California-based electric aircraft developer Archer Aviation signed a $1 billion deal with United Airlines to supply it with 200 of its yet-to-be developed electric aircraft and said it will become a publicly-listed firm.
Archer said it will list on the New York Stock Exchange after merging with special purpose acquisition company Atlas Crest Investment Corporation led by investment banker Ken Moelis, it said in a statement on Wednesday.
SPACs are investment vehicles that raise money on public markets with the intention of acquiring or merging with a private firm.
Following the deal, Archer said it is expected to receive $1.1bn of gross proceeds, including $600m through a private investment in public equity from investors including United Airlines, Stellantis and the venture arm of Exor, Baron Capital Group, the Federated Hermes Kaufmann Funds, Mubadala Capital, Putnam Investments and Access Industries. It also bagged an additional $30m from Mr Moelis and Walmart's e-commerce chief Marc Lore.
The start-up, founded by Brett Adcock and Adam Goldstein, is developing the world's first commercially viable all-electric vertical takeoff and landing aircraft. The vehicle is expected to travel at a distance of 60 miles at a speed of 150 mph and is expected to solve a pressing need within the urban mobility segment and address long traffic snarls.
Archer, though, is yet to unveil its first prototype – for which United, along with Mesa airlines, have placed their order. The airline has an option for an additional $500m worth of air taxis.
With these air taxis, the US carrier hopes to cut down its emissions. United estimates that Archer's aircraft could slash carbon dioxide emissions by 47 per cent per passenger on a trip between Hollywood and Los Angeles International Airport – the route where Archer plans to launch an air taxi service by 2024.
"By working with Archer, United is showing the aviation industry that now is the time to embrace cleaner, more efficient modes of transportation," said United chief executive Scott Kirby.
"With the right technology, we can curb the impact aircraft have on the planet, but we have to identify the next generation of companies who will make this a reality early and find ways to help them get off the ground."
Electric taxis have captured the interest of both investors and airlines but it is yet to be seen if these can be mass produced to decarbonise air travel and ease congestion.
Archer said it hopes to fast track the commercialisation of its air taxis through its partnership with United. The deal comes a month after the start-up said it is teaming up with Stellantis – the company formed following the merger of Fiat Chrysler and Groupe PSA, to mass produce aircraft.