Q2 2023 Eve Holding Inc Earnings Call
Greetings and welcome to the Eve Air Mobility second quarter 2023 earnings call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Mr. Lucio Aldworth director of Investor Relations. Thank.
Thank you Mr. Aldous you may begin.
Thank you operator, good morning, everyone. This is looser Waldorf the director of Investor Relations at <unk> and I wanted to welcome everyone to our second quarter 2023 or each conference call I have you here with my co CEO, Jerry Tomorrow, and enduring a very fine as well as our CFO Eduardo Colton.
After their initial remarks, we'll go to open the call for questions. He's got them back with a few slides and additional information that's available in our website at our yard dog eat air mobility that call. So please feel free to download and follow through the presentation.
Let me first say that this presentation includes forward looking statements or statements about events or circumstances that have not yet occurred.
We base these statements largely on our current expectations and projections about future events and financial trends.
Our business and our future financial performance these statements.
Are subject to risks uncertainties assumptions, including among other things general economic political and business conditions, both in Brazil and in our markets. The words believes may will estimates.
Continues anticipates intends expects and similar words are intended to identify forward looking statements and we undertake no obligation to update publicly or revise any statement because of new information future events or other factors.
In light of these risks and certainties and uncertainties.
Future events and circumstances discussed in this presentation may not occur.
Actual results could differ substantially from those anticipated in our forward looking statements with that I'll now turn the presentation over to Gerry Gerry.
Thanks, Felicia and good morning, and thank you all for joining the call today.
Over the past few months, we've continued to make meaningful progress on our EV tall development and the other aspects of our overall business plan.
As announced at the Paris Air show.
We progressed to the point in our optimization work that we have now defined what we consider to be the final aircraft configuration, which is depicted here.
And I'll talk a little bit more about the details of that configuration on the next slide.
We've reached this point in our development program by applying the findings most recently from the wind tunnel testing.
And a whole suite of test grades, which provide actual performance data to validate our simulations and predictive modeling.
Time will talk a little bit more about these tools that we've used in our development process a little later.
Importantly.
We have now identified the suppliers as well for several long lead aircrafts sub systems.
They include the electric motors, the energy and storage management systems and the propellers.
We plan to select and announce the providers for avionics actuators and flight control systems in the next few weeks and then we will move on to the last time critical elements through the balance of the year.
We also had some late breaking news, which we'd like to talk about and that is that the FAA has agreed.
To recognize the primary certification and the certificate process through a neck, which will allow us to do the dual validation, which is so critical to our development program.
We still expect that our certification basis will be approved by ANAC in this calendar year.
I'd now like to talk a little bit more about the final design configuration as shown here on slide three.
It includes a new one panache fixed to the center balloons that are then attached to the wings, providing a more robust physical structure.
It also includes <unk>.
One pusher.
With dual motors are redundant motors, and eight lifters, which benefits both weight and safety of the vehicle.
The DNA of our simple lift and cruise design remains unchanged.
It is designed for efficient and safe travel and targeting 99% of the urban missions.
The cabin will continue.
To house for up to four passengers.
Pilot, we continue to make refinements in the cabin structure based on the Mark up which we unveiled two investors earlier this year and have taken on a worldwide tour to get customer and user feedback based on that feedback we've made various enhancements, including the baggage compartment, which we believe continues to be the.
Best in class and is particularly adapted for airport downtown Shuttle services.
With our main suppliers known and specifications for those components to fine. We can now start to assemble parts for our full scale production prototype.
We will begin assembly of that prototype by the end of the year and in fact have already start to cut components and then we will begin the test campaign sometime next year.
Now moving to the next slide we announced at the Paris Air show the selection of several of our main suppliers E for the energy management and engine energy storage systems, Duke for the propellers for both the push her and the lift there.
And nowadays aerospace, which is a JV between night at Corporation and Embraer for the electric Motors, which will be bespoke for both the lifters.
And the pusher.
As you May recall selecting suppliers was one of the main milestones we established for 2023, and we continue to be on track with that milestone.
And as I mentioned earlier, our achieving this will allow us to start building. Our first prototype and recently, we've received totaling and began cutting material for the wings.
And you'll see that on the next slide.
Last and certainly not least I want to mention the announcement, we made last week regarding Johan Board as joining eve as our CEO effective September 1st Johan.
Johan currently serves as the president and CEO of Embraer services and support having built that organization from the ground up into a 1.3 billion dollar global enterprise.
Which is one of Embraer is most successful businesses. So Johan is a well known quantity and a perfect fit for this role.
The vision is to not only design and develop a groundbreaking aviation product as well as a global support network.
It is also to develop a sustainable urban air mobility ecosystem.
That will literally transform urban transportation on a global basis.
Achieving these ambitions will require an incredible amount of talent and innovation.
Having accomplished.
Initial goals of establishing <unk> as a public enterprise and bringing that enterprise into practice.
We are now going to focus on the immense challenge in the next phase.
And have added a very talented and seasoned executive that complement the existing team.
In addition, we'll also allow stein.
Main with Eve as our Chief strategy Officer to increase the leadership and focus on the diverse elements of operations infrastructure and regulation that are absolutely essential if we're going to make you a M a reality.
I will remain with the team through the end of October to support Johanns transition.
And in parallel are Ken Ricky has announced his intention to resign from the board in October and it is intended that I would replace them at that time.
I would note.
This change in leadership has really taken place now versus later in the year. So we can sure a seamless transition of responsibilities and there is absolutely no rush moving forward.
Now I'd like to ask Stein to provide you more details on other important developments in the last quarter.
Thanks Jerry.
Excited to announce that you have just celebrated the completion of the first carbon fiber eliminate material for our first D VTOL prototype.
As we plan to start the same way now in the second half update here.
We continue to make important advancements in our development process. We continue to work in our dedicated rigs to test different modern propeller considerations under different conditions.
Also use it to stress test and measure vibration in the entire system.
<unk> profile and all of their metrics.
We also built and you are running a truck mountain rig that is designed to travel down the runway and stimulate desktop vibration and the aerodynamic drag of the waters under real life conditions and it is use it to validate and refine our modeling of water performance.
And lastly, we're also employing a series of additional rigs up for batteries and modern as well as several management tasks that permit extensive independent testing of discrete subsystems.
Again. This is part of our testing protocol in which you test different companies separately and allowing for a week and a relatively an expensive development process.
We can easily swap parks and change component configurations, Holmes, who find optimal solution. These would be not possible had you already committed to a prototype flying.
Now onto slide six.
Perhaps as importantly it.
Selected a few weeks ago, where our initial factual been Brazil.
We had announced that last year after extensive studies with Porsche consulting to define and optimize our newest sterilization strategy that our initial facilities being Brazil and now we define the sights and thought about that in the state of some Paolo.
We are doing to expand one of our units and the image shows their red existing building.
The site is strategically important with easy access to major highways and the railway. It's also close to aim barriers and Ive had quarters in social Sab's campus and our development teams and all our human resources.
We believe these will facilitate the development and sustainability of new production process in reinforced our agility and competitiveness on top of that this will be a cost efficient way to maximize synergy synergies with product development and an experienced and restock.
Our system of Embraer.
Slide seven shows that you currently have why do you believe to be the largest and most diversified backlog.
By number of customers and regions in the industry today.
In total we have announced at the L. O wise for <unk> thousand 850, aircrafts from 28 different customers spread over 14 countries and different business from mainline two regional airlines to helicopter operators ridesharing platform and leasing companies.
You also have LOI is to offer our Uber in air traffic management systems from nine customers not to mention our portfolio of services and operational solutions that is integral part of broadband and mobile solutions and our discussions with our customers.
We believe this reflects the state of the art value proposition, we bring to our partners and their clients.
And there is smart you caught on that Frank.
We believe this pipeline offers strong long term revenue visibility and do help eve she smooth cash flow consumption in the years to come as it starts to convert the existing ladder of mutations into firm orders and collect pre delivery payments known SPD beads.
Beyond that we are developing a strong network of partners in Iris such as infrastructure and energy.
The address one of the largest challenge ahead of Borgwarner mobility, which is to create a whole new ecosystem besides simply developing on aircraft.
As part of this effort, we started to announce together with our customers our focus cities, where we will be accelerating these efforts some francisco Euphonize Airlines in U S in Rio and Hal is Julian Brazil.
More to come on that front as well.
Now I'd like to invite due to talk about our financials and next milestones.
Thanks. This time now moving to slide eight he was a pre operational company and our financial results reflect mostly the cost associated with the development of our <unk> Paul.
Starting with income statement highlights we invested almost 22 million during the second quarter 2023, and our program development versus 10 million a year ago.
The majority was invested to develop our EBITA and abortion in services and support solutions and the urban air traffic management system.
In addition to development expenses, we also deployed 7 million in SG&A this quarter compared to 16 million last year.
Born to say last year, we had several IPO and other nonrecurring expenses.
Excluding that our SG&A expenses are actually growing as we increase our corporate structure together with good program development.
He's also reported around 7 million in noncash expenses related to the Mark to market Obama Warren there's always chairs when the.
In the quarter and we also had 4 million financial revenues during the second quarter, mostly due to the financial return.
Going back to cash as interest rates are higher.
We have a very conservative financial policy, keeping our money invested in short term deposits with big banks.
With that we reported a net loss of 31 million in the second quarter of 2023.
Now moving to cash flow, our operations consumed $28 million in the quarter versus 20 meter last year, mostly driven by the higher R&D expenses in the agreement with Greenbrier, where the EBIT development.
Total our cash consumption in the first six months of the year was 48 million. This is more than twice the 22 million of the first semester of 2022 <unk>.
The increase was already expected and shows these higher R&D efforts.
With that we ended the second quarter with 269 million in cash, but when we consider these standby credit line from the Brazilian development bank of around 100 million that Reuben statue access now in September our total liquidity exceeds 370 million.
And it's enough to fund our operations into 2025.
Finally, slide nine summarizes our short term milestones and we want to reaffirm our commitment.
As mentioned before we concluded the first two milestones selecting primary suppliers for critical components of our aircrafts in freezing the configuration of our EBITA. We have also started to manufacture some of the individual components of our first prototype and should begin to assemble these seem to be.
Hello.
Later this year that.
We plan to initiate in the back campaign next year. We also continued to work in the trials softer of our urban air traffic management system.
Lastly, we reaffirm our total cash consumption between 130 and 150 million in 2023, which is a result of all of our development efforts.
With that we conclude our remarks and I would like to open the call for questions. Operator. Please proceed.
Thank you we will now be conducting a question and answer session.
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One moment, please while we poll for questions.
Thank you.
Our first question comes from the line of Savi Smith with Raymond James. Please proceed with your question.
Hey, good morning, everybody. This is Matt filling in for savvy.
First congrats to Stein and Jerry alike are made and the company thus far in their new roles and Jerry I believe this will be your last calls my calendar, it's correct. So.
Thank you for all the knowledge along the way and we've really enjoyed speaking with you.
That being said for my questions with the aircraft configuration now set do you have any early thoughts on what the aircraft performance specifications and production of our operating costs will look like or is that more of that.
And then after you finalize more of their suppliers.
Oh good good question, Matt first thank you for that on behalf of Stein as well and I'll I'll turn it over to him I you know, we're still targeting the same high level numbers that are we've been advertising since inception, roughly the 100 kilometer range et cetera, So I'll I'll pass it over to Stein.
For a little more detail if you like.
Oh, absolutely I think that but that's the message we are on track and now with more confidence that the the goals has sat for the aircraft.
Are feasible.
We're talking about $100 six miles of maximum range you are talking about a payload for four passengers with that Carrie on board. So that's a good place.
So he and we are moving forward to that so there is no changed the configuration will disclose now have been working with it for awhile.
<unk> open.
And as close as a select the motors. So that also give us more comfort to talk about it with an actual supplier in place that that makes a lot of difference both for the monitors and Florida batteries. So we keep on more window is the confidence that we are in the right track.
Okay, great that makes sense. Thank you both.
And then maybe for either you or whoever wants to take it now with more of the main suppliers who elected.
Are you able to discuss at a high level on how those agreements are set up and when we could expect certain deliverables and payment timing ticket. Thanks again for taking the questions.
Yes.
As you mentioned right Matthew.
We signed that are the primary suppliers right.
We are finalizing some some other key components in the short term.
Those are of course longer negotiations right.
They may requiring some some.
Some some payments from.
From the <unk> side, but those payments are highly connected with Dave you called it out right.
We pay.
Part of the development from some suppliers.
And this payment is connected to the different phases of the development right. The more we progress, whereas we advance we do those payments all of that is already good at in our short term forecast and and received the cash level, we have that we.
We have the cash for.
I would say waiting to 2024.
Okay that makes sense, so basically no real.
The nonrecurring charge caused timing lumpiness that we should really consider it's more of a as you know.
He progressed.
Yeah, Matt I think you know just to highlight what what he just said if you look at our cash burn in the first half versus the second half.
You know, there's there's a an increase in the second half and that's directly attributable in in in a major way with are now stepping up the development program with the vendors.
Supplier payments the product deliveries really won't be until well into next year. So that's really one of the main reasons why you see the increase in the.
The cash <unk>.
Half over first half the second issue, which we're working very aggressively to manage cash is the beginning of the beginning of the industrialization of the top of taste site as Stein alluded to so there they're the main drivers there but.
Payments are related to product really will be.
And in next year than this year, we're still developing.
And for Matt if I can complement our your question I add intimation about are the operational costs that you also ask so like with the performance the selection of the suppliers and the freezing the configuration help us to be comfortable that when it comes to cash operational costs, how much you got.
Cost to operate the aircraft and now have our intent on others, but us with a clear advantage against our competitors are.
Or at least double digits advantage when it comes to cash operational costs and again with the suppliers the performance.
As well as even though the cost of goods sold becomes more mature and believe we are like with the poor performance in the right track towards that as well.
Okay very clear thank you all again.
Thank you and our next question comes from the line of Cai von <unk> with TD Cowen and co. Please proceed with your question.
Yes, thanks, so much and Jerry and Stein great work.
So as for suppliers.
And air transport programs.
Not unusual to have a pay to play provisions for suppliers contribute to the development and that sometimes they get paid.
After the articles are actually delivered to end customers I know youre not going to talk about.
Individual agreements, but just philosophically can you give us a little more color on how those agreements are structured and what they imply in terms of cash contributions from suppliers and.
Cash flows.
So I'll I'll I'll give them a very high level Cai you know the the typical launch assistance, where we're staying away from that but these agreements are very.
Very comprehensive they cover the development phase a production phase and to date each of them addresses the aftermarket and how we will manage.
The support to the aircraft and customers are after that but there are other than that though the development and production or set up a pretty true traditionally as.
As you might in any product manufacturing and a little if any.
Real what I would call launch assistance Stein you wanted to expand on that at all.
I think the you touched on the main points, but the rationale here is not to get into surprise in aftermarket. So we are really cautious on how we are shutting that deals. So we can deliver back to MA in the previous questions. Our aircraft debt as the leader in the market. It comes true.
Operational costs. So there is always a trade off there and we are very.
We're very savvy about it given our own experience from People's problems with something that we do bring from the monarch company right.
Okay, and I think you mentioned Stein you think you have an operating cash operating cost advantage versus the competitors can you expand on that a little bit why roughly what sort of range of magnitude that might be.
Sure so what's the rationale behind it.
Our simple design there is a reason why you decided to go still avoiding complexities that increased maintenance costs. For example, our performance being tailored towards urban Air mobility. There is no free lunch you on a flight floater and faster.
That comes at a cost so when add this in place Jeff design this and.
And is that there's a.
Pharma space that aircraft is wild that you Kelly are designed for a given mission you al.
Our understanding of design Farmington ability designing for manufacturing and even the how we are talking with our suppliers and are sharing that to have a competitive a I've got today and when you would do our own internal analysis and compare what you would be if you are doing a different aircraft and have you done.
That since the beginning right we look at different tradeoffs in terms of adding tools are increasing the complexity of look at that and the final conclusion. We got that we are on the right track to create that differentiation. It to vary from operator to operator, maybe in some cases, 10%. Some cases, 15% some cases could be a bit less but there.
He has a clear advantage there even again the simplest cell phone design are designed for maintenance facility, our knowhow designing and building an aircraft awards that keep in mind that the main one of the main points for any regional aircraft into Xactly that philosophy. How you are designed for the mission and assuring that too.
Have a reliable aircraft, which helps us preserve utilization that also helps reducing operational cost at a at a lower cost of operation keeping their user experience in mind that as well. So that's how we are reaching that.
Terrific.
One other one so with Johan joining you get bring additional support expertise and I think you are different than your competitors and you have much more focus on offering support and service I think your initial IPO plans called in 2030.
Roughly 45% of revenues would come from service and support can you give us any color in terms of you know because you're going to be.
Slower tomorrow or after your competitors in terms of entry into service.
You intend on building up.
The support effort and I assume that's going to be the earliest revenues recognized thanks.
Okay before I turn it over to Stein I'm not sure. We accept your characterization that we will be substantially behind others, Oh, there's there's quite a bit to be accomplished as you well know.
To get these products through certification and then actually in operations and without mentioning a specific competitor when you look at their business plan. It's it's four two.
Two handfuls of of these products to be delivered in the first couple of years. So I'm not sure that material difference is going to exist, having said that I think you're exactly right that you know this team with this experience supporting aircraft around the world.
It is focused on that part of the role in Stein has been.
Very very involved with the teams he mentioned the launch cities.
Quite a bit of planning is going into that and it's also one of the reasons why we're bringing on the level of expertise that we are Stein.
Again, I think that touch all the main points, but first of all completely agreed that are yet to the scene that are.
Coming after our competitors are not and also the ramp up plan that in our case, it's it sounds so its not extreme that you're gonna delivered thousands of aircraft in the first year, but at the same time are we.
We are going to deliver enough aircraft to really create a good position for us in terms of market share. That's the plan one.
When it comes to surface and operational solutions beyond the experience. The access we have with existing infrastructure, how we are overlapping and combining that with the discussions of the initial cities, where you can deliver a type of infrastructure preexist from Embraer structure partnership central one for <unk>.
That can help us.
Do that without a credit my motto K backs in the beginning.
That again, it's clear differential that you always mention since the beginning that you achieved that network that that preexisting network from Andrea you would take US if you were to do it from scratch it would take us decades in hundreds of millions of dollars in terms of investment. So we definitely have an edge there and we had a lot.
So lessons learned on how to deliver cheap and now with y'all have come in Jan has been running that that organization.
Since its creation actually on the beginning a lot of expertise on that area too.
Thank you very much.
Thank you and our next question is from Jonathan <unk> with Trust with J P. J P. Morgan. Please proceed with your question.
Yeah. Good morning, Gerry Stein looser, but now that we have primary suppliers named the test campaign will begin early next year.
When should we probably otherwise I can pose a significant backlog would be converted into for motors is this something we can expect once a prototype is completed so mid to late next year or am I thinking about it wrong. Thank you.
So if I may Jerry that the two things that are not directly related.
That definition is more relate to chew us mature into development of the aircrafts something you said from the beginning.
Oh, the us doing the things on the right orders in terms of prototypes and so on not flying too early just to show to the market. So that that's one track when it comes should.
Chewed that confirmation that it is actually the work we are doing now on really got into is this backlog, we have and working with our customers to better understand their business case, where their craft to be deployed what type of infrastructure needs to be there why do you need for one hour program as while the confirmations were having now a supplier selection.
That's a very key milestone because that allow us to have the right visibility in terms of both performance and cost as we mentioned before so these are the key drivers for us to really start in converting that.
This backlog and real orders and in Rio deals Gary not sure. If you want to comment anything else there.
I think you're exactly right while the tour.
Not necessarily contingent on the other.
The timeframe that you mentioned is is probably realistic and the priority is Stein said will be first with our launch city and launch customers.
To convert them and then we'll move through the balance of the backlog, we're working right now to fill the first two years of production slot. So they will be the the.
No.
The priorities as we move through the first half of next year and by that point I think you'll see some of those early ones are converted and then we'll move through the balance.
Perfect. Thank you Jeremy Stein.
Yep.
Thank you and our next question is from Sheila <unk> with Jefferies. Please proceed with your question.
Hi, good.
Good morning, and congratulations guys.
So just wanted to talk about suppliers again, and just that configuration of the EBITA as you point out on slide three.
And Finalization.
Maybe can you point out too as well.
What what was the most significant and then what's left if anything on that on the configuration.
Final.
Good question Sheila It just so happens we have with US today, our Chief Technology Officer are but I think you know Stein can probably give you a pretty high level. We expect some further refinements, though as we go along and you know we still have another set of wind tunnel tests at least on the horizon and we.
Mentioned these task rigs so there may be some minor tweaking of the wing etcetera Stein you want to talk to that.
Sure. It is the configuration, so where the pressure is why do you actually see.
That's why it is defined we've been working towards that for a while now what it done in parallel just to disclose and we tie that together with the selection of the particularly the monitors. So we could assure okay. There is a real Oxford there for us to move ahead of that so we don't expect anything thats really visible.
But we are fine tuning the shape of the weaned the shape of the blades of the propellers.
The interactions of the systems.
The noise profile of the aircraft to sound profile of the aircraft and tweaking the day's interactions but that visually.
You won't see any we don't expect any change anything that just visually different really other than.
The fine tuning of the control loss after the human machine interface says Wow, how is I play the cockpit <unk> have been interacting with feature pilots end users to really refine that that you optimize the battery consumption. So that is ongoing.
<unk> does is this level refinement a read through of the suppliers on board that it's part of this phase of the project, but we don't expect to see any change that can actually visually.
Visually perceive in terms of aircraft other than details on the shape, you really need to go and interested that you that uba engineer and go deep dive on the details of it you'll see the any any future difference there, but that the configuration as a whole is set that that was part of the.
The finalization of the current phase of the development.
Got it and then on the suppliers, where they all competitive wins that you guys put out rfps for so a little bit to <unk> question and do they already have these products on any other ito.
Absolutely. They were all compete at there was a very large funnel.
And an eventual down selection process to the final vendors and frankly I think as you have found with the other ore and speaking with the other EV toll manufacturers virtually every one of these solutions is bespoke to that particular aircraft its configurations and its performance.
Requirements Stein, you want to add anything to that.
No no I think you said it all we are on.
And on the right track on that too.
Okay. Thank you Beth.
Thank you.
Your next question is from Austin Muller with Canaccord. Please proceed with your question.
Yes.
Hello. Good morning. So just my first question here what issues do you think other eventual Oems will have and maintaining their aircraft once delivered to customers relative to eve, which has access to embraer <unk> global MRO shops and supply chain.
So Jerry if I may start there are a lot of issues related to logistics to managing.
The initial provision release of materials for example.
It's having the K Pax in place, even if already procured or the physical locations that we have earlier access not only on the existing infrastructure as a nation, but even on the experience of understanding what comes first so what you need to.
Target first and logistics. It's one good example of that particularly in a market like that.
That will be.
That will happen that C. D level, it's not like these are cop two we will be able to fly cross country to go different MRO. So you really need you to establish how we do that so working with our customers as well a lot of our customers have their own capabilities and one example of death in beverage we've also announced.
Moving ahead and put it on the discussion with <unk> in Brazil.
They'll go more into detail should how the Samsung operation solutions, we work here.
In Brazil, but the same applies for other operators. So it's the combination of that physical infrastructure, but the process Knowhow logistics that we are bringing in from that on our DNA from the the motor company.
Okay. That's helpful and do you expect to be able to collect PD PS. After the first test sweitzer complete or closer to ANAC FAA certification.
Yeah.
We Oh, sorry Gerry.
That's fine I think we're both going to say the same thing it will depend on the you know the conversion of the LOI into firm agreements, but generally the P. D piece will start about 18 months before roughly 18 months isn't that right you do before delivery of the aircraft and then as we hit milestones through a certification and build.
Yeah, those progress payments increase so roughly 18 months out.
Great. Thanks for all the details.
Thank you and our next question is from Andres Sheppard with Cantor Fitzgerald. Please proceed with your question.
Hi, Good morning, everyone. Thanks for taking my question and congrats to Jerry and Andre and Andreas Great seeing you in Paris at the at.
At the Air show a lot of my questions have been asked but maybe one qualitative and one quantitative on the qualitative side.
Let's just curious to get.
Your thoughts on the recent FAA implementation guide that that was published in late July there's a lot of information there. So just wondering maybe it at a high level what your preliminary thoughts around that work. Thank you.
Yeah, we had a deep dive on that Andrew has been talking with FAA and with our peers as well as our industry answered to that understanding it even on discussions ahead of them that was quite preliminary so very similar to what you see in our types of today with western on conversant.
Engine aircraft.
And the expectations exactly for us as an industry comment and come back on that one.
We're working closely cleanest gamma.
The NYSE to answer together and but there are a few points. There that I think are relevant to highlight we understand that to your poker and our Woburn Air mobility operation. So we need to keep that the highest safety level highest safety studies that are completely aligned with FAA with that concern.
We believe though there are different ways to show, that's where our combined with that level of safety that is required. So in terms of reserves keep in mind that to me and I'm talking about 2 billion mobility you are talking about structure operation. So we take off the know knowing exactly where we need to go you know exactly where.
You are alternates are just to give you a little bit of color on things you are talking about it's different than when you are flying AD hoc and you need to we need time to figure out in case of.
Any emergencies do need to figure out where to land strips.
Structure operations, you don't require that you know already before taken off all of the potential alternatives. So that's one example, seamless pilots we need to apply the latest technology to assure that you have the keep pilots on board, but there are different ways should do that not necessarily <unk>.
<unk> from previous spikes in different types of aircraft.
Is the best way there was a comment about the ATP pilots for <unk>. We believe there are ways to assure.
The same level of safety through different methodologies for training use of technology for training to assure that the pilot knows what he's doing and is comfortable flying our EV Tulsa, reducing the pilot's workload in the Navy talks another key aspect.
I spiked a fab so I believe that it's going that.
As expected the.
First the first of these show up there as far came a heavy but again I believe and I believe based on all the discussions we have that that was dentation for the industry now to position themselves and showing how we can deliver the highest standards of safety through different process different technology different.
Alignments.
And there is a timeline and.
Actually you are reaching the time for the there is a timeline for the industry comment at the forfeiting after the mouth now so we are good.
From our side, who have made our comments already.
Got it. Thank you very much that's very helpful and maybe just one last quick one a question for maybe for Ed do.
With the $370 million in total liquidity, which includes the lines of credit.
I'm just wondering you know youre funded into 2025.
You've said before that the certification process is expected to cost between 500, and 600 million, which obviously you are well underway.
I'm just wondering you know how are you thinking about capital raising opportunities theres going to have to be a point, where once you begin manufacturing and testing and as you go through all these three different certifications I would expect some sort of capital raise at that point. So I'm just curious how you're thinking about that and anything you can say.
To that extent thank you.
Okay.
Well, thanks, Andrew for the question.
As you mentioned, we are very well capitalized right. We have these 370 meter liquidity.
We have been working through start to axis is 100 million.
Long term standby facility rates from the presumed Robson bank now September being very good shape that we will be quite interest because we.
We have been able to control our cash consumption rates.
I believe these line our cash consumption.
Should reduce even further ranked because a good amount of <unk>.
<unk> expenses for the second half of this year and 12 screen 24 will be.
Finance with this long term R&D line.
Regarding capex. We are also discussing some long term finance so I think overall, we're in a very good shape.
We do not plan any oh.
Our capital raising the short term because you know our liquidity is high.
We still have to access those finance lines and would've been start to to withdraw them. Now. So we are feeling good of course, we are.
As you mentioned, we have these five 600 Needham <unk> co.
The R&D.
But we raised right that we address we already raised.
A billion.
<unk> equity and be in that so so we're in good shape.
Got it. Thank you very much congrats on the quarter again and I'll pass it all thank you.
Thank you and our next question is from Marvin Fong with B T. I G. Please proceed with your question.
Oh good morning, Thanks for taking my questions and congratulations and good luck on your next move as Gerry and Sai.
<unk>.
My question is this just kind of follow up on what others have been asking about you know now that you've selected several of your suppliers that have visibility on some of the other ones.
Are you still confident on sort of your earlier estimates on what it would cost to build.
The E V with hall.
And and could you comment on like what percentage now Oh.
Like operating cost you've now kind of secured now that you've selected suppliers like for instance, I believe propulsion is.
You know your largest operating cost and now that you selected suppliers for it it.
It seems like you've locked that in so maybe you just kind of comment on how much of your operating costs, you sort of nailed down now that you've actually.
Seeing the product in and made the orders.
Sure.
Your point it is indeed, a assuring the key suppliers help us a lot to understand that future more than the proportion of actually the battery you think it's the it's really the game changer in terms of operational costs for electrical foundation, but both things are quite relevant and having.
Now an actual supplier with a contract in place it's not a R&D partnership that you're going to know later on it's an actual agreement like of dawn and other programs. So that gives us considerably more confidence to understand our future numbers not a lot.
Comment on the backlog percentage that represents on that on the operational costs, but what I can say and it would change from contract to contract right depend on pilot salaries and mechanic Tyler essential one but.
Buffy kind of Ah represents what fuel used to represent in internal combustion engines in terms of relevance so having that in place really help us to choose.
To see how that's going to play out in terms of operational costs also on another key aspect of the operational costs of course are the ownership cost of the AED tops of having satellite that suppliers.
And having a good understanding of the next phase as well because we are going through this process alright with answers in hand, even though.
Some.
12 days, you'll select more suppliers, but you are heavily engaged so that gives us a lot of confidence on these future operational costs.
You know, we haven't seen anything though.
That would change our basic estimate in terms of the.
The cost of building the aircraft. So some are a little bit higher some are a little bit lower.
And it will be volume dependent, but we're not changing the original forecast.
Okay. That's great. That's all I had thank you.
Alright, thank you.
Thank you.
There are no further questions at this time I would like to turn the floor back over to management for closing comments.
Thank you Camilla, we all look forward to updating you on their progress throughout the next few quarters as we achieve our operating milestones and meeting you India upcoming events were scheduled to attend as always if you have any questions. Please don't hesitate to reach to reach out to our team last but certainly not least I want to thank.
Jerry Einstein personally for their friendship and contributions to <unk> over the last few years I am positive. We are only in the position we are in right now.
Cause of their leadership so thanks to both of you and best of luck. So everyone else. Thank you for participating in today's conference call and have a good day. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.
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