FILE PHOTO: Midnight, an all-electric aircraft from company Archer Aviation, is seen at the Salinas Municipal Airport in Salinas, California, U.S. August 2, 2023. REUTERS/Carlos Barria/File Photo
(Reuters) -Archer Aviation said on Thursday a joint venture between Japan Airlines and Sumitomo Corp had secured the right to place orders for up to 100 of its electric air-taxis worth $500 million.
Shares of Archer Aviation rose 7% in morning trading.
If placed, the order from the joint venture, Soracle, would include pre-delivery payments based on Archer achieving certain milestones ahead of aircraft delivery, the companies said in a statement.
A handful of airlines have placed orders for air-taxis, or electric vertical take-off and landing (eVTOL) aircraft, betting on rising demand for urban travel.
However, the industry faces funding, technology, infrastructure and regulatory hurdles before such aircraft can carry passengers in cities.
Certification timelines have slipped to the second half of this decade from the first, as regulations governing air-taxis are still taking shape in the West.
German air-taxi maker Lilium, which went public in 2021 through a $3.3 billion reverse merger, said earlier this week it would file for insolvency after running into a cash crisis.
"I think it reinforces that what we are doing is very hard," Archer CEO Adam Goldstein told Reuters in an interview when asked about the impact of Lilium's insolvency on the industry.
Archer, which is backed by automaker Stellantis, is developing its air-taxi 'Midnight' that can carry four passengers and a pilot.
Archer has said the aircraft is optimized for back-to-back short-distance trips of around 20 miles, with "minimal charging time" in between.
Soracle said on Thursday it would develop a variety of flight routes that include places such as Tokyo, Osaka, Nagoya, Hokkaido, Setouchi and Okinawa. Operations will begin once certifications are received from Japanese authorities.
There is no deadline for Soracle to confirm the order, but the company has put in a "seven-digit" pre-delivery payment, Goldstein said.
Archer shares are down 47.7% this year.
(Reporting by Anshuman Tripathy in Bengaluru; Editing by Shreya Biswas)
