Q4 2021 Lilium N.V Earnings Call

March 1, 2022

For Lilium, full-year 2021 business update. This is our second conference call being publicly listed. My name's Bjorn Scheib and I'm the head of Investor Relations at Lilium.

Before we start, let me just go through a couple of housekeeping items. This is a virtual conference call and for the moment all participants are in listen-only mode.

Management will first provide an update on our business progress since our last call in November. A brief question and answer session will follow the formal presentation.

We scheduled the call for approximately 45 minutes, including Q&A time.

Including Q&A time please.

Please note that this conference call is being recorded.

A recording will be posted on Williams Investor Relations page soon after the event.

As a reminder, after yesterday's market closing, we posted on our website our shareholder letter.

Warmly invite you to read it.

Before handing over to our CFO, Geoff Richardson, let me just give you a reminder of the Safe Harbor language and other cautionary statements that would govern today's presentation and are described in more detail on the first two slides of today's presentation.

Specifically I want to remind you that all of our presentation will include forward-looking statements and any forward-looking statements or comments, we make about Lilium's future expectations beliefs plans objectives.

This financial condition assumptions, performance, protections, forecast, or other characterizations of future events or circumstances are subject to risks, uncertainties, and other factors that could cause Lilium actual results to differ materially from such statements.

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For more information on these risks, uncertainties, and other factors, please refer to the cautionary statements in our shareholder letter and the risk factors discussed in our filings with the US Securities and Exchange Commission.

All forward-looking statements that we're making during this call, are qualified by this cautionary statement.

You should not place undue reliance on forward-looking statements, which speak only as of today and which we assume no responsibility to update. With that, let me now turn it over to Geoff, our CFO. Thank you Bjorn Scheib and good morning, everyone. We appreciate you joining us this morning.

With me on the call today are our co founder and CEO, Daniel Wiegand, and our Vice President Business Sebastian Brown. We're especially delighted to have Sebastian with us today. He joined Lilium last year and brings over 20 years of aerospace experience. He'll be walking us through the exciting new developments between Lilium and Net Jets.

In 2021, we had the opportunity to share our vision of creating a radically new emission-free, high-speed, quiet, and affordable form of regional transportation. With your support, we're moving towards that goal.

Today, we want to give you an update on several key developments. These are the highlights.

First, a new market opportunity to sell our aircraft through private sales and fractional ownership.

New market opportunity to sell our aircraft through private sales and fractional ownership.

Second, a memorandum of understanding with Net Jets for the prospective sale of up to 150, Lilium jets plus related aftermarket services.

Third, introduction of a premium four-passenger club cabin configuration for the private and fractional market as part of our expanded product offering.

Fourth, implementation of modifications to our aircraft based upon the preliminary design review process that will simplify the design and reduced technical and certification risk. To start with our financials on cash spend we met our budget in 2021.

Total cash spend for the fiscal year through December 2021 was at $217 million in line with our planned budget of $221 million and reflected our budgetary discipline and focus on key engineering projects. The total cash spend for Q4, 2021 amounted to $72.7 million higher than Q3's $56.5 million.

For Q4, 2021 amounted to $72 $7 million higher than Q3's $56.5 million the anticipated increase in the latter months of 2021.

The anticipated increase in the latter months of 2021 was mainly driven by the acceleration of the development program, including the planned ramp up in engineering activities and important investments in technology and supply chain. Technology investments, mainly related to battery development, energy, and wind tunnel testing facilities.

Total cash spend excludes transaction expenses and a one-time equity investment in technology. Going forward, we expect the quarterly total cash spend to decrease in Q1 2022 due to lower investments compared to the previous quarter, partly offset by preparations for extended flight testing in Spain, and the build of our next demonstrative aircrafts Phoenix 3. Daniel will tell you more about those activities in a moment. Our liquidity at year-end 2021 is approximately $400 million.

<unk> flight testing in Spain, and the build of our next demonstrate our aircrafts Fenix three Daniel will tell you more about those activities in a moment our liquidity at year end 2021 is approximately $400 million.

Our audited full-year financial statements will be filed with the Securities Exchange Commission at the end of this month. We're closely monitoring the effects of Covid, the conflict in Europe, and general economic factors on our business and planning. These factors put pressure on our employee, material, and nonrecurring supply chain costs. Specifically tooling and engineering services as well as pressure affecting other stakeholders and regulatory agencies.

Conflict in Europe, and general economic factors on our business and planning. These factors put pressure on our employee material and nonrecurring supply chain costs, specifically tooling and engineering services as well as pressure affecting other stakeholders and regulatory agencies, we will.

We will provide a full-year financial outlook together with an update on the program at our next business update in May. With that it's over to Sebastian who will tell you about one of our key highlights.

Thank you, Geoff, and good morning, everyone, I'm Sebastian, Vice President Business at Lilium and I'm glad to be joining you all today to cover some of the business highlights starting with the fractional and private issuer segment.

We have received really strong insurance from private and business edition customers and if you believe the Lilium agenda is especially well-suited for their premium demands on the segment.

We will therefore extend our commercial offering to private individuals and business professionals through either direct sales or through a fractional ownership model that we expect to implement through our future collaboration.

Through a fractional ownership model that we expect to implement assure our future collaboration.

We believe the segment to be highly attractive to Lilium with a greater pricing flexibility and we also strongly believe they will drive early adoption of the EBIT on aircraft.

EBIT on aircraft.

Moving onto Net Jet that Geoff said earlier. We are very excited to be working together with the world's largest private jet company Net Jets.

The MOU, we signed really covers three areas of collaboration.

Firstly, we'll have the right to order up to 150 million tests, along with the corresponding support services from Lilium for its fractional aircraft ownership program in the US and in Europe.

We'll have the right to own or up to 150 million tests, along with the corresponding support services from William.

For its fractional aircraft ownership program in the U S and in Europe.

Secondly, mentioned plans to support Lilium establishing a separate private sales campaign for individuals to purchase Lilium jets.

Aircraft will be sold by Lilium directly to private individuals and those aircrafts may then be managed on behalf of the owner by niche apps RCC.

Lillian directly to private individuals and those aircraft May then be managed on behalf of the owner by niche apps RCC.

Thirdly, also worked together to have niche apps run flight operations for further network. As announced before, our lending structured trainer in Florida has to be handled by Sherman a major airport operator, and the medium investor together with the study stop development company. So really all network plan in Florida continue to make good progress.

<unk> run flight operations for further network as announced before our lending structured trainer in Florida has to be handled by Sherman.

A major airport operator, and then medium investor together with the study stop development company. So really all network plan in Florida continue to make good progress.

The proposed arrangement with Net Jet is obviously subject to the far east finalizing commercial terms and definitive documentation but for now, I'm glad to briefly show you a video of our partnership.

To briefly show you a video of our partnership.

I'm, Patrick Gallagher, I'm President of Sales Marketing and Customer Service at Net Jet and I'm thrilled to be announcing this partnership with Lilium today.

We're so excited about the partnership with Lilium on which we'll start with NetJets having the option to purchase up to 150 Lilium jet aircrafts. We'll also be working with Lilium to operate their network in Florida as well as other key regions in the US and Europe. And Lilium will be working with our sister company Quite Safety International to provide products and services. NetJets customers love our exclusive and flexible means of travel something that they can't find anywhere else in the world. We believe that they'll find the Lilium jet a beautiful addition to the NetJets overall experience because it allowed them to do more and miss less. Which we think is an important part of the overall metrics value proposition.

Customers Love, our exclusive and flexible means of travel something that they cant find anywhere else in the world. We believe that they'll find the Williams yet a beautiful addition to the Netjets overall experience because it allowed them to do more in this less which we think is an important part of the overall metrics value proposition it will allow them to.

It'll allow them to travel quieter with zero emissions. It will allow them to complete that last mile that is being so important in the overall customer journey.

With record-breaking high demand across our industry. It's critically important that NetJets continue to invest now more than ever in providing new solutions for our customers to allow them the ultimate flexibility in their travel. And sustainability is at the forefront of every decision that every conversation that we're having today. So the timing was perfect for this relationship to kick off.

Florida is one of our most heavily trafficked regions today. It also represents one of the highest concentrations of NetJets customer base and it's growing rapidly. We're also seeing new markets within Florida emerge and so the ability to connect so many of those cities by the Lilium jet we think is a fantastic opportunity and a great testing ground for applications elsewhere in the country or in the world.

We also see it as an opportunity for Lilium to tap into our well-established market, creating new sales opportunities for them as well as providing new services to our customers that we haven't been able to offer before. We're excited about the deal with NetJets screening for a bunch of reasons, but we've seen NetJets as really being the leader in the jet charter space.

We haven't been able to offer before we're excited about the deal with net jets screening for bunch of reasons, but we've seen that jets as really being the leader in the jet charter space.

For the Lilium side, we really believe we're creating the ultimate [inaudible] experience. You get in and its large cabinet space, you've got legroom, you've got lots of light. This is the sort of thing that people like and are used to today, especially the kinds of customers that NetJets has.

We couldn't be happier with the team that we've been working with at NetJets. We really see them as having a very future-minded, very pragmatic approach.

With the team that we've been working with a net jets, we really see them as having a very future minded very pragmatic approach.

We really welcome that vision in terms of seeing where the world is going in terms of sustainability in terms of electric aviation and particularly with the VTOL. We really appreciate the fact that they recognize the premium nature of the aircraft we are building and the impact it can have.

Great.

Another important and exciting update today is our aircraft cabin configuration.

As our aircraft cabin configuration.

Most of you probably you have seen the aircraft and know the aircraft from the way it looks from the outside.

Probably you have seen the aircraft and know the aircraft from the way it looks from the outside.

With operatory <unk> vector thrust technology, you can actually see clearly in this picture.

However, our cabin is really impressive as well. It is designed in a modular and very flexible way. It's long, wide, tall, has lots of lights. I think smartly designed to accommodate various configurations. This will ultimately allow us to pursue the various segments that we discussed earlier.

Sure.

So starting with our six-passenger shuttle cabin configuration, which we have announced before. High-capacity, has lots of leg room space. This is really meant for commercial aviation, shuttle services, and higher frequency routes.

Now introducing the new four-passenger plus cabin integration, which is really well suited again to private and business aviation segment. Offers the highest standards for space and comfort as premium seating and whereby the customer experience will be very special.

Lastly, we remain excited for the potential of the slot cabin to be turned into a cargo space. Especially in the highest logistics business and in this case would not have any windows, we intend to support either bulk loading all containers as you can see in this picture.

We remain excited for the potential of the slot Kevin can be turned into ecommerce space, especially in the highest logistics business and in this case would not have any windows, we intend to support either bulk loading all containers as you can see in this picture.

I'll now hand over to our founder and CEO Daniel Wiegand to talk about a leading jet program development. Thank you.

Thank you Sebastian. Good morning, or good afternoon, everyone.

Im excited about the progress we've made not only on the commercial side, but also most certainly with the aircraft and with professionalizing our aerospace organization.

We opened a preliminary design review in the fourth quarter last year.

And this is an important milestone in traditional aerospace product developments but it is similarly important to us.

It is similarly importance to us.

We are conducting the review as well as its closure with highly experienced independent advisors who have led some of the industry's most successful programs.

Following our closure of the PDR, we expect to release the design data to our supply chain starting in the second quarter of 2022.

As described in our November block the PDR consists of a series of technical reviews to assess whether the aircraft's architecture will meet airworthiness requirements deliver the performance requirements and be produced at the appropriate quality levels.

Completion of the PDR has turned the green light for engineering to finalize detailed designs and for procurement to ramp up supplier contracting.

Contracting.

The PDR process also helps us refine and optimize the aircraft design as well as identify and mitigate program and certification risks.

We continue to assess and as a result of the PDR process to date, we are implementing certain changes that simplify the design and reduced technical and certification risk for example through its 90 larger and more powerful engine design, we will reduce the number of engines from 36 to 30 and this will firstly reduce part count and weight and system complexity.

And this will firstly reduce part count and weight and system complexity.

It will secondly, improve aerodynamic balance between the main wings in the front wings. It will certainly create potential for lower material and maintenance cost and lastly improve the design flexibility of the aircraft in the future.

We're also introducing, as Sebastian just mentioned, a flexible cabin architecture, which enables us to offer a range of different configurations over time, including a four-passenger club configuration and the six passengers shadow campaign as well as the future cargo cabin.

The cabin configurations, we launched at entry into service will be determined by final customer demand, regulatory requirements, and the performance characteristics of the certified aircraft.

We continue to evaluate our overall program and launch timeline according to the PDR, and will provide an update in our next business update call in May.

Now let me tell you, where we are with the flight testing of our demonstrator aircraft.

Following the highly successful scientists campaign in southern Germany last year, our fifth-generation technology demonstrates our Phoenix 2 is now at the Atlas Flight Test Center in [inaudible] in Spain for high-speed flight testing.

In Spain for high speed flight testing.

The Anti-Slide Test center provides optimal infrastructure, enabling the aircraft to fly over a large and unpopulated area.

And this also offers excellent weather conditions in Spain.

We expect our final permits to fly from the Spanish authorities to be issued shortly and following the wind tunnel tests we've done recently to validate our aerodynamic models, we are expecting an exciting flight test campaign in Spain, which we will expand the flight envelope to full transition into wind bond side and two high-speed flight testing.

Speed flight testing.

Work remains on track for an additional demonstrator aircraft Phoenix III, which is scheduled to go to Spain for first flight this summer.

Having two test aircraft flying will further accelerate our flight testing campaign this year.

I take a lot of pride in the way our aerospace aircraft is progressing but also in our progress as an aerospace company.

We want to build the leading electric aviation company of the 21st century, and therefore in our recruitment we are focusing on high-quality talent and leadership and we have recently made some important appointments in key roles Carrie <unk> joined us from Egon Zehnder as Chief People Officer.

His experience in blending new technology with industry mindset will be invaluable to Lilium.

Sebastian Born whom you've had a chance to listen to just now joined us as Vice President Business.

John [inaudible]with 18 years executive experience from Pratt and Whitney joined as Head of Propulsion.

Oliviana, a former principal engineer at Gulfstream joined Lilium as Chief Engineer Flight Mechanics, and Andy Stranton joined us as Chief Test Pilot currently running the campaign in Spain.

Andy served in the Royal Air Force and was Chief Test Pilot at Leonardo Helicopters.

In the weeks and months ahead, we look forward to updating you further on the aircraft development, on the sourcing, on the flight testing, the commercial activities, as well as the finances. Finally, I wish to extend our sincere thanks to all our stakeholders. We are aware that the financial markets have been turbulent and technology stock specifically has been challenged.

Further on the aircraft development on the sourcing on the flight testing the commercial activities as well as the finances.

Finally, I wish to extend our sincere thanks to all our stakeholders. We are aware that the financial markets have been turbulent and technology stock specifically has been challenged.

Nevertheless, we are confident that we have a winning family of products and that we have the team to deliver a certified aircraft.

We believe the rewards will be compelling for society, for the planet, and our shareholders. Now let me hand you over again to Geoff and he will open the questions for you.

Thank you Daniel. So now we have some time to take your questions. Please introduce yourself with your name and company. As a reminder, to ask a question, during this session, please press star one on your telephone.

If youre watching the webcast in Parallel, please mute the sound of your laptop while you're asking your question. We will now begin with the Q&A session.

The first question from Alex Potter from Piper Sandler.

Please go ahead.

Great, perfect. Thanks.

Yes, this is Alex Potter, Piper Sandler.

Okay. So obviously that NetJets announcement, very interesting. It sounds, I just wanted to clarify, it sounds like this is primarily focused on the United States. So that was my initial impression is that it's mostly US. But in the video, you mentioned Europe a couple of times as well. I know NetJets has a presence in Europe. So to what extent is Is the NetJets partnership? Is it global in nature? Is it US and Europe?

Primarily focused on the United States. So that was my my initial impression is that it's mostly U S. But in the video you mentioned Europe , a couple of times as well I know net jets has a presence in Europe , so to what extent is.

Is the net jet partnership.

<unk> in nature is it U S and Europe .

Any any comment on the regional focus of that relationship would be helpful.

Morning, Alex. Great question, Seb you want to take that one, please?

Alex Great question, Seth you want to take that one please.

Sure, Yes, definitely and thank you for the question. And the opportunity to clarify. It is a global partnership. We tend to look at their traction on the market and in a global way.

<unk> offers easy to clarify it is a global partnership.

We tend to look at their traction on the market.

And in a global way and obviously.

And obviously as Pat mentioned in the video the US market will be a good test for us to see how far we can go. But it's meant to be global and we are confident it will drive us to do so.

But it's meant to be global and we are confident it will drive us to do so.

Okay, perfect. And then, I guess, another follow up on that...

I guess another follow up on that.

My understanding, at least, if you look at their current fleets, most of the jets that they have are 8, 10, 12 passenger configuration. Most of them are clearly going to be longer than the 100 or so mile route that the Lilium jet will be flying. So to what extent does this incorporating that Lilium jet into their business model require them to change their service offering, change their pricing?

Most of the jets that they have are 810 12.

Passenger configuration, most of them are clearly going to be longer than the 100 ourselves mile Route.

That the Williams, yet will be flying so to what extent does this.

Correlating that William jet into their business model require them to change their service offering changed their pricing.

It's obviously going to be a different product from what they've historically offered.

I'm interested in how they are approaching that.

Great. Thank you again. I cannot speak for that just obviously today. What I can tell you though is that a very high number of flights of small jets actually offline below three hundred kilometers. Something like 200 miles.

A very high number of flights of small checks actually offline below three.

300 cumin herself.

Something like 200 miles.

And therefore, there is a need and demand for the first mile and last mile because some of those aircraft cannot land in all of the places in the world. So we validated the demand and we feel confident it will be a great add to NetJets offering and the way, they're going to do it is for them to talk about.

<unk> offering and the way, they're going to do it is for them to talk about.

Okay, perfect.

Hopefully, [inaudible] will answer the question.

Yes, yes, that's good.

And then, maybe a couple of questions on the technical side. You mentioned that a fair amount of the engineering spend has been focused on batteries. Presumably that's in partnership with custom sales.

Maybe a couple of questions on the on the technical side, you mentioned that a fair amount of the engineering spend has been focused on batteries, presumably that's in partnership with customers and sell.

I'd be interested in hearing about any progress there, I guess, on battery chemistry changes or any other key battery performance metrics.

On battery chemistry changes or any other key battery performance metrics.

Not sure if battery related developments were involved in the decision to move down to 30 engines from 36 or I guess any other details you'd be willing to share on either batteries or powertrain would be interesting.

Thanks, Alex I'll let Daniel take this I would say that as part of our May one. The team is going to give a larger battery update as part of our next call, but I'll let Daniel answer the specific question.

The team is going to give a larger battery update as part of our next call, but all our Daniel answer the specific question.

Thanks, Alex. That's a great question.

Great question.

So the changes from 36 to 30 engines were not related to the battery On the battery side, as you know, we have started selecting and testing the silicon anodes better results in 2020. Since then we have made a big progress in testing those cells over two years. We understand their performance very well. We understand the power very well, in their lifetime.

As you know we have started selecting and testing the silicon anodes better results in 2020. Since then we have made a big progress in testing those cells over two years, we understand their performance very well, we understand the power very well in their lifetime.

We are now focused with our partner custom cells on the industrialization of these cells, as well as, the safety certification of these cells. On the industrialization, we have made great progress with custom cells. In fact, very soon we can start production of the first cells on the serial manufacturing line. This is the same line that we would use for the serial manufacturing of the cells. It's the same tools and then fully process control and quality and manage line. A huge step for the industrialization of our batteries and the prerequisite for certifying these cells so we are fully on schedule with respect to the batteries and theres no changes in chemistry or anything else.

The safety certification of yourselves on the industrialization, we have made great progress with customer cells. In fact, very soon we can start production of the first sales on the serial manufacturing nine. This is the same line that we would use for the serial manufacturing of the cells. It's the same tools and then fully.

<unk> controls and quality and manage nine a huge step forward.

For the industrialization of our batteries and the prerequisite for certifying these towns and so we are fully on schedule with respect to the batteries and Theres no changes on chemistry or anything else.

Very cool, okay.

So maybe last question and then I'll turn it over.

You mentioned in the letter obviously, a lot of interesting new employees added which is exciting and if you could maybe comment on head count. I think, in a previous call, you mentioned you are working towards 1000 employees or thereabouts.

Is that roughly where you are at now and are there any key job functions that you still need to address?

The company's around 800 FTEs. We also have a bit over 100 contractors. So we look at the mix between contractors and FTE. So I think it's somewhere, if you add those two together, it's between 90-1000. On an absolute basis, I think that it's not a numbers game for us as evidenced by I think the quality of the people we showed on the page and then previous quarters.

Have a bit over 100 contractors. So we look at the mix between contractors.

So we look at the mix between contractors.

And to FTE. So I think it's somewhere if you add those two together it's between 901000 on an absolute basis.

I think that it's not a numbers game for us as evidenced by I think the quality of the people. We showed on the page and then previous quarters.

All of these developments come down to the quality of the team. So we're always looking at adding bench strength I would say, and I'll ask Dan to confirm this. I think the top of engineering is largely set, but we're always looking to add great talent. Particularly, filling out the management ranks, but Daniel you can give your thoughts on engineering.

Developments come down to the quality of the team. So we're always looking at adding bench strength I would say and I'll ask data confirm this I think the top of engineering is largely SaaS, but.

But we're always looking to add great talent, particularly.

Filling out the management ranks, but Daniel you give your thoughts on engineering.

Yes.

I mean, as the CEO, talent is always at the top of my mind and for this year talent is not about significant growth. We may see a 10% growth also in the organization, but as Geoff said, we're continuously adding top talent, especially in the middle ranks of engineering and this is what we're focused on this year.

Engineering and this is what we're focused on this year.

Great perfect. Thanks, very much guys.

Thanks, Alex.

Thank you for your question. The next question from Colin Rusch from Oppenheimer. Please go ahead. Your line is open.

Thanks, so much guys.

You know, I'd love to get a little bit more detail on what's changing with the engines. Specifically, if you are looking at higher voltages on how that operates the RPM for those engines. And then locations for the next generation design by having a little bit larger engines does that simplifies the process of that larger aircraft?

Specifically if you are.

Looking at higher voltages on how that operates.

RPM.

For those engines and then.

Locations for the next generation design by having a little bit larger Amgen does that simplifies the process.

Of that.

Larger aircraft.

I can take that.

Yes, I can take it.

So.

So, the switch from 36 to 30 engines as really an incremental change.

There is no change in the engine design, no change in the technology, no change in the engine etc. So what we're doing is basically slightly scaling up the geometry of the engine, but with the same design and parts, the same propellants speeds, the same acoustic technologies. So the motivation here is really as I have laid out to reduce the complexity. Make a simpler aircrafts by reducing parts counts and this is also obviously lowering the maintenance cost and the operating costs of the airplane.

But with the same design and thoughts the same propellants. It feeds the same acoustic technologies. So the motivation here is really as I have laid out to reduce the complexity make a simpler aircrafts by reducing pumps counts and this is also obviously lowering the maintenance cost and the operating costs.

It doesn't really change something on the certification side. It's the same means of compliance and the same requirements that we have fulfilling. So we have been thinking about a 30 engine configuration over the last two years, but we really now just felt confident in that process to say, we now have all the data we need. We've had three wind tunnel tests campaigns in the last 12 months to confidently make that step and make use of the benefits.

The same requirements that we have.

Fulfilling so we have been thinking about a 30 engine configuration over the last two years, but we really now just felt confident in that process to say, we now have all the data we need we've had three wind tunnel tests campaigns in the last 12 months too.

Confidence.

That step and make use of the benefits.

Okay. That's helpful and then I'm curious about what's going on in the business development side. Obviously, you've been able to make a couple of meaningful announcements in the last couple of quarters.

But as you look across the field of potential partners and interest level and maturity of those conversations can you give us an update on where you're at with incremental partners, particularly around some of the frame applications that you kind of talked about and supplement from a passenger down the line.

You talked about and supplement comes from a passenger Astro down the line.

Sure, Geoff you want to take this? Yes, I'd like to take that question.

Yes.

Interesting journey, of course, and a lot of progress has been made, I have to say, I've joined recently but I've been in the industry for long.

Joining me since Ive been in the industry for more.

I think if our clients realize that this is real they will change dramatically the way of flying. We're talking to some cities and countries whereby the implementation of our digital will have a positive impact in terms of mobility. Tremendous impact.

To sum.

Cities and countries.

The implementation of our Ito will.

<unk> have a positive impact.

Terms of mobility.

Tremendous impact.

We're going through the journey of building the aircrafts and people are following what we're doing but overall I would say that the maturity of discussions are increasing and our partners and potential customers we're talking to are very serious about it.

Potential customers, we're talking to are very serious about it.

Permitting to resources, understanding what it takes to operate such an aircraft and overall I think we're getting closer and closer to being able to look at that with a much more global foot print

We're getting closer and closer to being able to look at that with a much more global.

Sure.

So do you want to comment on delivery I think that was Colin's main point.

Pain points.

So again.

You want to comment on delivery? I think Collin had asked what are we seeing on the delivery side.

Okay.

Delivery side of on the aircraft side, you're talking about sorry, and the like.

Cargo. I think you said what are your thoughts around.

Sorry, yes. So this one is a more complex. Every single car company has slightly different requirements in regards to why they want to do it.

In a more complex every single car company has slightly different requirements in regards to why they want to do it.

But overall still very positive. A lot pf discussions with those companies and we'll see real leads, but obviously overall, a big engagement. And trying to figure out some of the details of their operation. So quite engaged and we'll see in the near future.

A lot of.

Discussions with those companies and we will see relief.

But obviously overall, a big engagement. And trying to figure out some of the details of their operation. So quite engaged and we'll see in the near future.

Great. Thanks, so much guys.

Thanks, Kyle.

Thank you for your question. The next question from Adam <unk> from Longbow Research. Please go ahead.

Morning, Adam [inaudible] from Longspur research. A couple of questions, If I may. Just going back to the just the answer you gave just on motor engine technology.

Just wondering. I think I'm right in saying that the permanent magnet synchronous motor that you're using, have you ruled out other motor technologies? We obviously know, I think, that you've got the same technology, have you ruled out things are actual pro-moters in the longer term?

I think I'm right in saying that.

Permanent magnet synchronous motor that Youre using have you ruled that out to all their motion technologies. We obviously now I think that you've got the same technology have you ruled out things are actual promoters in the longer term.

Okay.

And then on the PDR, generally, I wonder have you made any changes on the back of what we've seen in terms of supply chain disruption sort of across the world? Generally, do you think maybe you are in a more robust place for potential disruption going forward?

On the back of what we've seen in terms of supply chain disruption sort of across across the world. Generally do you think maybe you are in a more robust place for potential disruption going forward.

And then just a couple of quick questions on the MOU. Is there any time a clause on the MOU or is it a sort of evergreen one?

And just like clarification on an answer to an earlier question. The actual fractional ownership model which NetJets has, will that pretty much be the same model that [inaudible] they'll offer on the NetJets aircraft?

Just like clarification on an answer generic your question the actual fractional ownership model, which net jets has will pretty much be the same model for <unk>.

They are opening on a pole couldn't be the same one little buffer on the on the net jet aircraft.

Thanks.

Okay. That's great question. Geoff, I can take the first one, and then maybe you can take the second.

On the motor, yes, I can confirm it's a stand-up, permanent, magnet electric machine, which of course, we have looked into different designs like [inaudible] and other types of machines.

I can confirm it's a spend the permanent magnet electric machine, which of course, we have looked into different designs like X sales Max machines and other types of machines.

There's two reasons why we are, in the end, took a relatively stand up geometry for the motor.

A related <unk> spend that geometry for the motor.

One is cost and the supply chain again. We have the highest competition in the market for these types of motors and the second reason is that it fits very well into the cooling concept in geometry of our engine. It's an extremely powerful or power-dense motor still because it runs at relatively high ARPA.

And we're using very sophisticated geometries and designs, but in a nutshell, it's a stand-up permanent magnet motor.

And King.

Seb, you wanna take the rest? Yeah.

For NetJets, obviously I can't communicate the term of our agreement.

However, what's more important is we are currently working hard together to really make it happen and we have, as we said earlier, several streams. Number one is how does our aircraft fit into their functional model and it seems like it's a great training.

How that would how does our aircraft fit into their functional model and it seems like it's a great training.

We are really excited to work together with a better understanding that somebody mentioned earlier on a number of passengers. I can't comment on this confidential data, but our profitability and capacity actually fits very well with most of their travels.

Can't comment on theirs are confidential data, but.

Our profitability and capacity actually fits very well with most of that travels.

Anyway, back to fractional limit to each private sales. I think it's really important as well it wasn't really serving private individuals.

Sales positions and really important as well it wasn't really serving private individuals.

The aircraft will have to be managed by talking to the [inaudible] operators or 145 maintenance, but this is a second big data of how we're going to be selling two products in these individuals. And lastly, we see that as a great opportunity as well to make offshore work, even more real with an operator looking at slight upside in our business there. Along with, like you said earlier, the partnership on the infrastructure side. So really complementary, I would say, work streams. And we're working hard together with those teams right now to make it a success. And Adam for me, what's really important about this deal is the concept that if you look at their customer base, their earlier adopters and they have an ability to pay.

This is a second big data or how we're going to be selling to progress.

In these individuals and lastly, we see that as.

As a great opportunity as well to you to make offshore work, even more real with.

Sure.

Greater looking at slight upside in our business there along with like you said earlier the partnership on the infrastructure side, so really complementary.

I would say work streams.

And we're working hard together with those teams right now to make it a success. And Adam for me, what's really important about this deal is the concept that if you look at their customer base their earlier adopters and they have an ability to pay.

And Adam for me, what's really important about this deal is the concept that if you look at their customer base their earlier adopters and they have an ability to pay.

So you combine those two things there's a lot a lot of ways to work together and deploy those. But if you take it up a level, and look at how industries typically roll out their customer base, who are the early adopters, is quite important and we've aligned that we agree that their customer base are likely early adopters for this type of product.

And look at how industry is typically roll out their customer base.

Who are the early adopters is quite important and we've aligned that we agree that their customer base are likely early adopters for this type of product.

Sure.

That's really helpful. Just another question, just on the PDR and the impact on and influence of supply chain issues. And particularly supply chain potential disruption.

Other question, just on the PDR and impact on impactful and influence of <unk>.

Supply chain issues, and particularly supply chain chain potential disruption.

I think that we're very aware of the disruptions. I wouldn't necessarily say that the outcome of PBR is to change designs based on current supply chain, but the team has been very focused since last year and aware of it. So as we go through the PBR process, any limitations or kind of difficulties in the supply chain are getting factored into the process. I don't think design changes are happening to address the short-term market imbalance. But, as we go forward, whether it's through volumes, through contracting, through NRCs, there's a huge amount of supply chain activity. This is one of the topics we'll be in a position to give you a deeper dive.

We're very aware of the disruptions I don't.

I wouldn't necessarily say that the outcome of PBR is to change designs based on current supply chain, but the team has been very focused.

Since last year and aware of it so as we go through the PBR process any limitations or kind of difficulties in the supply chain or getting factored into the process. I don't think design changes are happening to address the short term. Market imbalance, but as we go forward.

Market imbalance, but as we go forward.

Whether it's.

Through volumes through contracting through and Rcs.

There's a huge amount of supply chain activity. This is one of the topics we'll be in a position to give you a deeper dive we'd like.

Do that on the May call, because I think we're seeing more visibility, but I think the team has been working very hard on this and I think in the last call we had updated that we've added a new Head of Supply Chain, who was very senior from Airbus BMW. So we've also spent a lot of time. Adding talent to this team, particularly because of the current situation in the market.

Working very hard on this and I think in the last call. We had updated that we've added a new head of supply chain, who was very senior from Airbus BMW. So we've also spent a lot of time.

Adding talent to this team, particularly because of the.

Current situation in the market.

Yes.

That's great. That's really helpful. Thank you very much.

Thanks, Adam.

Thank you for your question. The last question is from David <unk> from Barclays.

Hey, Thanks for taking my question. Maybe for Daniel or Sebastian.

Maybe for Daniel or Sebastian.

You gave some criteria that you would be using to address the type of configuration you would go on to the launch market. I know you'll give more color on this in May but can you maybe give a little more detail on the criteria you'll be using and how you are evaluating that.

And how you are evaluating that.

And specifically, whether you're thinking right now maybe launching one configuration before the other than the 2021 for launch time.

Now maybe launching one configuration before the other than the 2020 for lunchtime.

Daniel, want to take it or do you want to take it.

I can take it. I can start and maybe you can add to it.

So from the technical perspective, this is really a flexible cabin. So we're deliberately designing the aircraft in this part of the PBR process outcomes here, we're really designing the aircraft to be able to accommodate all different types of cabin configuration. So, in the end, it really boils down to the demands of the customers in the different segments.

A flexible cabin so we're deliberately designing the aircraft in this.

Part of the PBR process outcomes here, we're really designing the aircraft to be able to accommodate.

All different types of cabin configuration. So in the end it really boils down to the demands of the customers in the different segments, we think that.

We think that as early adopters on the fractional ownership side especially, this is a great market and business model to start with. But I would maybe hand over to you and sit back down to say a couple of questions on the demand side.

On the fractional ownership side, especially this is this is a great market and business model.

To start with but I would maybe handover to use it back down to say a couple of questions on the demand side.

Yes, well actually on the demand. We've seen obviously both. People that cares more about higher capacity and high-frequency routes and we've seen others more into replacing helicopters, more premium.

We've seen obviously both.

People Thats cares more about higher capacity and.

High frequency routes and we've seen others more into replacing helicopters more premium.

So if youre asking me, what we're going to be starting deliveries of aircraft I can't give you that answer yet.

But it will probably be a combination of both configuration as Daniel said, we have this smart design in the cabin and we're not afraid of being able to deliver on those aircraft in either order.

I'm going to order.

David This is Victor.

Thank you, Rick.

That does. It was specific to the configuration. Is it envisioned that the configurations will be roughly similar payload size for the four and the six. For the pallet size? Payload.

Is it envisioned the configurations will be roughly similar payload size for the for the FX. Panel size. Thank you Sir.

Panel size.

Thank you Sir.

How much weight you would...

So, I've been here.

The configurations can have different payload capabilities so they would not all have the same payload necessarily depending on what you are adding in the cabin and yes, what configuration in the cabin.

So they would not all have the same pay those necessarily depending on what you are adding in the campaign.

What.

Yes, what configuration.

Who's in the cabin.

Okay, great.

I got one follow up. A competitor announcer launch and certification process in the Brazil market. You already have an agreement in that market.

A competitor. Announcer launch.

Announcer launch.

And.

Certification process in the Brazil market.

You already have.

Agreement in that market opportunity.

Can you maybe just discuss how your certification process is expected to develop there? Your first part of the market and whether it can support multiple entrance? Yes, Daniel, you want the second and I'll start.

Your first part of the market and whether it can.

Support multiple Andrew.

Yes, Danielle the second I'll.

I'll start.

Yes, as you know we're really in the [inaudible] territory, and we will have the FAA certification as well and therefore, we're going to be able to go outside quickly to any countries in the world.

We're really in the.

Yes.

Territory, and we will have the FAA certification as well and therefore, we're going to be able to go outside quickly to any countries in the world.

Before accepting asset type certification. So, we obviously engaged with our partner Azule and with the authorities over there and we'll see how that will offset I think Brazil has a huge market and probably there is enough room for two, right?

We'll see how that will offset I think Brazil has a huge market and probably there is enough room for two right. So.

All I can tell you is it's going well. We're engaged, very deeply engaged, and we see that market being quiet interesting for us.

Quiet.

Interesting for us.

Thanks, Sebastian. Thanks, Ana.

I think we have two minutes.

Yes.

We received a number of questions from our retail engagement platform.

We saw a lot of engagement and they voted up. I think we have time for probably two quick questions.

Daniel why don't we give you, "When can we expect an update on the progress of key flight tests, such as Max Speed and Max Range Validation Tests?

What can we expect an update on the progress of key flight tests, such as Max and Max range validation test.

So on the flight testing side, as I mentioned before, we have just freshly brought the demonstrator to Spain. And in the Spanish flight test area, we have the big advantage that it's an uninhabited environment, where we can do longer flights. We can do faster flights. We can, in the future, if necessary, fly beyond visual line of sight.

We have just freshly broad the demonstrator to Spain and.

In the Spanish flight test area, we have the big advantage that it's an uninhabited environment, where we can do longer clients. We can do fastest nights, we can in the future if necessary apply beyond visual line of sight.

So we're starting this flight test campaign now and we have as a target for this campaign and the next steps to do the full-transition to flight and then continue into high-speed flying and then in summer we will add another aircraft to this test campaign so their going to have a higher pace in testing of our technologies and our airplanes. And we will obviously keep you updated on any progress in the flight test campaign, and I think it will be very exciting. For me always the most exciting thing to see the air craft flying.

Do the full transition to flight and then continue into highest flying and then in summer we will add another aircraft to this test campaigns or theyre going to have a higher pace.

in testing of our technologies and our app things and we will obviously keep you updated

Any progress in the flight test campaign, and I think it will be very exciting for me always the most exciting thing to CBI craft line.

Okay, thanks, Daniel. And I think with that we're at time. We will try to leave more time in the future to address the highest voted retail questions, but I think with that we come to the end of our Fiscal Year 2021 Business Update. Thank everyone for joining us and we look forward to speaking again soon cheers.

We're at time, we will try to leave more time in the future.

To address the <unk>.

I asked vote in retail questions, but I think with that we come to the end of our fiscal year 2021 business update.

Thank everyone for joining us and we look forward to speaking again soon cheers.

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