The 218-page document, assembled by the National Academies of Sciences, Engineering, and Medicine (NASEM) at the behest of Congress, warns that NASA is prioritizing short-term missions and commercial contracts over the people and technology that make its out-of-this-world activities possible.

Per the report, the space agency’s emphasis on near-term victories and overreliance on private contractors comes at the price of a strained budget, degraded infrastructure, and exodus of talented personnel.

“NASA should rebalance its priorities and increase investments in its facilities, expert workforce, and development of cutting-edge technology, even if it means forestalling initiation of new missions,” the NASEM said.

NASEM operates under a congressional charter and comprises private and nonprofit institutions that provide independent analysis on public policy decisions. The academies release decadal reports on topics such as astronomy and planetary science, effectively giving NASA and Congress a roadmap for funding over the next ten years. The studies take years to put together and are considered influential within the spaceflight community.

Tuesday’s publication, titled NASA at a Crossroads, is a bit of an aberration. The report was requested by Congress in 2022 amid growing pressure from China, which in June became the first nation to return samples from the moon’s far side.

NASEM members met with experts, visited NASA centers, sent requests for information, and reviewed agency documents to inform their conclusions. The outlook, the organization says, may be bleak.

The State of NASA

The NASEM report paints the picture of an agency in turmoil from top to bottom.

Internal and external pressure from NASA and its benefactors has placed it in a bit of a tight spot. Agency senior center managers told researchers they would prefer to spend additional funding on new missions rather than facility maintenance or personnel training. But per the U.S. Committee on Human Spaceflight, NASA annually spends about $3 billion on missions it cannot afford.

“Each dollar of mission support that previously had to sustain a dollar of mission activity now has to support $1.50 of mission activity, effectively a 50 percent increase,” the report says.

In short, the agency’s workload is expanding more rapidly than its mission budget—and that’s absorbing money that could be better spent elsewhere.

NASA infrastructure is essential to the agency’s mission and is used by other agencies and private partners. But “chronic insufficient funding” has resulted in about 83 percent of the agency’s facilities, many of which were built in the 1960s, exceeding their design life. These aging assets are difficult to maintain, soak up valuable personnel time, and make NASA less attractive to prospective talent.

“During its inspection tours, the committee saw some of the worst facilities many of its members have ever seen,” NASEM said.

For example, according to the report, NASA’s Deep Space Network (DSN)—a network of radio dishes around the globe that receive and transmit data from missions—is too degraded to support current and planned projects without disrupting others. DSN locations over the next decade will cost tens of millions to maintain, it predicts, while contending with a thin workforce and failing infrastructure. The DSN budget in 2022 was $200 million, down from $250 million in 2010.

NASA’s employee turnover rate is largely consistent with the commercial space industry, per the report. But agency employees cited lower salaries and greater private sector involvement as deterrents to working there. In addition, NASEM found that women and minorities are underrepresented, leaving plenty of talent untapped.

Researchers worry the prevalence of certain commercial contracts, such as fixed-price or milestone-based, could make matters even worse by turning NASA engineers into contract monitors. These agreements stifle agency personnel by reducing hands-on work while opening the door for private companies to develop technology that, in the NASEM’s view, should be built in-house.

“Innovative, creative engineers don’t want to have a job that consists of overseeing other people’s work,” said ex-Lockheed Martin executive Norm Augustine, the lead author of the report, during a virtual briefing Tuesday afternoon.

A Tight Budget

NASA’s tendency to prioritize short-term missions over long-term success stems in part from a constrained budget environment.

Between 2014 and 2023, the agency’s funding actually increased by an average of more than 3 percent over the previous year. But over the past two decades, its purchasing power has essentially held flat while mission complexity has grown. During the peak of the Apollo program, NASEM estimates, purchasing power was about three times higher.

The 2023 debt ceiling agreement capped increases to federal non-defense discretionary funding for fiscal years 2024 and 2025, and NASA has felt the impact. Its 2024 budget left it with about half a billion less than it had in 2023. The 8.5 percent discrepancy between what the agency requested and what it received was the largest since 1992.

The funding cut gives NASA little wiggle room for certain missions such as Mars Sample Return, for which the agency has requested help from private industry to lower costs. Another high-profile program, the Chandra X-ray observatory, was placed on the chopping block, and several others have been delayed.

It could be a similar story in 2025. The White House’s 2025 NASA budget request, which seeks the same amount awarded in 2023, has been marked up by the House and Senate Appropriations Committees, with the latter’s proposal reading much more favorable.

Under the House budget, NASA would receive $200 million less than requested, a slight increase over 2024 in real dollars but below the current rate of inflation.

The biggest loser would be the Science Mission Directorate, which would get $7.3 billion—the same as 2024’s allocation, which represented the first cut to NASA’s science budget in a decade. A coalition of scientific organizations and more than 40 members of Congress believe the agency needs closer to $9 billion to support its dozens of space science missions.

Mars Sample Return could also suffer despite the House requiring it to spend $450 million more than NASA requested.

That’s because it would provide less than half of that money, leaving NASA to scrounge up the rest by axing other planetary science projects. The House would require full funding for certain programs, so only a few—namely Discovery, New Frontiers, and fundamental research—would be candidates for cuts. Within those programs are the critical Veritas Venus mission and Dragonfly Saturn moon mission, both of which could be jeopardized.

Also at risk is the Artemis lunar program, the successor to Apollo. NASA asked to shift funding from flight-proven components to novel technology that will be used on future missions, including the return of Americans to the moon during Artemis III. But the House mandates that the former programs maintain their historical levels of funding.

According to Casey Dreier, head of policy at the Planetary Society, that creates a roughly “half-billion-dollar hole” for the Lunar Gateway moon space station. To fill it, NASA will need to either redirect funds from other programs or significantly cut Gateway funding.

Artemis II and Artemis III have already been pushed to September 2025 and 2026, respectively, and NASA has hinted at delays to future missions. Earlier this year, it suddenly canceled development of the Viper lunar rover due to budget uncertainty.

“Future funding is clouded by the ever-declining federal discretionary budget from which NASA support is provided,” the report says.

Things may improve in 2026 when spending caps are lifted. However, NASA within the last year and change has lowered its budget projection for 2030 from about $30 billion to $28 billion.

Instant Gratification

NASA’s inefficiencies arise not just from its meager budget but also from how the agency uses it, the NASEM says.

The agency is often stretched thin by the sheer number of projects it pursues, causing setbacks to individual missions as in the case of Mars Sample Return or the James Webb Space Telescope.

Further, according to the report, many NASA leaders dismiss the need for long-term internal strategy, citing immense influence from Congress on its annual projects and budget. In short, the perception within NASA is that doing so would waste resources.

“Even planning for the advancing Artemis program lacks certain action-specific details associated with an architecture that is more complex and interdependent than Apollo,” the NASEM said.

But the lack of foresight by leadership results in unrealistic initial cost estimates, creating a domino effect that forces underfunded missions to pull money from other programs. The NASEM characterizes NASA’s internal research and development program, for example, as underfunded.

“The inevitable consequence of such a strategy is to erode those essential capabilities that led to the organization’s greatness in the first place and that underpin its future potential,” the report reads. “The profound negative consequences of this are felt far beyond the specific projects producing the delays and unanticipated funding demands.”

The NASEM recommended a total overhaul of NASA’s long-term mission planning process, including required “need dates” for capability and component needs. It also suggested that as responsibility shifts from NASA centers to specialized mission directorates, the agency should make sure its checks and balances are providing enough oversight.

An Eroding Base

Because NASA puts so much energy into its missions, the agency has neglected the engine that drives them: personnel and infrastructure.

Since 2017, only two NASA congressional authorization acts—which allocate funds from the Treasury Department and establish new programs and policy focuses—have been made law.  According to the report, “this inhibits the forecasting of workforce, infrastructure, and technology needs.”

On the infrastructure side, the NASEM recommended NASA work with Congress to create a revolving working capital fund (WCF) financed by the government and users of NASA facilities, similar to those for other federal departments. The agency could use the money to eliminate its maintenance backlog over the next decade and make continuous infrastructure enhancements.

Equally concerning is the agency’s workforce, which faces more competition for employment than ever before. Creating a commercial space ecosystem was a U.S. national policy goal for decades, and NASA has benefitted from working with private companies. These partnerships are necessary, the report argues, but verging on excessive.

Researchers contend that specialized, early phase mission work should be handled in-house, or NASA risks losing the talent that has propelled it thus far. Fixed-price or milestone-based contacts, such as the Artemis human landing system (HLS) agreements with SpaceX and Blue Origin, take agency personnel out of the picture. Many employees told researchers they would like more training or opportunities to hone their skills.

“In this case, NASA is more of a contract monitor than a technical organization capable of taking humanity into the solar system,” the NASEM said. “The concern is not only an erosion of ‘smart-buyer’ capability, but also of the capacity to invent and innovate.”

There is also the risk that a commercial provider exits the market or fails to deliver. A NASA inspector general report, for instance, blames contractor Boeing for certain delays associated with the Artemis program.

The NASEM directs NASA to invest in “early-stage, mission-critical technologies” that commercial firms have yet to crack, emphasize more hands-on work, and unearth new talent by targeting underrepresented demographics.

It could also seek to update the NASA Flexibility Act of 2004, which was implemented partially in response to the space shuttle Columbia accident and dictates what the agency can pay employees. By securing greater appointment and hiring authority, it could ease the burden of attracting and retaining talent.

Houston, Do We Have a Problem?

NASA’s budget woes have been well documented. The NASEM report, however, raises new concerns about how the agency uses what little it receives.

It’s not all NASA’s fault—the agency’s effort to scale back Mars Sample Return, for example, faces opposition from the House. If NASA must divert funding from other projects to support that mission, the blame would land squarely on Congress.

But the agency certainly isn’t helping matters. The neglect of long-term mission planning, despite lawmakers’ control over the budget, borders on ineptitude. Infrastructure and technology are dated. And private firms are snapping up talent faster than NASA can produce it.

Given the pressure the agency faces internally, from the government, and from its contractors, these issues are unlikely to resolve themselves without some serious effort. The hope is that the adoption of the Senate’s more favorable budget proposal, and the lifting of spending caps in 2026, could give it some much needed support. But NASA’s fortunes will also hinge on a reassessment of its priorities.

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Four projects intended to study potential AAM use cases and guide Michigan lawmakers as they regulate the industry have received a total of $6.25 million in funding. AAM is an umbrella term used by the FAA to denote new forms of passenger- and cargo-carrying aircraft, from drones to electric vertical takeoff and landing (eVTOL) air taxis.

The $2.6 million will be allocated to electric aircraft and charging station developer Beta Technologies. The remaining funds will be divided among drone infrastructure developer Skyports ($512,000); Traverse Connect, the economic developer for the state’s Great Traverse region ($689,500); and Michigan Central, a transportation technology campus located in Detroit ($2.45 million).

The money comes from the Michigan AAM Activation Fund, which has the combined backing of the state’s Department of Transportation (MDOT), Office of Future Mobility and Electrification (OFME), and Economic Development Corporation (MEDC). The fund aims to prepare Michigan for the arrival of AAM aircraft by coordinating state agencies.

“Advanced air mobility is an incredible economic opportunity for the state of Michigan,” said Gilchrist. “These investments create high-tech jobs, grow cutting-edge businesses, and enhance quality of life for our residents. These innovative advancements will elevate the way our companies operate, making air transportation more efficient and changing the way we move both people and cargo.”

Added Bradley Wieferich, Michigan state transportation director: “This new investment complements the state’s strategy to find safe and cost-efficient ways to capitalize on a robust network of aviation infrastructure serving Michiganders today.”

Beta will use its $2.6 million appropriation to install electric aircraft chargers statewide, including at Cherry Capital Airport (KTVC), Capital Region International Airport (KLAN), West Michigan Regional Airport (KBIV), and Willow Run Airport (KYIP).

The company is developing systems that adhere to the combined charging standard (CCS), a set of design protocols endorsed by Beta, the General Aviation Manufacturers Association (GAMA), and other manufacturers such as Archer Aviation and Boeing’s Wisk Aero. So far, Beta has about 20 chargers installed and online in the Eastern U.S., with another 50 or so in the construction or permitting process.

Skyports will use its money to launch a trio of proof-of-concept, ship-to-shore drone delivery services in the cities of Sault Ste. Marie and Detour Village, in partnership with local shipping provider Interlake Steamships. The ships will be anchored while drones arrive to pick up deliveries.

Traverse Connect, with an assortment of partners, will examine the use of drones to deliver critical medical supplies to rural areas, which typically have less access to the U.S. healthcare system. The drones will also be deployed for marine surveying, water sampling and testing, bathymetric mapping, and emergency response in the Lake Michigan area.

Michigan Central, meanwhile, has been tasked with improving Michigan’s recently announced advanced aerial innovation region, an urban campus that was opened to bring AAM companies and jobs to the state. It will also work alongside Brooklyn’s Newlab, a technology center best known for revitalizing the Brooklyn Navy Yard, to test beyond visual line of sight (BVLOS) drone use cases across building inspection, cargo delivery, and medical delivery.

“Michiganders have always been pioneers in the mobility space, and now we’re taking to the skies, finding new ways to use next-generation transportation to deliver critical resources like medical supplies and food, reinforcing international partnerships and cross-border collaboration, and so much more,” said Justine Johnson, Michigan chief mobility officer.

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The manufacturer last week said it received a $10 million grant from the U.K. government through the Aerospace Technology Institute (ATI) program, its fourth grant award through that initiative. The award brings Vertical’s total U.K. government grant funding to $47 million and follows founder and CEO Stephen Fitzpatrick’s personal commitment to provide another $50 million.

The company will use the money to develop next-generation propellers for the VX4, its flagship, four-passenger eVTOL air taxi. The propellers will be featured on Aircraft Two, a full-scale prototype in production that will build on its Aircraft One model.

Aircraft One is the company’s inaugural prototype that suffered a crash during uncrewed testing at Cotswold Airport (EGBP) in August. The accident damaged the model’s right wing and landing gear, and rendered it unusable for further flight testing.

“This exciting sustainable propeller project is a fantastic example of our commitment to our world-leading aviation sector, supporting high-skilled, high-paid jobs across the U.K. while developing technologies of the future,” said Nusrat Ghani, U.K. minister of state for industry and economic security. “When government and industry collaborate like this, we help our aerospace sector soar to new heights, leading the charge towards net-zero air travel by 2050.”

Vertical will head a consortium of U.K. technology organizations and research institutions, including the University of Glasgow, University of Bristol, Cranfield University, and Helitune, a helicopter monitoring specialist.

Of the more than $25 million being poured into the propeller project, Vertical said it received more than $10 million, or about half of the company’s eligible development costs. Another $4.5 million will be awarded to other consortium members.

According to Vertical, the new propellers will be lower in weight, inertia, and noise than its existing propellers and will be “delivered to a higher safety standard than any model currently on the market.”

“The project will see advancements in rotor technologies vital to the success of eVTOL aircraft developed here in the U.K., growing knowledge, skills and capability in the process,” said Mark Scully, head of propulsion and advanced systems technology for ATI. “Through this investment the ATI Programme is enabling the development of ultra-efficient and cross-cutting technologies.”

The award follows Fitzpatrick’s commitment to support Vertical with $50 million out of his own pocket. The company last week confirmed it has entered into an investment agreement with its founder and CEO, putting the promise to paper.

By its own estimate, Vertical risked running out of cash by September amid the fallout from its August crash and delays to its certification timeline, which over the years has been pushed from 2024 to 2026. The company reportedly missed a target to raise funding by December. Its previous raise of $205 million closed more than two years ago.

However, Vertical said Fitzpatrick’s contribution will extend its cash runway into mid-2025, with more funding potentially lined up pending the completed flight test campaign of Aircraft Two. Last month, it said the full-scale prototype was nearing completion at partner GKN Aerospace’s Global Technology Center in the U.K.

Aircraft Two is expected to be Vertical’s certification aircraft that it will use in for-credit type certification testing with the U.K. Civil Aviation Authority (CAA). In addition to the next-generation propellers, the updated design adds a revamped powertrain, refined flight control system, and battery packs designed to meet thermal runaway safety requirements. It will feature components made by certification partners Honeywell, GKN, Hanwha, Solvay, and Leonardo.

Vertical intends for Aircraft Two to complete a flight campaign and several public demonstrations this year. These are expected to include an appearance at the Farnborough International Airshow at Farnborough Airport (EGLF) in July, as well as flights to and from London Heathrow Airport (EGLL).

In March, Vertical received CAA design organization approval (DOA), a required step in the regulator’s type certification process. Only a handful of air taxi firms, including Germany’s Volocopter and Lilium, have obtained DOA from the European Union Aviation Safety Agency (EASA).

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Heart Aerospace, maker of the 30-seat, hybrid-electric ES-30 regional airplane, this week raised $107 million in a series B round, bringing the company’s total funding raised to date to $145 million. The money will go toward type certification for the ES-30 under the European Aviation Safety Agency’s (EASA) CS-25 large aeroplanes category, expected in 2028.

Compared to conventionally fueled airplanes on short-haul routes, the design will lower emissions, noise pollution, and, most importantly, operating costs, Heart Aerospace claims.

“Billions of people around the world are looking to be connected to this amazing infrastructure over the next decade,” said Anders Forslund, co-founder and CEO of Heart Aerospace. “Meanwhile, the industry has committed to net-zero emissions by 2050. The only way forward is to decouple the tremendous growth in aviation from its emissions, and we believe ES-30 is the first stepping stone.”

In its fully electric, zero-emissions configuration, in which the batteries power four electric motors, the ES-30 has a range of about 124 sm (108 nm). But the aircraft can also be flown in reserve-hybrid configuration, using a pair of turbogenerators running on sustainable aviation fuel (SAF). This doubles the model’s range to 248 sm (215 nm). But it actually maxes out at about 497 sm (432 nm) with a slightly reduced load of 25 passengers.

Reserve-hybrid mode can also be used during cruise on longer flights, complementing the electrical power supplied by the batteries. As Heart’s battery technology matures, the ES-30’s range in all-electric mode is expected to increase, while battery maintenance and electricity costs go down.

At launch, the ES-30 will not produce emissions around airports or on routes up to 124 sm (108 nm). As battery technology improves, though, so too will zero-emissions range. Eventually, the company claims, it will cut emissions per seat in half compared to 50-seat turboprops on longer sectors, or by 90 percent if SAF is used.

In fact, Heart promises fuel costs, maintenance costs, and operating costs per seat comparable to a 50-seat turboprop, but with significant per-trip improvements. At the same time, the aircraft’s electric motors keep noise to a minimum during takeoff and landing.

“Moreover, because of the superior economics of electric aircraft over their fossil-fuel counterparts, the ES-30 will bring back service to communities that have lost connectivity and open many new markets,” said Forslund.

The ES-30 is the only clean-sheet, hybrid-electric airplane of its size possessing active type certification applications with the European Union Aviation Safety Agency (EASA). Heart expects to unveil a full-scale demonstrator this year. But first it will use this week’s cash injection to develop the aircraft’s hybrid-electric powertrain.

Sagitta Ventures, a Danish investor focused on early stage firms, is among the new investors in the series B, which included Bill Gates’ Breakthrough Energy Ventures, EQT Ventures, and Y Combinator. Customers and previous investors United Airlines Ventures and Air Canada also participated in the round, with the latter providing $5 million.

Further, Ted Persson, partner at EQT Ventures, will join Heart’s board of investors.

“As someone said, the Stone Age didn’t end because we ran out of stones, and the fossil fuel age won’t end because we [ran] out of fossil fuels,” said Persson. “Heart Aerospace is taking decarbonization to the skies, and we’re proud to be funding technology that will fundamentally change the aviation industry.”

Heart has approximately 250 firm orders for the ES-30 to go along with options and purchase rights for 120 aircraft, as well as letters of intent for 191 more. Thirty of those belong to Air Canada. The bulk, though, come from United and Mesa Airlines, a subsidiary which will help the airline introduce electric aircraft. A conditional agreement in 2021 calls for each to acquire 100 aircraft.

“United’s goal of net-zero emissions requires bold solutions, and that’s why we’ve invested in a broad portfolio of low-carbon technologies including hybrid-electric aircraft,” said Andrew Chang, managing director of United Airlines Ventures. “Once operational, we believe Heart’s ES-30 aircraft have the potential to reduce our carbon footprint, while serving regional markets across the country.”

Recently, Heart was also part of a massive order from JSX, the largest Part 135/Part 380 charter operator in the U.S. JSX committed to 50 firm ES-30 orders and 50 options, part of a spending spree for as many as 332 hybrid-electric models.

The manufacturer’s 2028 launch target mirrors the FAA’s timeline for initial advanced air mobility (AAM) air taxi services in the U.S. That year, several manufacturers are expected to fly their air taxis at the 2028 Olympic Games in Los Angeles, and operations are projected to reach scale in major cities. United is also working with air taxi manufacturer Archer Aviation, so Heart’s ES-30 won’t be the only electric aircraft in its fleet.

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Stephen Fitzpatrick—founder, CEO, and majority owner of electric vertical takeoff and landing (eVTOL) aircraft manufacturer Vertical Aerospace—on Monday committed to invest $50 million into the company, which risked running out of cash by September per its own projection.

The funding, which will support the development and planned 2026 certification of Vertical’s flagship VX4 air taxi, extends the firm’s cash runway into mid-2025, it said.

“The company has achieved significant technical progress, both in its prototype program and its certification plans in 2023, that I believe is not reflected in our share price,” Fitzpatrick said. “Given the success I have seen in the past 12 months, I am more confident than ever in our world class team, and I am delighted to further support the company with additional funding.”

Vertical’s stock (NYSE: EVTL) dipped dramatically in 2023 amid delays to its certification timeline and the crash of its Aircraft One prototype in August—so much so that the New York Stock Exchange has threatened to delist it if shares continue to trade below $1. 

The manufacturer has also struggled to attract investors, reportedly missing a target to raise funding by December. Its previous raise of $205 million closed more than two years ago. Like other air taxi manufacturers, Vertical does not yet produce revenue, so investment is required to finance its operations: Net cash used in operating activities in 2023 totaled about $95 million.

Fitzpatrick’s investment is structured in two tranches. An initial $25 million investment—priced at $10 per share of common stock—is expected to close in March. The Vertical CEO will supply a further $25 million by the end of July, but only if the company is unable to raise that amount in alternative equity funding. Whatever it is unable to scrounge up, Fitzpatrick will supplant.

Vertical said it is engaged in discussions for further funding pending the completed flight test campaign of its second VX4 prototype. The company’s first prototype was the one that tumbled 30 feet onto the runway at Cotswold Airport (EGBP) in the U.K. in August, damaging its right wing and landing gear. Vertical later said the crash resulted from a wiring issue that caused a high-voltage short circuit.

The manufacturer’s second-generation prototype, Aircraft Two, promises to address the problem. The piloted full-scale prototype is nearing completion at partner GKN Aerospace’s Global Technology Center in the U.K.

The updated model will have more features aligned with the design Vertical hopes to certify with the U.K.’s Civil Aviation Authority (CAA). It adds a new propeller, second-generation powertrain, battery packs designed to meet thermal runaway safety requirements, and refined flight control system. Aircraft Two will also feature components made by Vertical certification partners Honeywell, GKN, Hanwha, Solvey, and Leonardo.

The upcoming prototype will complete a flight test campaign and several public demonstrations this year. These will include an appearance at the Farnborough International Airshow at Farnborough Airport (EGLF) in July, as well as flights to and from London Heathrow Airport (EGLL).

The demonstrations will put Vertical in position to refine and finalize the VX4 design, the company said. After that, the aircraft will need to pass final regulatory testing before being approved for production.

“I look forward to both our demonstrations and the completion of additional funding rounds to deliver on the promise the VX4 has to offer our customers and their passengers,” said Mike Flewitt, chairman of Vertical. “We are on track to deliver a transformative U.K. developed electric aircraft to our customers across the globe.”

In March, Vertical received design organization approval (DOA) from the CAA, a necessary step in the regulator’s type certification process. Only a handful of eVTOL air taxi firms, including Volocopter and Lilium, have obtained DOA. Vertical also said after the VX4 prototype crash that its timeline for CAA certification activities remained unaffected.

Once certification is obtained, Vertical has a large backlog of customers to serve. As of October, it had received preorders for 1,500 aircraft from dozens of customers worldwide. The company estimates its order backlog comprises $5 billion in value once fully realized.

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ZeroAvia, a developer of hydrogen-electric propulsion systems, on Monday announced it completed a $116 million Series C funding round to support certification of its ZA600 engines and the scaling of its technology for larger aircraft.

The round was co-led by previously announced financiers Airbus, Barclays Sustainable Impact Capital, and NEOM Investment Fund, as well as the U.K. Infrastructure Bank (UKIB), which joined as a “cornerstone-level” investor. Bill Gates’ Breakthrough Energy Ventures, Amazon’s Climate Pledge Fund, Horizons Ventures, Alaska Airlines, and several others were named as participants.

“This is a great example of the bank supporting a first-of-a-kind technology that has real potential to have a telling impact on carbon emissions and help position the U.K. at the forefront of a developing green hydrogen ecosystem,” said Ian Brown, head of banking and investments at UKIB.

According to ZeroAvia, the bank’s financing will promote the company’s growth plans in the U.K., where it has been predicted that one-quarter of carbon emissions will come from aviation by 2050.

“ZeroAvia has grown rapidly in the U.K. as we have worked to deliver two major historic milestones in aerospace engineering, as we look to preserve the benefits of flight through clean propulsion,” said Val Miftakhov, founder and CEO of ZeroAvia. “This backing by such a preeminent investor as [UKIB] will help us deliver the first commercial zero-emission flights and help the U.K. realize substantial export potential.”

UKIB, meanwhile, has the opportunity to become a market leader in the country’s quest to eliminate aviation emissions by the 2050 timeframe. Founded in 2021, the bank’s mandate is to back emerging technologies and crowd in private investment while driving regional growth and taking on climate change. It said a successful rollout of hydrogen engines in aviation could catalyze the development of wider hydrogen infrastructure.

“Aviation and hydrogen are sectors that need significant private investment to get to net zero,” said Brown. “By providing confidence to investors, our equity has helped to crowd in the private investment needed for the continued development of this cutting-edge technology and should help stimulate the development and deployment of hydrogen technology across other hard-to-decarbonise sectors.”

ZeroAvia’s latest funding comes three years after a series A investment led by Breakthrough Energy, the Climate Pledge Fund, and other participants in November’s round netted it $21.4 million. It followed that up last year with a Series B from Barclays, Neom, International Airlines Group, and American Airlines, bringing its total raised to $150 million.

The company is starting small: Its ZA600 engine, a 600-kilowatt, hybrid-electric powertrain, will be retrofitted on regional turboprops with nine to 19 seats and a range of 300 sm (260 nm) by the end of 2025. Two years later, the ZA2000, a 2-5 megawatt model, is expected to support aircraft with 40 to 80 seats and a 700 sm (608 nm) range.

So far, ZeroAvia has secured experimental certificates to test its engines with the FAA and the U.K.’s Civil Aviation Authority (CAA) using three separate testbed aircraft.

The company has already hit several flight test milestones, most notably using a Dornier 228 equipped with one ZA600 engine and one conventional stock engine. Since completing its maiden voyage in January, the aircraft has gone through a range of tests, including flying at 5,000 feet, weathering a 23-minute endurance test, and operating in just-above-freezing temperatures.

ZeroAvia says it has a number of engineering partnerships with key aircraft OEMs, such as Cessna, Beechcraft, and de Havilland Canada. It claims to have nearly 2,000 preorders from major global airlines, including United Airlines, which in 2021 signed on as an investor and agreed to purchase up to 100 engines.

Simultaneously, the manufacturer is working on several projects. The most recent is a collaboration with Airbus to explore certification for hydrogen-powered systems. The partners also intend to examine liquid hydrogen fuel storage, fuel cell propulsion testing, and the development of hydrogen refueling infrastructure.

Another venture involves Textron, with which ZeroAvia will collaborate to install the ZA600 on a Cessna Grand Caravan turboprop. The company is also working with European airport operator AGS Airports to develop hydrogen fuel infrastructure and zero-emission routes, while a partnership with autonomous cargo aircraft developer Natilus will see it add its engines to the company’s Kona model.

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On Tuesday, flying car company Jetson Aero, manufacturer of the electric vertical takeoff and landing (eVTOL) Jetson One personal aircraft, closed a $15 million seed funding round headed by will.i.am and “pioneering angel investors from around the world,” including Jetson board director Luca Spada and senior board adviser Rikard Steiber.

The investment will support Jetson One’s eventual launch and see will.i.am, a Jetson customer, train to become one of the first flying car pilots in the world. As the Black Eyed Peas song goes: “Let’s Get It Started.”

“I’m proud to be a part of the Jetson family and support the company’s mission to democratize flight, opening the skies to all,” the artist said in a statement. “Personal aircraft ideal for short point-to-point flights will soon be a reality.”

Jetson said the seed round is a precursor to the firm’s launch of a Series A financing campaign, which will support its stated mission to democratize flight and “make everyone a pilot.” Stéphan D’haene, CEO of Jetson, said the company’s approach to the urban air mobility (UAM) market leverages Jetson One’s ability to fit into existing regulatory frameworks, akin to the FAA’s Innovate28 plan for early eVTOL operations.

“This may be the biggest opportunity in aviation since the Wright brothers took flight,” said D’haene, who previously spent a decade working in Bombardier’s recreational products division. “Today, there is an existing market that is a profitable business for a single-seat recreational aircraft. We are starting the first shipments already next year and will open our [Series] A round soon to accelerate our growth.”

Jetson One’s design was inspired by race cars, with a lightweight aluminum space frame and a Carbon-Kevlar composite body. The aircraft uses simple joystick controls and relies on a flight computer to stabilize it in the air, which the company claims allows any prospective customer to learn to fly it in a matter of minutes.

The eVTOL is powered by eight electric motors running on high discharge lithium-ion batteries. This configuration gives it a 20-minute flight time and a top speed of 63 mph (55 knots), making it best suited for short hops.

Whether or not it can be considered accessible depends on the customer. In its current form, Jetson One cannot be flown by a pilot weighing more than 210 pounds, limiting taller or heavier users. And with a $98,000 price tag, the model is more expensive than many single-seat ultralight aircraft already on the market, which can cost as little as $8,000. That figure is what around 300 Jetson customers paid down just to reserve their serial numbers.

Jetson builds its aircraft at a production and research and development facility in Arezzo, Italy. About 50 miles to the northwest, just outside Florence, the company operates a private airfield containing an industrial facility and a 2,600-foot airstrip, which it uses for daily flight testing. The airfield is also home to a customer experience center and pilot school.

By 2024, the company hopes to have expanded to the U.S. market. It’s weighing several locations for its future U.S. headquarters. Meanwhile, Tomasz Patan, Jetson co-founder and chief technology officer, is expected to conduct the company’s first U.S. test flights later this month.

“Jetson is on a mission to redefine the future of air mobility and transportation,” Patan told FLYING. “We are enabling new and exciting ways of travel, which will solve many problems, ultimately making our cities a much better place to live. I think the U.S. market is a great opportunity for Jetson.”

Boom Boom Pow

The involvement of will.i.am is arguably the most fascinating piece of Jetson’s investment.

The artist made a name for himself with the Black Eyed Peas. But between the group’s split in 2011 and reunion in 2015, he reinvented himself as a tech entrepreneur and creative consultant.

“Leveraging his early experience in the consumer electronics industry, will.i.am has continued to launch a range of his own tech-based companies focused on software and operating systems incorporating AI, natural language understanding, voice computing, creativity & productivity, customer-service apps, as well as consumer-tech products,” reads a description on the i.am Angel Foundation website. 

The foundation, launched in 2009, supports K-12 science, technology, engineering, arts, and mathematics (STEAM) education programs for more than 12,000 disadvantaged youth in Southern California. The actor and musician is also a board member of FIRST Robotics Competition, an annual international high school robotics contest.

In 2011, will.i.am was named director of creative innovation at Intel, where he advised the development of technologies such as smartphones, tablets, and laptops. He has also served as chief creative officer of 3D printing firm 3D Systems since 2014 and has worked as a futurist and creative adviser for companies such as Honeywell, General Electric, and AirAsia.

He is the owner of machine learning company Sensiya and Internet of Things (IoT) platform Wink and is also a member of several World Economic Forum committees focused on technology. The artist has even worked with NASA’s Jet Propulsion Laboratory, with which he partnered in 2012 to become the first artist to stream a song from the surface of Mars. 

Now, will.i.am will look to make history again by becoming one of the world’s first flying car pilots. And while his seed funding contribution to Jetson was a one-time investment, the Black Eyed Peas frontman has made several multimillion-dollar investments and acquisitions over the past decade. Perhaps he’ll continue to give flying cars a lift.

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Per a press release viewed by FLYING, the New York City-based company, which last week sought and received $15 million in emergency funding from the airline, will cede 95 percent ownership in exchange for a $500 million capital infusion from Delta, Knighthead Capital Management, Certares Management, and others.

The raise will save Wheels Up—plus the 11,639 active members who would have become unsecured creditors—from bankruptcy, which it said Monday it was considering as a “strategic alternative.” But the company’s survival, and potentially that of the industry, will come at the cost of equity.

“If a brand as important as Wheels Up were to fail, it would have had trickle-down impacts across private aviation,” Lance Tweden, vice president of membership for private aviation firm Jet Agency, told FLYING. “Wheels Up’s failure would have caused concern and anxiety among customers, whether they are with Wheels Up or not.”

The nonbinding agreement comprises a $400 million term loan (including $150 million from Delta) coupled to a $100 million liquidity facility from the airline. Delta and other investors will in turn receive newly issued Wheels Up Class A common stock representing the lion’s share of the company.

Ironically, Delta once owned Wheels Up’s private jet management business in full—it sold its Private Jets unit to the startup in 2020 in exchange for a 20 percent stake. The business changed hands again last week, when Wheels Up sold it to Airshare for an undisclosed fee.

“The partnership will create new opportunities for Wheels Up to drive strategic, operational, and financial improvements for its customers in the months and years ahead,” said Delta CEO Ed Bastian. “Delta’s unmatched expertise in premium travel, customer loyalty, corporate sales, operational reliability, and aircraft maintenance, combined with Certares’ and Knighthead’s experience and global reach, are expected to speed Wheels Up on its path to profitability.”

Wheels Up CFO Todd Smith will continue to serve as the firm’s interim CEO, while Delta CFO Dan Janki is replacing Wheels Up chairman Ravi Thakran.

“Over the past few months, we have been intensely focused on taking clear steps to improve our product offering and our operational delivery,” said Smith. “Those actions are already showing results, and we look forward to continuing and accelerating that progress with the support of our new partners. Our continued close work with the Delta team will enable us to further integrate our digital experiences, member benefits, and our operations.”

Similar to on-demand rideshare services such as Uber and Lyft, the private aviation business has struggled to reach profitability while burning through cash. Since filing for an initial public offering in 2021, it has consistently posted quarterly net losses. In the second quarter, that net loss widened to $160 million, a 73 percent increase year over year.

Wheels Up reported $152 million in cash on hand at the end of Q2, a fraction of the $586 million it had at the end of 2022 and even the $363 million reported in Q1. In that same period, adjusted earnings before taxes, interest, depreciation, and amortization (EBITDA) have held relatively flat.

The company’s woes could be in part because of its string of acquisitions over the past five years. Since 2019, it has added five different charter operators—Delta’s Private Jets, Mountain Aviation, Alante Air Charter, Gama Aviation Signature, and TMC Jets. But not all fly under the same certification, which limits its ability to reallocate crews across providers.

Wheels Up has also continued to add members and maintain certain policies—like its capped hourly rate—as its competitors have pulled back due to macroeconomic conditions. That’s driven more revenue for the company but at the expense of inflated operating costs.

For example, in the case of a mechanical issue, Wheels Up guarantees a replacement aircraft to the customer free of charge. That means if the charter rate rises between the time of booking and the mechanical issue, Wheels Up has to eat that cost. The issue can be exacerbated during stretches where demand is strong, as was the case with fractional jet ownership company Jet It, which folded in May.

The COVID-19 pandemic also had an impact on Wheels Up’s ability to crew flights. But on the flip side, the business likely would not be viable today had the pandemic not driven an uptick in private jet demand.

Luckily for new majority owner Delta, that volume is expected to be sticky. An eye-popping 93 percent of customers who began flying privately during the pandemic say they have continued to do so. The question now is what Delta and the other investors will do with that demand.

With the sale of its private jet management business, Wheels Up’s fleet is largely composed of King Air turboprops, Citation Xs and XLs, and Hawker 400 light business jets. Prior to the $500 million investment, the company was reportedly looking to grow its corporate business, its fastest-growing segment responsible for about one-quarter of all sales.

Currently, Wheels Up and Delta have an exclusive partnership through which customers can receive Delta benefits with a Wheels Up membership. Part of that arrangement focuses on business charter customers, which Delta could leverage to continue building out the more lucrative area of the business. However, Wheels Up’s membership program may require an overhaul to eliminate the issues that landed the company in a cash-strapped position in the first place.

“It will be interesting to see how they change the structure of the membership program going forward,” said Tweden. “There is no way it could be status quo.”

The new management team may also shed some of Wheels Up’s previous acquisitions to build stronger synergies. And Certares, which owns Internova Travel Group—ranked as the 11th largest U.S. travel agency with more than 100,000 advisers—could open new sales channels.

“Delta will likely make a lot of these changes quickly, as another challenge will be trying to maintain [Wheels Up] members that may be just now becoming aware of the precarious place the company is in,” said Tweden. “Despite this bailout, ultimately Wheels Up did fail, so how do they win that customer confidence back?”

Whether Delta is able to restore confidence in the Wheels Up brand or not, the latter’s struggles could have wide implications for private aviation as a whole. Given its size and high profile, rivals will likely look to the company as a case study of the industry’s challenges and how (or how not) to overcome them.

The post Delta, Others Invest $500M in Wheels Up Bailout appeared first on FLYING Magazine.

Archer Aviation and rival Wisk Aero, the eVTOL subsidiary of aviation giant Boeing, jointly announced an agreement to settle a bitter, yearslong trade secrets dispute on undisclosed terms. Archer will issue warrants to Wisk for up to 13.2 million shares as part of the settlement.

But the agreement is twofold. In a twist nobody saw coming, the longtime competitors will actually enter a collaboration to make Wisk the sole provider of autonomy technology for Archer. Not only that, but Boeing—which bought out Kitty Hawk’s remaining shares in Wisk to become its sole owner in June—will fund the integration of the tech on a future variant of Archer’s Midnight eVTOL.

“This collaboration puts Archer in a unique position—to be able to source autonomy technology from a leader in the industry,” the company said in a press release. “Over the long term, autonomy is seen as one of the keys to achieving scale across all AAM applications, from passenger to cargo and beyond.”

The settlement gets a monkey off Archer’s back, and Boeing’s investment could one day allow the company to shift to autonomous flight, which has been the goal since the beginning. But that’s just the tip of the iceberg.

Separately, Archer announced a $215 million investment from Stellantis, United Airlines, and ARK Investment Management, raising Archer’s valuation to a whopping $1.1 billion. The funding includes Boeing’s money as well as a $70 million acceleration from Stellantis, part of the exclusive manufacturing partnership the automaker signed with Archer in January.

And there’s even more. In its second-quarter shareholder letter, Archer revealed the FAA has greenlit Midnight for initial test flights. The approval keeps the company on track for type design flight testing in 2024 and a commercial launch the following year. Additionally, the first delivery of Midnight aircraft to an Air Force base—part of the firm’s recent $142 million AFWERX contract—is on schedule.

The trio of announcements comes just over a month before Archer and Wisk’s legal dispute was set to head to trial.

In May 2021, Wisk sued Archer for the “brazen theft” of over 50 trade secrets. It alleged that a former Wisk employee had downloaded sensitive information before departing for Archer and that Archer knowingly used Wisk intellectual property to develop Maker, the precursor to Midnight. Supporting its case were the similarities between the two designs.

Archer, predictably, disagreed. That August, it escalated the dispute with a countersuit for $1 billion in damages, claiming defamation. It referred to Wisk’s claims as an “extra-judicial smear campaign.”

Each side secured small victories in the disagreement. Wisk had a motion for injunction denied, allowing Archer to continue developing Maker. But when Archer responded by trying to have the case dismissed, Judge William Orrick III blocked it, arguing that Wisk’s allegations were plausible.

Still, Wisk’s allegations would have been difficult to prove. It needed to show not only that employees downloaded trade secrets, but also that Archer knew this when it began working on Midnight. In February 2022, federal prosecutors declined to charge Jing Xue, the former company engineer at the center of the case, dealing a blow to its efforts.

Archer and Wisk entered a second round of mediation this past March, but to no avail.

Now, however, both companies will be free to focus entirely on certifying their aircraft. That should happen for Archer before it does for Wisk, given the latter’s decision to fly autonomously from the jump.

Like rival Joby Aviation, Archer’s net loss widened significantly in Q2 as it prepares to ramp up manufacturing and flight testing. But while Joby reported about $1.2 billion in cash and short-term investments on hand, Archer has less than half that, about $407 million. That’s still a boatload of money. But its main rival—which has already begun flight testing its production prototype—appears to have a slight edge.

Archer, Joby, Wisk, and others will compete in the emerging advanced air mobility (AAM) market, flying passengers on short trips to and from airfields. Archer has agreements to fly in Chicago and New York City with United, while Joby plans to fly in New York and Los Angeles with Delta Airlines.

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The on-demand Part 135 provider, which reserves prepurchased time on airplanes from charter operators through a membership model, on Wednesday announced that it received emergency funding from Delta Air Lines, which owns one-fifth of the company. It postponed its earnings announcement, which was scheduled for Wednesday morning.

Multiple media reports claim the firm said there was “substantial doubt” about its ability to continue operations, even with the investment. Wheels Up stock (NYSE: UP) was in freefall Wednesday morning, tumbling nearly 45 percent.

“Wheels Up Experience Inc. is actively involved in discussions around strategic business partnerships for the company and [Wednesday] announced that Delta Air Lines has provided a short-term capital infusion to the company,” the company told investors in a statement.

Wheels Up also said it has entered into a nonbinding letter of intent to sell its private jet management business to private aviation company Airshare. The move sheds non-core company assets and was hinted at in May, when the company underwent a leadership shake-up amid weak financials and whispers of bankruptcy.

Airshare stands to double or even triple its owned and managed fleet if the deal goes through. Wheels Up would be left with some 150 King Airs, Citation Excels, Citation Xs, and other aircraft out of its current fleet of around 1,500, which includes partner aircraft.

The deal is expected to close in the third quarter, subject to customary approvals.

“Airshare has our same dedication to the customer and focus on extraordinary service, and we believe this will be a great destination for our managed fleet and team,” said Dave Holtz, chairman of operations at Wheels Up. “As we looked for a strong partner, Airshare’s commitment to aircraft management and overall customer experience stood out.”

What It Means

Rumors of Wheels Up’s cash flow woes first emerged Tuesday, when Bloomberg News reported the firm would seek emergency funding to keep it afloat. The hope is that shedding the private aircraft management business will help it bounce back after a disappointing few quarters.

Wheels Up became the largest Part 135 operator in the U.S. last year with more than 1,500 owned, leased, managed, and partner aircraft in service. But since going public, the company has lost money each quarter.

Those losses, combined with recent cost cutting, layoffs, and murmurs of bankruptcy, precipitated Wheels Up founder and chief executive Kenny Dichter’s May resignation. The company has yet to name his successor, with former chief financial officer Todd Smith serving as interim CEO. Dichter’s departure also marked a shift in focus toward the company’s core charter business.

In the first quarter of 2023, Wheels Up reported year-over-year revenue growth of $26 million, suggesting some rebound potential. But compared to Q1 2022, it posted a 1 percent decline in active members and a 13 percent dip in live flight legs as its net loss climbed $12 million.

It’s unclear how much the aircraft management division contributed to that figure. But Airshare sees potential in the business.

“Aircraft management has become a core source of revenue for Airshare,” said John Owen, president and CEO of Airshare. “Adding aircraft capacity and valuable owner relationships to our rapidly expanding managed fleet positions us very well for the future.”

Airshare, which also offers days-based fractional ownership, jet cards, charter services, and third-party maintenance, already provides management for the three aircraft types (Beechcraft King Air, and the Cessna Citation Excel series and Citation X) that currently comprise the bulk of Wheels Up’s fleet. Those services also extend to light and large-cabin jets, such as the Embraer Phenom 300 or the Bombardier Global 5000.

Integrating Wheels Up’s base of managed aircraft should add flexibility for Airshare customers. Doug Gollan, editor-in-chief of Private Jet Card Comparisons, reported, “Jet card and fractional customers of the Overland Park, Kansas-based company will now have broader charter options when their program aircraft type doesn’t fit their mission.”

In addition, aircraft owners currently in Wheels Up’s management program will now have increased opportunities to earn money when they aren’t flying by chartering their aircraft to Airshare’s base of customers.

“A core part of our business is aircraft management, and this is certainly going to strengthen that aspect of our business,” an Airshare spokesperson told FLYING. “But we offer a holistic suite of solutions that encompass aircraft management, fractional programs, and charter, and through this potential transaction, every customer we have across all those solutions will benefit.”

Airshare appears to be gathering momentum, having recently placed an order to double its Bombardier Challenger 3500 fleet, expanded into Florida, and extended its brand deal with Kansas City Chiefs superstar quarterback Patrick Mahomes II.

According to research by The Business Journals, the company records around $142 million in annual revenue.

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