On The Radar
The headline news from Lilium's 20-F filing with the U.S. Securities and Exchange Commission on March 30 is that the company’s plans to bring its seven-seat Lilium Jet eVTOL aircraft into commercial service have slipped from 2024 to 2025. The full extent of the delay hasn't been confirmed as so much hinges on the revised plan to build the first production-conforming prototype and start test flights at some point in 2023. Even if its original timeline had allowed the company up until the end of 2024 to bring the ducted-fan-powered, winged model to market, the delay will surely push back the flow of first revenues for at least 12 months.
The 126-page report, supplemented by a further 63 pages from the company's independent accounts, is well worth a patient study as the transparency requirements of U.S. financial regulators provide a high degree of illumination on the hype-free realities faced by new aircraft developers, spelling out a litany of financial, technological, and market risk factors. FutureFlight strongly doubts that Lilium will be the last of the publicly-owned pioneers in the advanced air mobility gold rush to make such a filing.
Financial backers must surely discern from such reality checks that returns on their investments will not come as soon as originally projected. Along with the 70-plus suppliers now committed to the program, they will also want to digest the latest cost projections to assess Lilium’s ability to support development costs through to the production phase.
With minimal revenues for now and with capital expenses for the program inevitably rising, it is not surprising that Lilium’s operating losses have climbed between 2019 and 2021 from €58.2 million to €400.6 million ($437.4 million). Research and development expenses have accounted for larger portions of these losses, reaching €144.6 million last year, with general and administrative expenses adding €239 million in costs over a period that saw the payroll swell to more than 750 employees.
As of December 31, 2021, Lilium reported it had cash and cash equivalent in hand of €353.3 million, with no substantial debt, plus other financial assets of €219.6 million. Net cash used for operating activities last year was €215.1 million.
The Lilium management team acknowledged that last year's New York Stock Exchange initial public offering, following its combination with Qell Acquisition, was, "crucial to our ability to continue as a growing concern." They added if program and business costs continue to rise, they may have to raise additional funds and would likely seek to do this through further public and private equity offerings, debt financing, partnerships, and grant funding.
As anyone who has been awake on this plant for the past three months or so can attest, the cost of everything is now in vertical lift mode with no sign of an early descent. The question is at what point the eVTOL start-ups can reasonably expect to be able to refuel their coffers from a real-world revenue stream.