in private equity (PIPE) common stock (priced at $10 per share) that is also supported by $25 million from Zanite Sponsor and $105 million from a consortium of financial and strategic investors including Azorra Aviation, BAE Systems, Bradesco BBI, Falko Regional Aircraft, Republic Airways, Rolls-Royce and SkyWest. The transaction is also backed by a $237 million cash contribution from Zanite Acquisition, founded by Directional Aviation Capital principal Kenn Ricci and Steve Rosen, co-founder and co-CEO of Resilience Capital Partners. That gives Zanite about a 9 percent share in Eve.

SkyWest, Republic Airways, and leasing group Azorra have confirmed provisional orders for up to 500 of the Eve eVTOL vehicle, respectively committing to 100, 200 and 200 units each. Eve said these commitments, backed by non-binding letters of intent, take its order backlog to 1,735 units that it collectively values at $5.2 billion (implying a list price per vehicle of $3 million). Along with Falko, SkyWest and Republic Airways are already a customer for Embraer’s E-175 and E-190 regional airliners. Eve has not disclosed whether any deposits have been paid to secure the provisional orders, but said that they will be firmed up as type certification work progresses.

The final amount of the Zanite Acquisition investment is contingent on how many of its existing shareholders might redeem their equity upon closing, which is expected in the second quarter of 2022. Cash proceeds from the deal will fund Eve’s plan to bring a four-passenger eVTOL aircraft into commercial service by 2026. Both Embraer and Zanite's sponsors have agreed to a three-year lockup on their respective shares in the new venture. Ricci told FutureFlight that he's invested for the long-term in Eve, adding, "I want to be here to see this fly and go into production. Eve was our first choice—its eVTOL is a simple design that will be easier to produce and maintain than other models, especially tiltrotors that have more moving parts. There is a clear path to certification and production for Eve's aircraft."

Eve, which is headquartered in Florida, also intends to be involved in other aspects of the urban air mobility (UAM) ecosystem, including air traffic management. The merged venture is projected to have a pro forma enterprise value of around $2.4 million and a pro forma equity value of $2.9 billion.

Zanite Acquisition floated on the Nasdaq exchange in November 2020 and since then has been seeking investment opportunities in the UAM sector. Ricci’s Directional Aviation group includes several prominent interests in the business aviation sector, including fractional ownership group Flexjet. Earlier this year, it launched a UAM subsidiary called Halo and in June the new venture agreed to buy up to 200 of Eve’s all-electric eVTOLs, which is expected to have a range of around 60 miles.

As part of the agreement, Embraer has granted Eve royalty-free access to its existing UAM intellectual property. The parent company is also allowing the startup it formed as part of its EmbraerX technology incubator priority access to skilled personnel and its global infrastructure to assist in areas such as engineering, certification, production, and customer service and support.

Embraer CEO Francisco Gomes Neto also highlighted the fact that, unlike the eVTOL startups, his company has extensive aircraft certification and production experience, as well as an existing global sales and service network. In addition, he said Eve will be working with Brazil's ANAC to certify its eVTOL, avoiding what he expects will be a certification bottleneck for eVTOLs at the FAA. According to Neto, Ricci's decades of aircraft operational experience will complement what Embraer brings to the table.

Ricci told a December 21 investors' call that Zanite had opted to align itself with Eve for several core reasons, starting with its belief that the company's simple lift and cruise, fixed-wing design would be easier to certify than more complex tiltotors and multicopters. He also highlighted the fact that, unlike several other eVTOL market frontrunners, Eve has no plans to operate aircraft itself and will focus instead on delivering and supporting aircraft for customers, avoiding conflicts of interest and more costly capital outlay. The Directional Aviation Capital founder also maintained that, through Embraer, Eve has a stronger connection with primary markets outside the U.S., which he believes will be early adopters for UAM.

Eve will be led by former BAE Systems CEO Jerry DeMuro and Embraer executive Andre Stein, who has been CEO of the venture since its launch. Zanite’s directors and strategic advisors now include former Gulfstream Aerospace Larry Flynn, former Northrop Grumman CEO Ronald Sugar, former U.S. deputy defense secretary, and Boeing senior vice president Patrick Shanahan, and former KPMG CEO and chairman John Veihmeyer.

According to DeMuro, Eve will benefit from Embraer's well-established track record of certifying multiple airliners and business aircraft, and its strong relationship with Brazilian civil aviation regulator ANAC. Referencing competitors now seeking approval for new eVTOL designs under the higher-profile FAA and EASA jurisdictions, he said that the start-up will have ANAC's "undivided attention" in meeting its objective of achieving type certification by the end of 2025.

Also on December 21, defense group BAE Systems said that it will work with Embraer to explore potential military applications for the Eve eVTOL design. Engineers from BAE's air division will work with colleagues from the Embraer Defense and Security team to consider missions such as troop-carrying, surveillance and reconnaissance, disaster relief, and humanitarian response.

“Eve was founded on a vision to accelerate the UAM ecosystem, make safe and affordable urban air transportation available to all citizens while reducing global carbon emissions,” Stein commented. “The transaction announced today with Zanite is a major milestone that will accelerate our strategic plan and support us in realizing our vision.”

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