Q4 2023 Lilium NV Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Lilium full year 2023 Business Update conference call. At this time, all participants are in listen-only mode.

Good day, and thank you for standing by welcome to the lithium full year 2023 business update conference call. At this time, all participants are in listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star 1 1 again.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you need to press star one on your telephone keypad.

Yeah, I know thematic message advising you handed waste.

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Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Rama Bondada, Global Head of Investor Relations at Lilium. Please go ahead. Good afternoon and good morning, everyone. My name is Rama Bhandada.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to first speaker today round up on Dada Global head of Investor Relations. At later. Please go ahead.

Good afternoon, and good morning, everyone. My name is Rama and Donna and Williams' global head of Investor Relations.

Rama Bondada: I'm Lilium's Global Head of Investor Relations. For our last webcast, we chose to give you a deep dive on Lilium's battery technology. This gave us an opportunity to give this key technology the attention it deserves and enabled us to answer many of your... For today, we're happy to return to a more traditional format and give you a broader update on our overall progress. We have time for questions after the call. Please note that a recording of the conference call will be posted on Lilium' As a reminder, this morning we posted our FY and Q4 2023 shareholder letter on our website. We invite you to take a look.

For our last webcast, we chose to give you a deep dive on Williams battery technology gave us an opportunity to give this key technology the attention it deserves and enabled us to answer many of your questions for today, we're happy to return to a more traditional format give you a broader update on our overall progress in positioning there'll.

Every time for questions after the presentation.

Please note that a recording of the conference call will be posted on Williams Investor Relations page soon after the event.

As a reminder, this morning, we posted our FY in Q4 2023 shareholder letter on our website, we invite you to take a look.

Rama Bondada: Before handing over to our first speaker, let me just point out that our presentation will include forward-looking statements within the meaning of the United States federal securities laws that are subject to risks, uncertainties, and other factors that could cause Lilium's actual results to differ materially from such statements. Please refer to the cautionary statement in our shareholder letter and the risk factors discussed in our filings with the U.S. Securities and Exchange Commission for more information on these risks. With us on the call today, we have our Chief Executive Officer. Klaus Roe, our Chief Financial Officer, Oliver Vogelgesang, and our Chief Commercial Officer, Sebastian Borrell. So without further ado, let me hand you over now. Clough.

Before handing over to our first speaker, let me just point out that our presentation will include forward looking statements within the meaning of the United States Federal Securities laws that are subject to risks uncertainties and other factors that could cause <unk> actual results to differ materially from such statements.

Please refer to the cautionary statement in our shareholder letter and the risk factors discussed in our filings with the U S Securities and Exchange Commission for more information on these risks.

With us on the call today, we have our chief Executive Officer cloud through.

Our Chief Financial Officer, Oliver Vogelgesang, and our Chief commercial Officer Sebastian Boral, So without further Ado, Let me hand, you over now to close clubs.

Klaus Roe: Thank you, Rama. Great to join you all on this call. It's been a while.

Thank you Omar great to join you all of this call it's been a what.

Klaus Roe: And we've achieved a lot since we last spoke. Ladies and gentlemen, Lilium has again taken significant strides towards certification, production, and entry into service of the revolutionary LiliumJet. We are proud of what we accomplished in 2023 and the strategic partnerships that we signed both on the operational side with suppliers and with customers for our commercial market entry. Let me start by reminding you of one of our most outstanding recent achievements.

And we've achieved a lot since we last spoke ladies and gentlemen, lithium has again taken significant strides towards certification production and entry into service of the evolutionary Williams Jed we are proud of what we accomplished in 2023 as a strategic partnerships that we signed both on the operational side with suppliers.

And with customer support while commercial market entry.

Let me start by reminding you one of our most outstanding.

Recent achievements first of all we received design organization to prove it.

Klaus Roe: First of all, we received design organization approval. Lilium applied for EASA design organization approval in 2017 and underwent an extensive investigation and review for each core process of the design organization. During this multi-year period, we underwent four separate audits that ultimately validated that Lilium has the appropriate organization, resources, documentation, and safety procedures to design aircraft according to the highest safety standards. Under its design organization approval, Lilium is qualified to design and be a type certificate holder for aircraft developed according to EASA's rules for eVTOL aircraft. Lilium thus becomes the first company to be qualified to be a full type certificate holder for aircraft certified under these rules, which represents the highest safety level globally for eVTOL aircraft. So what practical advantages does design organization approval bring for Lilium? Holders enjoy special privileges when working with EASA. This includes having compliance documents accepted by EASA without further verification and being authorized to perform activities independently from EASA as part of an agreed certification program.

<unk> has applied for the Asa design organization approval in 2017 and underwent an extensive investigation and review for each core process of the design organization.

During this multiyear period, we underwent four separate outlets that ultimately validated that million thats the appropriate organization resources documentation and safety policy just designed aircraft. According to the highest safety standards.

And the Williams design organization approval lithium is qualified to design and via type certificate holder for aircraft developed according to the authors who will put E. VTOL aircrafts lithium thus becomes the first company to be qualified to be a fluid type certificate holder for aircraft certified under these rules, which represents the highest.

Safety level globally for EBITA aircraft, so what practical advantages does design organization approval bring for Lillian.

<unk> enjoys special privileges when working with the Asa.

This includes having compliance documents accepted by the Asa without further verification and being authorized to perform activities independently from the Asa as part of an agreed certification program, but simply it means that we can do a lot of the testing on our own because the other nodes we have to proceed.

Klaus Roe: But simply, it means that we can do a lot of the testing on our own because EASA knows we have the procedures in place to provide evidence with the required detail and transparency. As such, Lilium's design organization approval is expected to streamline the process toward obtaining type certification of the LiliumJet. So where do we currently stand with regard to the Pipe Certification Program?

Just in place to provide evidence with our required detail and transparency as such.

Such Liam's design organization approval is expected to streamline the process towards obtaining type certification of the lithium jet.

So where do we currently stand with regards to the type certification process.

Klaus Roe: Right now, our focus is on delivering the first manned flight of the Lilium jet, which is targeted to occur later this year. For that, we first need a permit to fly that allows for the heightened safety requirements of piloted flights. And to obtain the permit to fly, we have to demonstrate to EASA through extensive testing that the aircraft is safe to fly through what is called a safety of flight campaign. As part of this campaign, we will be testing multiple aircraft systems, including aerostructures, propulsion systems, flight controls, avionics, battery packs, and integration on an individual subcomponent level. We will be performing these activities over much of this year as we prepare for the first manned flights. We are able to do this because we have a full range of advanced test capabilities on site, including the recently opened propulsion unit test bed.

Right now our focus is on delivering first flight of the lithium jet which is targeted to occur later this year for that.

We first need to permit to fly that allows for the heightened safety requirements of pilot at slide and to obtain a permit to fly we have to demonstrate asa through extensive testing that the aircraft is safe to fly through what is called the safety of flight campaign.

As part of this campaign, we will be testing multiple aircraft systems, including Aero structure propulsion systems flight controls of Euronext battery packs and integration on the <unk>.

Individual component level.

We will be performing these activities over much of the year SPP path for first manned flight.

We're able to do this because we have a full range of advanced <unk> capabilities on site, including the recently opened propulsion unit Testbed that testing will be shared with the Asa helping us not only to demonstrate the aircraft's safety, but also to provide us with evidence of how the lithium jet will confirm.

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We will commence testing for safety of flight substantiation in the coming weeks.

Our <unk> <unk> and expect to be amongst the leading group of EBITA companies pursue type certification.

Klaus Roe: The testing will be shared with EASA, helping us not only to demonstrate the aircraft's safety but also to provide EASA with evidence of how the Lilium jet will conform to EASA's SCVTOL rules. We will commence testing for safety of flight substantiation in the coming weeks under our DOA and expect to be amongst the leading group of eVTOL companies pursuing type certification. This is probably a good time to also remind you that, unlike most of the eVTOL industry, we are certifying to the highest level of safety in the commercial aerospace industry as per EASA rules. This is known as a 10 to the minus 9 level of safety, which means only one aircraft lost for one billion flight hours. In addition, the Lilium jet design does not allow for any single point of failure.

This is probably a good time to also remind you that unlike most of the EBITA industry. We are certified to the highest level of safety in the commercial aerospace industry is totally asaf.

This is known as a 10 to the minus nine level of safety, which means only one aircraft loss for $1 billion flight hours. In addition, the lithium that design does not allow for any single point of failure.

Built in redundancy on all critical systems make the lithium jet the safest aircraft by design. This is complemented by a string of operating with as best in class pilot interface and training. This is the same level of safety used for large commercial aircraft such as the <unk> hundred 20 and to put this level of safety into context the total.

<unk> family, which is the best selling large commercial aircraft in the world since its introduction in 1987 is about 310 million flight hour as of September 2023.

Helicopters are set at 10 to the minus eight or 10 to the minus 7% level of safety or one aircraft loss at week 10, or 100 million flight hours, which is what the current FAA ABB 12 with a guiding towards this means that our aircraft will be certified to 10 or 100 times higher level of safety than then.

Klaus Roe: The built-in redundancy of all critical systems makes the Lilium jet the safest aircraft by design. This is complemented by stringent operating rules and best-in-class pilot interface and training. This is the same level of safety used for large commercial aircraft such as the Airbus A320. And to put this level of safety into context, the total A320 family, which is the best-selling large commercial aircraft in the world since its introduction in 1987, has about 310 million flight hours as of September 2023. Helicopters are certified at 10 to the minus 8 or 10 to the minus 7 level of safety, or one aircraft lost every 10 or 100 million flight hours, which is what the current FAA eVTOL rules are guiding towards.

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Safety is paramount to us and we will remain in line and its the best pace dictated by our regulators in this industry. We unfortunately had seen what happens when safety of sacrifice for speed to market.

As a team of company leaders that have designed tested certified and deliver safe aircraft over the last several decades.

Safety will remains the utmost priority at Lilly.

Secondly, moving onto another proud achievement at the end of last year, we signed an Mou with Lufthansa to collaborate on key vitol opportunities.

With the current fleet of over 700 commercial aircraft Lufthansa is Europe's largest airline by revenue and is in the.

For worldwide, our collaboration with Lufthansa is therefore presents an exciting opportunity to bring lithium jet flight to Lufthansa group customers.

On this breakthrough agreement.

With one of Europe's foremost commercial airlines ligament Lufthansa will explore innovation opportunities in aviation discussing areas, such as ground and flight operations future aircraft maintenance, including in flight training.

Both of our companies also want to analyze the opportunities for collaborations with third parties like airports and regional partners.

Klaus Roe: This means that our aircraft will be certified to a 10 or 100 times higher level of safety than an FAA-only certified EVTOL. Safety is paramount to us, and we will remain in line and at the best pace dictated by our regulators. In this industry, we unfortunately have seen what happens when safety is sacrificed for speed to market.

<unk> of infrastructure, such as worthy cause S based integration and the definition of required operation processes.

Coding to our projections the European market is expected to account for the demand of around 9200 E VTOL aircrafts through 2035.

Klaus Roe: As a team of company leaders that have designed, tested, certified, and delivered safe aircraft over the last several decades, safety will remain the utmost priority at Lilium. Secondly, moving on to another proud achievement, at the end of last year, we signed an MOU with Lufthansa to collaborate on eVTOL opportunities. With a current fleet of over 700 commercial aircraft, Lufthansa is Europe's largest airline by revenue and is in the top four worldwide.

Transact has been at the forefront of some of Europe's most important aviation initiatives, especially in the area of environmental sustainability.

And we are honored to be working with them.

Third our next major achievement, we started assembly of the first lien debt in December 2023, the first complete fuselage built in December.

<unk> arrived lift production facilities.

Since then the fuselage has been matched up with the first set of colossal wings delivered by a Nova our first Lilly objectives due to move into our final Assembly lines. Shortly aircraft number two it's already advancing with a fuselage now an assembly with up to two weeks at the 70 of the wins and cannot underway at OMNOVA facilities in.

Klaus Roe: Our collaboration with Lufthansa therefore represents an exciting opportunity to bring LiliumJet's flights to Lufthansa Group customers. Based on this breakthrough agreement, which is one of Europe's foremost commercial airlines, Lilium and Lufthansa will explore innovation opportunities in aviation, discussing areas such as ground and flight operations, future aircraft maintenance, and crewing, and flight training. Both of our companies also want to analyze the opportunities for collaboration with third parties like airports and regional partners on the advancement of infrastructure such as vertiport, airspace integration, and the definition of required operation processes. According to our projections, the European market is expected to account for a demand of around 9,200 eVTOL aircraft through 2035.

Parallel lithium teams are also diligently focused on preparing an efficient lithium that production ramp up at our main campus. Let me just add a few words about this lithium campus.

We have 175000 square feet manufacturing and testing facilities co located together with our company headquarters on the Wrestling Airport ground close proximity support efficiency and connectivity between our engineering operations supply chain and production teams as well as production halt for aerostar.

Truck propulsion units and batteries. The campus includes our lithium that final assembly line and the host of testing facilities, such as the propulsion testing as I, just mentioned battery testing equipment electro magnetic chamber acoustic test chamber flight simulators in cabin design Center we.

Recently started installing the state of the art, 70% equipment for the serial production of the lithium jets product propulsion units.

Our design and construction of this assembly line, we've partnered with a German automation and Robotics company Shneidman machine in bulk.

We are also supporting us with workflow design as well as chip and tools for our Aerostructures facilities and final Assembly line Shneidman.

Klaus Roe: Lufthansa has been at the forefront of some of Europe's most important aviation initiatives, especially in the area of environmental sustainability, and we are honored to be working with them. Third, our next major achievement, we started the assembly of the first Lilium jet. In December 2023, the first complete fuselage, built and assembled by supplier Azituri, arrived at Lilium's production facility. Since then, the fuselage has been matched up with the first set of canals and wings delivered by ANOVA. Our first Lilium jet is due to move into our final assembly line shortly. Aircraft No.

Basically of Germany's automotive up stood cut as a global leader in designing and supplying automated scalable industrial solutions with long standing partnerships and high volume industries, especially automotive propulsion Aerostructures Assembly lines in the same building next to the Lib Jet final Assembly line.

While gearing up towards delivering the first set of aircraft interior production. We are also preparing the ground for production at scale, which takes me to our better risk strategy in another milestone.

In 2023, we announced that we will implement a multi sourcing strategy for batteries extending our partnership with <unk> will represent the pillar of our multi sourcing strategy phosphate production it will contribute towards setting a healthy supply of lithium battery sales for entry into service of the lithium jet and the year.

Klaus Roe: 2 is already advancing, with the fuselage now in assembly with ACITURI and assembly of the wings and canals underway at ANOVA facilities. In parallel, Lilium teams are also diligently focused on preparing an efficient Lilium jet production ramp-up at our main company. Let me just add a few words about this Lilium company. We have 175,000 square feet of manufacturing and testing facilities co-located together with our company headquarters on the Westinghouse Airport grounds

After <unk> lithium high performance sales at its facilities in Slovakia will support product Investor Goshen High Tech Goshen as one of the world's largest battery manufacturer, whose battery cells are due to be installed and up to 80% of the folks wagon group's future electrical vehicles Goshen.

<unk> largest shareholder outside China Volkswagen.

As part of the agreement <unk> will build lithium battery sales at existing bulk of one and future royalty to plant and bodyguard, Slovakia devoted to plant will be <unk> first Giga factory was up two four gigawatt hour of production capacity Cogent Hy Tech, which holds a 25% stake in <unk>.

No, but will contribute resources and manufacturing know how to ramp up the capacity at <unk> to cloud.

Klaus Roe: Close proximity supports efficiency and connectivity between our engineering, operations, supply chain, and production. As well as production halls for aerostructures, propulsion units, and batteries, the campus includes our LiliumJet final assembly line and a host of testing facilities, such as the propulsion test hangars I just mentioned, battery testing equipment, electromagnetic chamber, acoustic test chamber, flight simulators, and cabin design center. We recently started installing state-of-the-art assembly equipment for the serial production of the Lilium Jet Propulsion Unit. For the design and construction of this assembly line, we partnered with a German automation and robotics company, Schneidmann Maschinenbau. They are also supporting us with workflow design as well as jigs and tools for our aerostructure facilities and final assembly line. Schneidmann, based near Germany's automotive hub, Stuttgart, is a global leader in designing and supplying automated, scalable industrial solutions with long-standing partnerships in high-volume industries, especially automotive.

Lithium will retain its valuable intellectual property rights and the lithium battery technology, while it's important that we secure supply of battery cells through our <unk> partnership. It's also worth noting that many battery cell suppliers are actually very keen to work with million business cycles and aircraft manufacturers tend to be a lot less volatile than auto.

Motive, so we provide an opportunity for some stability and capacity utilization for diversified Hyatt battery producers.

Turning now to our current supply chain today custom sales continues to deliver lithium battery cells and increasing quantities.

Sales are being used for performance testing and integration into our initial battery packs that will be used in our test aircraft. We are making good progress towards initial series production of the battery packs that energy system. We recently selected suppliers for the advanced materials used in the battery packs. These.

<unk> designed to meet the spring and safety rules.

First high voltage electrical harnesses for the rooms that were completed in October 23.

In the coming weeks the remaining harnesses are scheduled for delivery to the lithium final Assembly line for installation on the first of the inkjet aircraft and just a reminder, we are not fully vertically integrated aerospace OEM, our supplier of some of the largest and most advanced aerospace suppliers and we believe this gives us access to.

Some of the best Aerospace engineering at manufacturing wise in the EBIT or industry.

I'd like to finish our discussions on progress with the lithium battery and energy system by drawing your attention to the webinar, we hosted last November and at our co founder and Chief engineer for innovation and future programs Daniel explained.

<unk> explained the energy demand of the lithium jet the existing technology that will meet those demands and how lithium and our partners are preparing to scale up production. You also dispel some myths about slide physics and battery technology.

Klaus Roe: The propulsion and aerostructures assembly lines are in the same building next to the Lilium Jet final assembly line. While gearing up towards delivering the first set of aircraft and serial production, we are also preparing the ground for production at scale, which takes me to our battery strategy and another milestone. In 2023, we announced that we would implement a multi-sourcing strategy for battery cells. Extending our partnership with InnoVat will represent the pillar of our multi-sourcing strategy for cell products. It will contribute towards setting a healthy supply of Lilium's battery cells for entry into service of the LiliumJet and the years thereafter. InnoBud will build Lilium's high-performance cells at its facilities in Slovakia with support from its investor Goshen Hitech. Goshen is one of the world's largest battery manufacturers, whose battery cells are due to be installed in up to 80% of the Volkswagen Group's future electrical vehicles. Goshen's largest shareholder outside China is Volkswagen.

Commend Washington, the webinar, if you want a fuller understanding of the energy concept of our aircraft.

Let me now hand over to our CFO Hugo over to you Oliver.

Thanks, and good morning, and afternoon to everyone. Joining us today, great to have this opportunity to exchange with you. Let me start by highlighting our major achievement on the funding side in 2023.

Successfully raised $292 million in additional capital.

The funding was supported by numerous new and existing sophisticated investors, including leading Germany technology investors.

Early bird <unk> capital you will see partners in Huntingdon.

This is a big deal. These investors are very smart and performed significant due diligence, which included extensive site visit with our supply chain and technology partner.

In our view this level of interest in infection is the ultimate Testament to the strong progress we are making.

And the cloud has discussed we have made significant progress in.

Funding loans to bring us much closer to first flight.

We have met our milestones and achieved the goals we have promised to our investors who have been with us for a long time. They know the value of the technology put fifth the return potential of our business model and they invested again with us last year.

Klaus Roe: As part of the agreement, InnoBud will build LiliumJet battery cells at its existing Volta 1 and future Volta 2 plants in Vodoradi, Slovakia. The Volta 2 plant will be InnoBud's first Gigafactory with up to 4 GWh of production capacity. Corsion Hitech, which holds a 25% stake in InnoBud, will contribute resources and manufacturing know-how to ramp up the capacity at InnoBud's Volta 2 plant. Lilium will retain its valuable intellectual property rights in the Lilium Jet Battery technology.

And now we are even further along and closer to the end goal. We continue to have constructive discussions to ensure we have strong liquidity as we execute on our key milestone to certification and full commercialization.

We also received our first customer pre delivery payments for the lead inkjet ahead of expectations. The capital enabled us to continue our program development at pace.

Our cash investments has been very much focused on key activities essential for the <unk> development.

Cloud just talked about several of these activities certification testing preparation towards men's slide securing the production ramp up and managing entry into service.

As a result of our prudent approach to cash management at the end of 2023, Lillian unaudited liquidity amounted to 198 million euros.

Our liquidity was therefore higher than expectations with adjusted cash spend lower than the guidance. We had provided back in July.

Klaus Roe: While it's important that we secure a supply of battery cells through our InnoVAD partnership, it's also worth noting that many battery cell suppliers are actually very keen to work with Lilium. Business cycles in aircraft manufacturing tend to be a lot less volatile than in automotive, so we provide an opportunity for some stability and capacity utilization for diversified high-end battery producers. Turning now to our current supply chain, custom cells continue to deliver Lilium Jet Battery cells in increasing quantities. These cells are being used for performance testing and integration into our initial battery packs that will be used in our test aircraft.

Three main items drove our lower cash usage, resulting in a higher cash balance at the end of the year.

First cost controls that we launched in the first half of the year begin to come through in the second half and it's worth pointing out again this area of savings did not affect the pace of our program plan.

Second we began to receive pre delivery payments ahead of schedule. There is usually a few weeks or months of delay between the announcement of the deal and the collection of PDP.

The third area that drove lower cash usage is simply timing some supplier payments shifted into 2024.

Looking ahead now into the year 2024, we expect our cash usage of between 170 to 180 million euros in the first half of the year.

Klaus Roe: We are making good progress towards initial serious production of the battery packs and energy system. We recently selected suppliers for the advanced materials used in the battery pack, designed to meet EASA's stringent safety rules. The first high-voltage electrical harnesses for the Lilium jet were completed on October 23.

On the funding front going forward few things to keep in mind first we are at advanced levels of discussion on funding the government agencies in our home countries, including other regions of Europe and in the U S.

In addition, we continue to collect pdp's via remain in demand discussions with large aircraft fleet operators and airlines for very sizeable fixed orders third and most important is to support we continue to receive from our largest shareholders who remain committed to our business over the long term.

Klaus Roe: In the coming weeks, the remaining harnesses are scheduled for delivery to the Lilium final assembly line for installation on the first Lilium jet aircraft. And just a reminder, we are not a full vertically integrated aerospace OEM. Our suppliers are some of the largest and most advanced aerospace suppliers, and we believe this gives us access to some of the best aerospace engineering and manufacturing minds in the eVTOL industry. I'd like to finish our discussions on the progress with the Lilium jet battery and energy system by drawing your attention to the webinar we hosted last November. In it, our co-founder and chief engineer for innovation and future programs, Daniel Wiegand, explains the energy demands of the Lilium jet, the existing technology that will meet those demands, and how Lilium and our partners are preparing to scale up production. He also dispels some myths about flight physics and battery technology.

And finally, we are continuing to have advanced discussions with potential strategic partners.

With that let me hand over to Sebastian Vogel, our chief commercial officer for a more detailed update on our commercial achievements over to use it.

Thank you Oliver and thank you all for joining US here today, let me start by talking about our key announcements we made at the Singapore Airshow last week.

Lithium proudly unveiled the EBIT total industry's first dedicated aftermarket service organization named lithium power on.

Alongside supporting our sales effort, we expect the aftermarket to be a key source of recurring revenues and profitability for Lillian after entry into service.

According to our estimates the lithium jet services market will reach at least $5 billion by 2035.

The newly established William power business will offer the full aircraft manufacturer services portfolio, including training services maintenance operations material and battery management and global distribution flight operation support ground service equipment and digital solutions.

For efficient spare parts logistics lithium sign a strategic collaboration agreement with the <unk> group.

Oliver Vogelgesang: I recommend watching the webinar if you want a fuller understanding of the energy concept of our aircraft. Let me now hand over to our CFO, Oliver Vogelgesang. Good morning and afternoon to everyone joining us today. Great to have this opportunity to talk with you. Let me start by highlighting our major achievement on the funding side in 2023. We successfully raised $292 million in additional capital.

<unk> group is a world leading provider of aircraft component parts repair and supply chain solution with offices located globally.

As a further pillar in our services strategy lithium also signed last week, an agreement with star charge, an innovative smart energy solution provider with an initial order of a 120 Chargers for certification testing and MRO services.

We'll also be delivered to our customers to build dirty parts.

<unk> charged will therefore develop customized and provided the chargers for lithium use in ground and flight testing as well as for its aircraft maintenance and delivery centers activities. The charging system provided by surcharge deliver outstanding fast charge performance and will be fully compatible with the combined charging system stand.

Oliver Vogelgesang: The funding was supported by numerous new and existing sophisticated investors, including leading German technology investors, Early Bird, BitCapital, UEC partners, and Frank Thelen. This is a big deal. These investors are very smart and perform significant due diligence, which included extensive site visits with us, our supply chain, and technology partners. In our view, this level of interest and inspection is the ultimate testament to the strong progress we are making. And as Klaus discussed, we have made significant progress since these funding rounds to bring us much closer to first-man flight. We have met our milestones and achieved the goals we promised to our investors who have been with us for a long time. They know the value of the technology we possess, and the return potential of our business model, and they invested again with us last year. And now we are even further along and closer to the end goal.

Ccs used for the lithium jet, which supports compliance with established standards.

Charters will feature a liquid cooled charging cable for high performance charging suitable for all types of lending infrastructure, and which will lead to a reduction in charging times of up to 20%. <unk> also has previously signed agreements for flight training with Lufthansa Aviation training and Flightsafety International and digital the aircraft.

Health management solutions with balance here.

We are therefore, well positioned to provide multiple services as part of the lithium power on business.

Turning now to our network development, we made several important announcements in key markets.

Earlier this month lithium designated the future Orlando International Airport Verde brought as network hub folium jet operators in Central Florida.

In the center of the State network is strategically placed to cater to the nearly 80 million annual visitors that the regional trucks.

Oliver Vogelgesang: We continue to have constructive discussions to ensure we have strong liquidity as we execute on our key milestones to certification and full commercialization. We also received our first customer pre-delivery payments for the Lilium Jet, ahead of expectation. Capital has enabled us to continue our program development efforts. Our cash investments have been very much focused on key activities essential to the Lilium Jet development. Laus just talked about several of these activities, certification, testing, preparation towards 12 months of life, securing the production ramp-up, and managing entry into service. As a result of our prudent approach to cash management, at the end of 2023, Lilium's unaudited liquidity amounted to 198 million euros. Our liquidity was therefore higher than expectations, with adjusted cash spend lower than the guidance we had provided back in July. Three main items drove our lower cash usage, resulting in a higher cash balance at the end of the year.

With a world class airport in the rapidly expanding community of Lake Nona. The airport city is expected to become a true multimodal hub for many forms of transportation.

Lillian Ultra announced its support for proposals to designated Greater Orlando Additional authority as the advanced mobility test site for the state of Florida.

And back in January we announced a strategic collaboration with airport, operator, subpart to explore planning and approval steps for the implementation of commercial digital operations at key airports in Germany.

Property is active at 30 international airports across four continents, including Frankfurt, Germany busiest airport.

The partnership will complement lithium partnership already agreed with airports across Germany, including the airports of stood up unique Nuremberg Colombo and dusseldorf.

On the sales side last year on top of Lufthansa.

<unk> also signed an Mou with Citic offshore helicopter company.

Major helicopter operator in China.

The agreement provides the basis for our two companies to strategically collaborate on the establishment of an EBIT total operational network in China.

As part of the agreement lithium and Citic will develop services in the region based on market demand and eventually offer a regular EBITA services.

This will commence in the greater Bay area with additional services planned across the Guangdong, Hong Kong macro Greater Bay, Hainan Island, and changing in the future.

We also opened a private sales in the U S market through our partnership with EMC Jets.

Oliver Vogelgesang: First, cost controls that we launched in the first half of the year began to bear fruit in the second half, and it's worth pointing out again that this area of savings did not affect the pace of our program plan. Second, we began to receive pre-delivery payments ahead of schedule; there are usually a few weeks or months of delay between the announcement of a deal and the collection of PDPs. The third area that drove lower cash usage is simply timing.

Empty jet and industry, leading aircraft brokerage and management company is set to be the exclusive <unk> dealer in Texas for private sales. This announcement is the first step in unlocking the U S. Private aviation market, the largest general and business aviation market in the world.

We also launched private sales in middle East with Archos jet announcing a binding purchase agreement for 10 million projects expected to be delivered through 2026 and 2027.

The agreement followed their permanent Aqua jet as an exclusive authorized dealer for private sales of <unk> in the middle East.

Aam's approach for original Air Mobility is also a perfect fit for island nations across the globe, such as the Philippines, a country with more than 7000 islands.

Oliver Vogelgesang: Some supplier payments have been shifted into 2024. Looking ahead now into the year 2024, we expect a cash usage of between 170 to 180 million Euros in the first half of the year. On the funding front going forward, a few things to keep in mind. First, we are at advanced levels of discussion on funding with government agencies in our home countries, including other regions of Europe and in the U.S. In addition, we continue to collect PDPs, and we remain in advanced discussions with large aircraft fleet operators and airlines for very sizable fixed orders. Third, and most important, is the support we continue to receive from our largest shareholders, who remain committed to our business over the long term.

Singapore Air show last week, <unk> announced the signing of a memorandum of understanding with Phil Jets, a leading aviation provider of global services in the Asia Pacific region.

The agreement includes the intend to purchase telling them that as well as the future strategic collaboration on EBIT told network across the Philippines, and other southeast Asia countries, such as Cambodia.

So to summarize our commercial success, we're excited about what we've accomplished in the past months in terms of new sales opportunities and the launch of our services business lithium power on.

We are also very excited about our ongoing discussion with larger customers to provide a cost effective solution. Both for point to point connections and first and last mile experience.

We look forward to sharing our success on this front with you in the coming months and now let me hand, you back to Klaus for closing comments. Thank you.

Thank you is that as you can see we continued to deliver our key milestones as we progress to our first men's slides targets to cure and late 'twenty four with the lithium that targeted to enter into service in 2006. After the type certification is obtained.

Oliver Vogelgesang: And finally, we are continuing to have advanced discussions with potential strategic partners. With that, let me hand over to Sebastian Borell, our Chief Commercial Officer, for a more detailed update on our commercial achievements. Thank you, Sebastian.

We have made strong progress in our certification process design organization approval.

We are well into assembly of offers Lillian jet and we'll be keeping the market abreast of the progress of the program over the course of the year on the commercial front, the uniqueness and compelling use cases for the lithium that has resulted in around 45 firm orders and we continue to convert <unk> into firm orders with pre delivery payments.

Sebastian Borrell: Thank you, Oliver, and thank you all for joining us here today. Let me start by talking about a key announcement we made at the Singapore Airshow last week. Lilium proudly unveiled the eVTOL industry's first dedicated aftermarket service organization, named Lilium Power On. Alongside supporting our sales effort, we expect the aftermarket to be a key source of recurring revenues and profitability for Lilium after entry into service. According to our estimates, the Lilium Jet Services market will reach at least $5 billion by 2035. The newly established Lilium Power On business will offer the full aircraft manufacturer services portfolio, including training services, maintenance operations, material and battery management and global distribution, flight operations support, ground service equipment, and digital solutions. For Efficient Spare Parts Logistics, Lilium signed a strategic collaboration agreement with the AJW Group. AJW Group is a world-leading provider of aircraft component parts, repair, and supply chain solutions with offices located globally.

Our partnership with Lufthansa Paves the way for early adaptation of our <unk> technology is the most commercial market also on the adoption front, our newly formed aftermarket service business sets us with safe and reliable network to maintain our customers' volume jet fleets, while being additive to <unk>.

Our profit streams in the future.

We continue to have discussions with airlines on large fleet orders and hope to show you progress on defense of the coming months, we remain of the view that safety is paramount in this new emerging aviation technology. We have a team that has extensive experience of certified commercial aircraft with the highest safety standards.

On the financing front, we have already begun collect collection of pre delivery payments, we are continuing our discussions with the German government and other regions and countries on funding options and most important to us on the financing front is a continued long term support of our largest shareholders as we progress to entry into service.

Finally, I would like to say a word about what we are doing to protect our value of intellectual property.

As of February 2020 for lithium had filed a total of 103 patent applications before the European patent office and German patent office to help secure and protect our core technologies and intellectual property globally. We filed many of these patent applications in other jurisdictions such as the U S.

In China around 75% of all our patent applications related to propulsion energy and battery technology with a remainder of protecting our technological breakthroughs in Aerostructures flight controls and avionics. This valuable know how together with the approved comprehensive two design aircraft. According to the higher.

Sebastian Borrell: As a further pillar in our services strategy, Lilium also signed last week an agreement with StarCharge, an innovative smart energy solution provider, with an initial order of 120 chargers for certification testing and MRO services. They will also be delivered to our customers to build virtual products. StarCharge will therefore develop, customize, and provide the chargers for Lilium's use in ground and flight testing, as well as for its aircraft maintenance and delivery center activities. The charging system provided by StarCharge delivers outstanding fast charge performance and will be fully compatible with the Combined Charging System Standards, CCS, used for the LiliumJet, which supports compliance with established standards. The chargers will feature a liquid-cooled charging cable for high-performance charging, suitable for all types of landing infrastructure, and which will lead to a reduction in charging times of up to 20%.

Safety standards and the progress we have made towards bringing to market are significantly superior product given.

A sound foundation for the future with that I will conclude our prepared comments operator can you. Please open the call to questions.

Thank you to ask a question you will need to press star one on your telephone keypad and lake for a name to be announced please keep to one question and one related follow up question. If you have additional question. Please repeat the process to get back into the queue to read your question. Please press star one again.

Mr. Bob will compile the Q&A roster this will take a few moments.

And now we'll go and take our first question.

And this comes from the line of Bill Peterson from Jpmorgan. Your line is open. Please ask your question.

Yes, hi, good morning, and thanks for taking the question I was hoping maybe just starting off at a high level to try to bridge the timeframe of what Youre doing now in terms of assembling the first aircraft with the second one on the Q.

Sebastian Borrell: Lilium has also previously signed agreements for flight training with Lufthansa Aviation Training and Flight Safety International and digital aircraft health management solutions with Palantir. We are, therefore, well positioned to provide multiple services as part of the Lilium Power On business. Turning now to our network development, we made several important announcements in key markets. Earlier this month, Lilium designated the future Orlando International Airport as a network hub for Lilium jet operators in central Florida. Located in the center of the state, the network is strategically placed to cater to the nearly 80 million annual visitors that the region attracts.

All the way through type certification to try to get a sense for.

The timing of milestones along the way so I guess first how.

Many aircraft do you need to build.

And I guess when you think about we're getting ready for flight testing at the end of the year.

What are the key sort of.

By steps that you can take internally given you have the Doa in place that allows us and delegating authority versus what other costs are certified by Asa.

Yes.

Holistically, what do you think that was challenging our most challenging parts of the certification will be I assume its in propulsion, but if you could just kind of level set us since we haven't had a conversation in the public form in quite some time.

Yes.

Bill class over to you, yes, okay. Thanks, Rami and hybrid good to have you here.

Sebastian Borrell: Coupled with a world-class airport and a rapidly expanding community of Lake Nona, the airport city is expected to become a true multi-modal hub for many forms of transportation. Lilium also announced its support for proposals to designate Greater Orlando Aviation Authority as the Advanced Air Mobility Test Site for the state of Florida. And back in January, we announced a strategic collaboration with airport operator Fraport to explore planning and approval steps for the implementation of commercial eVTOL operations at key airports in Germany. Fraport is active at 30 international airports across four continents, including Frankfurt, Germany's busiest airport.

Question. So we have started the assembly of the first aircraft and <unk>.

Aircraft is going to serve.

As an integration and test bench.

Aircrafts too is just following and before the end of the year, we will have three aircraft assembled or an assembly.

And the other three are going to follow next year.

The first flight as you May know and we said is planned to occur before the end of the year.

If we cut it short, let's say the first flying aircraft by summer.

The Assembly line.

Power also means being put.

Sebastian Borrell: The Farport partnership will complement Lilium's partnership already agreed with airports across Germany, including the airports of Stuttgart, Munich, Nuremberg, Köln-Boeing, and Düsseldorf. On the sales side, last year, on top of Lufthansa, Lilium also signed an MOU with the Seatick Offshore Helicopter Company, a major helicopter operator in China. The agreement provides a basis for our two companies to strategically collaborate on the establishment of an eVTOL operation network in China. As part of the agreement, Lilium and Citiq will develop services in the region based on market demand and eventually offer regular eVTOL services. This will commence in the Greater Bay Area with additional services planned across Guangdong, Hong Kong, Macau, Greater Bay, Hainan Island, and Tianjin in the future. We also opened a private sales office in the U.S. market through our partnership with EMCJET. EMT Jet, an industry-leading aircraft brokerage and management company, is set to be the exclusive Lilium dealer in Texas for private sales.

On the electric power will then have to go through quite an extensive ground testing.

<unk> testing on aircraft. We are also doing a lot of component testing.

On propulsion on energy on avionics also.

Our seal up which is basically a simulator integrated simulator, we are going to pull all those data together.

We have been witnessing a part of the test as you say with the Doa.

A lot of delegation to do our testing and basically put results in front of us but for sure. We also want them.

To witness some of the critical tests.

Going through this.

Wrapping everything up and before the end of the year. We should then go into flight.

Youre right dimensions.

I would say the most sophisticated part of the test and assembly activities.

So all around our very innovative propulsion systems.

But we are willing to test we already had the so called Fat first and then to test.

Running by the end of last year.

<unk> added quite a few to it.

We are also going through some very extensive wind tunnel testing we did first.

The campaign last year.

Just to another one right now which is all helping us for the final calibration.

Sebastian Borrell: This announcement is the first step in unlocking the U.S. private aviation market, the largest general and business aviation market in the world. We also launched private sales in the Middle East, with Arcos Jet announcing a binding purchase agreement for 10 Lilium jets expected to be delivered through 2026 and 2027. The agreement followed the appointment of AquaJet as an exclusive authorizer for private sales of the Lilium jet in the Middle East.

Our flight control loss.

And for sure.

We are doing still a lot of battery testing.

The testing by the way in the meantime, as moving not only to pure functional testing. Its also growing lot into majority testing before we go into flight.

Have to get there.

The so-called permit to flight granted by the Asa and we have agreed a very comprehensive test program with them.

Which in the end all has to be put in front of them and then they will give us the right to take off we cannot do it on our own but even guys like <unk> to get the permit to flight from the Asa. So a lot of testing going into it. We are looking for what we are really delighted because everytime I'm going down.

Sebastian Borrell: Lilium's approach to regional air mobility is also a perfect fit for island nations across the globe, such as the Philippines, a country with more than 7,000 islands. At the Singapore Airshow last week, Lilium announced the signing of a memorandum of understanding with FieldJet, a leading aviation provider of global services in the Asia-Pacific region. The agreement includes the intent to purchase 10 Lilium jets as well as future strategic collaboration on the EVTOL network across the Philippines and other Southeast Asian countries such as Cambodia. So to summarize our commercial success, we're excited about what we've accomplished in the past month in terms of new sales opportunities and the launch of our services business, Lilium Power On. We are also very excited about our ongoing discussions with large online customers to provide a cost-effective solution both for point-to-point connections and the first-to-last mile experience. We look forward to sharing our success on this front with you in the coming months. And now, I will hand you back to Klaus for his closing comments.

Into our production testing is I'm seeing something different ICP.

Super engaged and there is always something to learn even one all skylight meet.

When we do our testing.

It's a fascinating time.

Yes, thanks for that.

I appreciate the cost savings measures you took with cash control and the guide guidance you've posted for the first half of the year, but I guess can you maybe for all of our can you share some more information on I guess what will be in Opex.

What will be in Capex in terms of new new construction or buildings, you may need our equipment.

And how to think about the trajectory in the second half of the year and into next year, especially considering it sounds like it sounds like youre going to unlock the potentially unlock more PDP. After flight testing. So should we assume that the use of cash actually goes down in 'twenty five any any sort of.

Color on the cash trajectory and use of cash sources of cash would be very helpful.

Klaus Roe: Thank you. Thank you, Zeb. As you can see, we continue to deliver our key milestones as we progress to our first manned flight target of late 24, with the Lilium jet targeted to enter into service in 26 after the type certification is obtained. We have made strong progress in our certification process with design organization approval. We are well into the assembly of our first LiliumJet and will be keeping the market updated on the progress of the program over the course of the year. On the commercial front, the uniqueness and compelling use cases for the LiliumJet have resulted in around 45 firm orders, and we continue to convert MOUs into firm orders with pre-delivery payments. Our partnership with Lufthansa paves the way for the early adaptation of our eVTOL technology in the mass commercial market.

Thanks Bill.

Just real quick on the 2025, we have we're not guiding quite that forward, yet, but I'll hand over the rest of the question over to Oliver.

Thank you. Thank you bill.

I expected this question.

As we said in the call our budget for the first half and that is the guidance. We gave is around $170 million to $180 million.

I would.

You could expect the second half to be in a similar ballpark household I don't want to be over precise on that one but having said this.

We closed the year with nearly $200 million and.

It will bring us quite fast throughout this year. However of course, the are preparing to cash in additional money and here and first I would like to mention I cannot be too detailed story for that but as discussed before we expect to sign some binding order. So we will see.

Klaus Roe: Also, on the adoption front, our newly formed aftermarket service business provides us with a safe and reliable network to maintain our customers' Lilium Jet fleets while being additive to our profit streams in the future. We continue to have discussions with airlines on large fleet orders and hope to show you progress on this in the coming months. We remain of the view that safety is paramount in this new emerging aviation technology. We have a team that has extensive experience of certifying commercial aircraft to the highest safety standards. On the financing front, we have already begun collecting pre-delivery payments.

The PDP ramping up and we are in.

Dialogue with existing shareholder and we get an amazing support with our largest and oldest investors.

Incredible.

Cannot disclose too much.

In discussions with new investors and we have the government.

In Germany, but also in different countries. So overall I think we are well underway for the first half of this year, we are covered and then.

Klaus Roe: We are continuing our discussions with the German government and other regions and countries on funding options. And most important to us on the financing front is the continued long-term support of our largest shareholders as we progress to entry into service. Finally, I'd like to say a word about what we are doing to protect our valued intellectual property. As of February 2024, Lilium had filed a total of 103 patent applications before the European Patent Office and German Patent Office.

We are working on getting additional money into the company and my target is not to close this year.

With liquidity, which is significantly less than what we had last year, but again I cannot go into more details I hope. This gives you a little bit of timing.

Order to update your model.

Yeah, no. Thanks for the second half color in.

Yes, there's a lot going on here. So really appreciate the update this morning. Thank you. Thank you.

Thank you.

Now we're going to take over next question.

Just give us an amendment.

Klaus Roe: To help secure and protect our core technologies and intellectual property globally, we filed many of these patent applications in other jurisdictions, such as the US and China. Around 75% of all our patent applications relate to propulsion, energy, and battery technology, with the remainder protecting our technological breakthroughs in aerostructures, flight controls, and avionics. This valuable know-how, together with the approved competence to design aircraft according to the highest safety standards and the progress we have made towards bringing to market a significantly superior product, has given Lilium a sound foundation for the future. With that, I will conclude our prepared comments. Operator, can you please open the call to questions? Thank you. To ask a question, you will need to press star 11 on your telephone keypad and wait for a name to be announced.

And the question comes from the line of Alex Potter from Piper Sandler. Your line is open. Please ask your question.

Perfect. Thanks, maybe Oliver just very quickly just kind of a housekeeping question or a definitional question when you talk about.

The cash guidance the cash spend guidance in the first half is that net of PDP expectations.

Or is that just your own operational cash spend plan.

I take it back.

That's fine.

Our spend that is what we use intend to use for the first half. It is not a net cash flow. It is our cash spend it is basically our SG&A our head count related cost is covered the capex and it covered the supplier Nsc's and you can emerge.

And the more we.

Move toward building, our first ex us and we also need to to thing on our theory of production because you thought that in 2016 to start to deliver to our customers. So I think that the growth of of cash.

Operator: Please skip to one question and one related follow-on question. If you have additional questions, please repeat the process to get back into the queue. To withdraw a question, please press star 11 again.

Cash spend.

Compared to what we had last year is mainly related to the production ramp up and two supplier in that seat.

Okay, Okay very good.

So maybe another question just obviously youre getting at.

Operator: Please stand by while we compile the Q&A roster. This will take a few moments. Now we're going to take our first question, and it comes from the line of Bill Peterson from JP Morgan. Your line is open, please ask your question. Yeah, hi, good morning, and thanks for taking the question.

Having some success moving <unk> into firm orders with PDP.

Im interested in knowing how you think that will inform your mix of deliveries once were actually in service, we're starting to build build.

Build the units.

Maybe in 2026, 2027, 2028, and those first couple of years.

Bill Peterson: I was hoping maybe just starting up at a high level to try to bridge the timeframe of what you're doing now in terms of assembling the first aircraft, the second one in the queue, all the way through type certification to try to get a sense for, you know, just the timing and the milestones along the way. So I guess first, how many aircraft do you need to build? And I guess, you know, when you think about getting ready for flight testing at the end of the year, what are the key sort of, you know, step-by-step steps that you can take internally, given you have the DOA in place that allows you some delegated authority versus what other tasks are certified by EASA? And I guess, you know, just holistically, what do you think the most challenging or most difficult parts of the certification will be?

How do you think the mix of deliveries.

Well look maybe just in broad terms what percentage it is going to be go into private aviation what percentage. It is going to be larger airline harder obviously, the pricing implications could be different but the volume of applications will also be different is that mix consideration changed at all over the last several months or quarters.

Thanks Oscar for the question I think this is a good one for Sebastian.

Yes, Hello, everyone. Good question. Indeed, as you know the premium market is a healthy market and which will stay.

Stay steady over the year. So we will always continue to sell to the premium market and so.

Since we're starting with this and since we will introduce then.

Subtle edition, which serves six passenger scheduled operation you will see the growth and therefore more and more shuttle coming in.

The premium, saying steady youre looking at 50 to 100 premium a year <unk>. If it continues to grow and have the discussion the current discussion going very well so.

Steady premium and high network individuals purchases and the shuttle edition growing tremendously in the next few years.

Bill Peterson: I assume it's in propulsion, but if you could just kind of level set us since we haven't had a conversation in the public forum in quite some time, yeah. Thanks, Bill. I'll pass this over to you.

Okay very good.

Very helpful and maybe one last one if I can sneak it in.

Is there any additional regulatory clarity on certification.

Rama Bondada: Yeah. Okay. Thanks, Rama. And hi, Bill.

United States I know that.

Youre, obviously, making great progress with regard to AI.

Rama Bondada: Good to have you here. Great question. So we have started the assembly of the first aircraft, and this aircraft is going to serve as an integration test bench. Aircraft two is just following.

Two organizations had slightly different certification protocol.

Any additional clarity you can provide on certification in the United States, our progress towards certification here in Texas would be helpful. Thanks.

Klaus Roe: And before the end of the year, we will have three aircraft assembled or in assembly, and the other three are going to follow next year. The first flight, as you may know and we said, is planned to occur before the end of the year. If we cut it short, let's say the first flying aircraft will leave the assembly line by summer. It will do its power on. So it means being put under its own electrical power.

Alex <unk> speaking so as you know we have since quite a while our seb tolls.

In place requirements.

We also have since I think June last year, our <unk> one paper.

Which basically sets the scene for us in terms of what we have to do.

Guarding ASO certification, but also FAA certification.

Top.

<unk> has been also released so we also know the operational <unk>.

Klaus Roe: We'll then have to go through quite extensive ground testing in parallel to testing on the aircraft. We are also doing a lot of component testing on propulsion, on energy, on avionics, also on our SEALAB, which is basically a simulator, integrated simulator. We are going to pull all those data together. We have the ARSA witnessing a part of the test, as you say, with the DOA. We have a lot of delegation to do our testing and basically put results in front of the ARSA, but for sure, we also want them to witness some of the critical tests.

In the U S. We are a little bit behind but thats not only for us it's true for everybody because the so called S routes for the operations have not been finally finished.

And to my knowledge also our friends.

Friends competitors from from the U S.

The G. One papers the updates have not been published on the <unk>. So.

Our debt to sale.

Emily we are in the most advanced company not only having it from both irrespective so from the outside but I.

I think we are also at least as advanced as everybody else if not more advanced.

Added states.

Perfect. Thanks, guys appreciate that I appreciate the update.

Klaus Roe: We are going through this, then wrapping everything up, and before the end of the year, we should then go into flight. You have rightly mentioned the more sophisticated part of the test and assembly activities.

Thank you.

Now we will go and take our next question.

And the next question comes from the line of.

Austin <unk> from Canaccord Genuity. Your line is open please ask your question.

Hello, Good morning.

Klaus Roe: It's for sure all around our very innovative propulsion systems. But we are well into testing. We already had the so-called FAT first engine to test running by the end of last year, and we have since added quite a few to it. We are also going through some very extensive wind tunnel testing. We did the first big campaign last year.

So just my first question would be announcement about the aftermarket business I know, we're not there yet, but how are you thinking about the aftermarket business as a percentage of total revenues within your mix once we get to production and what the margin profile would look like for the aftermarket versus OEM sales.

Klaus Roe: We just did another one right now, which is all helping us with the final calibration of our flight control laws. And for sure, we are still doing a lot of battery testing. The testing, by the way, in the meantime, is moving not only to pure functional testing but it's also going a lot into maturity testing. But before we go into flight, we have to get the so-called permit to fly granted by the ARSA. And we have agreed a very comprehensive test program with them, which, in the end, all has to be put in front of them. And then they will give us the right to take them off.

Sam do you want to you want to take this question.

Yes, I mean, obviously.

Recurring revenue will grow as we introduce the aircraft starting in 2006, and we have given estimates of what the revenue could look like by 2035.

Provided that we've looked at into the number of flight hours and we expect all of our customers and number of aircrafts.

Flying there, but I think Oliver you may have a better picture in terms of how much that represents from a revenue perspective compared to the OEM sales.

I have two on mute.

Yep.

Hi, Austin Great question.

Just wanted to give you a little bit.

Patrick Tori on this business. So you can imagine it is service business. So it starts to kick in after the first deliveries.

Klaus Roe: We cannot do it on our own, but even guys like Airbus still get the permit to fly from ARSA. So lots of testing going into it. We are looking forward. We are really delighted because every time I go down into our production or test hangar, I'm seeing something different. I see people super engaged.

We see it ramping up then and this is interesting it is ramping up over proportionately you can imagine the main driver for this business the exchange of the batteries and the more aircraft you have in the universe of course, the more often you need to exchange the batteries. So this is the <unk>.

Klaus Roe: And there's always something to learn, even for an old guy like me, when we do our testing. And that's a fascinating time. Yeah, thanks for that. And, you know, I appreciate the cost-saving measures you took with cash control and the guidance you posted for the first half of the year. But I guess, can you, maybe for Oliver, can you share some more information on, I guess, what will be in OPEX, what will be in CAPEX in terms of new, you know, new construction or buildings you may need or equipment, and how to think about the trajectory in the second half of the year and into next year, especially considering it sounds like you're going to unlock or potentially unlock more PDPs after flight testing. Should we assume that the use of cash will actually go down in 2025?

Portion I would say with the strongest growth potential it started a bit later.

To give you an exact percentage.

<unk>.

I cannot do it right now.

Disclose lanky pet, but having said.

I wanted to mentioned before it starts I would say to be visible in 2007 with the first federal exchanges, but then in the year 2030.

We gave you an idea beyond <unk> 5 billion.

Our revenue line and it will grow over proportionally after that.

I don't know if it helps you for your modeling but.

On the margin.

Like to say it is.

Our high margin business.

We expect to get even higher margins compared to the OEM business.

It's low risk business. Therefore, it is one of our key priorities to really get a grip on this business.

And that's what I can say for the time being Austin.

And also just to clarify that's over $5 billion in revenue in 2035.

And.

On the margin front I think for a good example, you can kind of think of if you look at the other aerospace aftermarket companies that do proprietary sole source.

Bill Peterson: Any sort of, you know, color on the cash trajectory, use of cash, and sources of cash would be very helpful. Thanks, Bill. Just real quick on 2025. We haven't guid quite that forward yet. But I'll hand over the rest of the question over to Oliver. Thank you. Thank you, Bill. Yeah, I expected this question. Bill, as we said in the call, our budget for the first half, and this is the guidance we give, is around 170 to 180 million. I would expect the second half to be in a similar ballpark, so I don't want to be overly precise on that one, but having said this, you know, we closed the year with nearly 200 million, and it will bring us quite far this year.

<unk>, that's kind of what we're looking at for margin profile.

Okay. That's helpful and then just a follow up.

I know you've already started collecting PDP as youre aiming to collect additional pvp is once you get some manned test while its under the ball with the aircraft.

But are you are you confident with 730 aircraft in the backlog that potentially those PDP is if you collect them, 30% to 50% of the price of an aircraft.

That might be able to replace like a supplemental equity rates for example.

Oliver do you want to take that one.

On mute.

On the PDP.

Sure.

It's important to understand what is the triggering point and <unk>.

Aerospace business you have two years in advance of delivery typically one year in advance of delivery was at try here, but not every contract is the same now, but what we try and that the trend. We see is that the important <unk> milestone.

Oliver Vogelgesang: However, of course, we are preparing to cash in additional money. And here, in the first instance, I would like to mention, I cannot be too detailed, sorry for that. But, as discussed before, we expect to sign some binding orders. So we will see the PDP ramping up, and we are in dialogue with existing shareholders, and we get amazing support from our largest and oldest investors here. It is incredible.

Especially on the premium sales.

The element, which because of the PDP payments can we achieve 30% or more so far what we saw in the <unk> 40.

Five firm orders yet the can.

Well it is the same with the Big Airlines, we will explore and come back to you later, but I think what is important to collect the PDP is to achieve the first flight is a key milestone the type certificate.

Oliver Vogelgesang: I cannot disclose too much. We are in discussions with new investors, and we have government discussions in Germany but also in different countries. So overall, I think we are well underway for the first half of this year. We are covered. And then, of course, we are working on getting additional money into the company. And my target is not to close this year with a leak, significantly less than what we had last year.

A key milestone and this will take a significant PDP payments and therefore it is one more argument why we entered.

<unk> market strategy has been selected and focus in the first towards.

Basically in the premium segment, because it is a higher price.

<unk> you.

You get higher PDP and become linked them primarily to those milestones.

Maybe I just can add Sebastian again.

In the commercial discussion that we have given the maturity we have especially on the aftermarket actually we will provide a lot of data on how we're going to be supporting them in a lot of it.

Oliver Vogelgesang: But again, I cannot go into more details. I hope this gives you a little bit of context in order to update your model. Yeah, no, thanks for the second half, Culler, and you guys. A lot going on here, so I really appreciate the update this morning.

I'd say level of Khan for understanding how we can provide those details solution.

The percentage of PDP.

Being provided prior to delivery is not a hot question in the discussion we have commercially.

Bill Peterson: Thank you. Thank you. Thank you. Now we're going to take our next question. Just give us a moment. And the question comes from the line of Alex Potter from Piper Sandler.

It's much more about the demand in the network and working together and you mentioned 700 aircraft in there.

And with you. We also have cooperation agreement, we haven't stated number of aircraft and so you can imagine that there is a lot of silence.

Operator: Your line is open; please ask a question. Perfect. Thanks. Maybe Oliver, just very quickly, just kind of a housekeeping question or a definitional question.

Activities going on which is not only converting what we have but we also have a lot of discussion.

Obviously, the world is pretty big and we're talking to a lot of people right now.

Excellent thanks for all the details.

Thank you.

Alex Potter: When you talk about the cash guidance, the cash spend guidance for the first half, is that net of PDP expectations, or is that just your own operational cash spend plan? That, sorry, I take it directly, Rama, sorry. No, that's fine.

Now we're going to take over next question.

And the next question comes from the line of CIBC from Raymond James Your line is open. Please ask a question.

Hey, good afternoon, everyone.

Just on the <unk>.

Oliver Vogelgesang: That's our spend. That is what we use, and intend to use, for the first part. It is not a net cash flow.

Follow up.

<unk> line of questioning here.

What's your approach to kind of building. These aircrafts are they going to be fully compliant one through six or certain aspects of that and.

Oliver Vogelgesang: It is our cash. It is basically our SG&A, our head count related cost. It covers the CAPEX, and it covers the supplier NRCs. And you can imagine how much we move towards building our first aircraft. And we also need to think about our series production because you have heard that in 2060, we will start to deliver our aircraft to our customers. So I think that the growth of cash spent compared to what we had last year is mainly related to the production ramp-up and to supplier NRCs. Okay, okay, very good.

Just I know crude slide is flattish.

<unk> kind of a target for year end.

But do you expect to start flying these.

How many flight hours, you think you might get.

This year on lease.

Vacation conforming aircraft.

Yes, maybe I'll take it.

That's nice to have the question so.

We are going to start with immense slide so we are not even provisioning and aircraft to be remote controlled.

Alex Potter: So maybe another question just obviously you're having some success moving MOUs into firm orders with PDPs. I'm interested in knowing how that will inform your mix of deliveries. Once we're actually in service, we start to build these, build the unit, maybe in 2026, 2027, 2028, in those first couple of years. How do you think the mix of deliveries will look, maybe just in broad terms? You know, what percentage is going to be going to private aviation? What percentage is going to be larger airline orders? Obviously, the pricing implications could be different, but the volume implications will also be different. Has that mix consideration changed at all over the last several months or quarters? Thanks, Austin, for the question. I think this is a good one for Sebastian.

As I said before we foresee in total seat of six aircrafts suite to be completed by this year. It will be the first slide will be in the last part of the year. So we won't.

Hundreds of flight hours this year.

Overall, our flight test program as we speak is foreseen to be something between 800 to 1000 flight hours.

And this is what you need to learn to understand your aircraft and also run squad certification tests.

The aircraft will not be identical.

Simple reason.

You allocate certain tests to certain aircraft because you have two instruments accordingly so.

I think there will be no no two aircraft is the same as the aircraft itself yes.

But as we are targeting certain tests on certain aircraft.

Instrumentation will be different so it will be some overlap because we need to have redundancy and fall back.

In case of an aircraft is under maintenance so that we can continue the flight test.

Sebastian Borrell: Yes, hello everyone. A good question, indeed. As you know, the premium market is a healthy market which will stay steady over the years. We will always continue to sell to the premium market.

But this is well laid out and it's I would say that is similar to what I did when we certified <unk> hundred 20, Neo we had a similar size.

Of aircraft flight test aircraft and also the same philosophy from being very heavily instrumented and then especially.

Sebastian Borrell: And so, since we're starting with this and since we will introduce then, you know, the shuttle edition, which, you know, serves six passengers, and it's a scheduled operation, you will see the growth and, therefore, more and more shuttles coming in and the premium staying steady. You know, you're looking at 50 to 100 premium a year, 150 if it continues to grow and we have the discussion, the current discussion going very well. So, steady premium and, you know, highly valuable individuals purchases and the shuttle edition growing tremendously in the next. Okay, very good. That's super helpful.

Utilization on certain instrumentation, depending of the flight test purposes.

Does it answer your question.

Is that Super helpful. Anant, Yes, yes. It does just on the follow up is finite.

And just you have a lot of tier one suppliers.

Contributing here now what's there.

They're relevant in the certification process I know you talked about doing a lot of component testing this year.

Are these already certified components. So that you can move faster or just in what's taking the benefit of using this kind of tier one suppliers.

Suppliers.

Either we certify our supplier is doing a lot of certification work and then the aircraft comes through the so called PDP, which was a declaration of design in performance, which offsets a lot of work that we have to do so basically what we are doing we do vast test on our deliverables.

Alex Potter: Then maybe one last one, if I can sneak it in: is there any additional regulatory clarity on certification in the United States? I know that you're obviously making great progress with regard to EASA, but the two organizations have slightly different certification protocols. Just any additional clarity you can provide on certification in the United States or progress towards certification in the United States would be helpful.

Which is the propulsion system the battery system and also the total aircraft.

For sure. We are also making lost use of tests, which are performed by.

Our suppliers.

We have.

Who.

Experienced suppliers assembled around us.

Can really make lots of use of what they are doing cost for sure have the components first and they have done similar.

Klaus Roe: Thanks. Yeah. Hi Alex, Klaus speaking.

Klaus Roe: So, as you know, we have had for quite a while our SCVTOLs in place, requirements. And we also have, since I think June last year, our G1 paper, which basically sets the scene for us in terms of what we have to do regarding EASA certification, but also FAA certification. On top of that, the part IAM has also been released.

Qualifications and certifications before begins to have all the test means.

The people, who know how to run those tests have to people.

How to compare the necessary reports.

So that is really of great help for us. So like we are discharging the last part of the development work.

Can also discharged lost a large part of the certification work to our suppliers. We ultimately for sure. It all flows into the type certificate of the Lilien jet. So we have to sum it up.

Klaus Roe: So we also know the operational rules. In the US, we are a little bit behind, but that's not only for us; that's true for everybody because the so-called ESFA rules for the operations have not yet been completely finished. And to my knowledge, also our friends, competitors from the US, the G1 papers, the updates have not been published on the federal register. So I would dare to say formally that we are the most advanced company, not only having it from both jurisdictions, so from the outside FAA, but I think we are also at least as advanced as everybody else, if not more advanced in the United States. Perfect. Thanks, guys. I appreciate that. I appreciate the update.

The physical doing.

To a large extent also offset by our suppliers.

Helpful. Thank you.

Thank you.

Yeah participants as a reminder, if you wish to ask a question. Please press star one one on your telephone keypad.

Now we will take our next question.

And it comes from the line of Christian Buss from B Riley Securities. Your line is open. Please ask your question.

Hi, Thank you for taking my questions. So first can you just give us some more color on what level of performance you're expecting to achieve with your prototype propulsion systems and then.

What gains you're expecting with the next iteration and when that next generation might occur.

Alex Potter: Thank you. Now we're going to take one next question. And the next question comes to Lan of. Austin Muller from Kanaka Genuity, your line is open, please ask your question. Hello, good morning.

Yeah, Hi, Chris so on the propulsion system.

We expect right from the beginning that performance that we need.

Cause otherwise, we wouldn't be able to lift of the aircraft and to go to transition flight to go to high speed slides.

And the same is true for the battery system.

Operator: So just my first question with the announcement about the aftermarket business. I know we're not there yet, but how are you thinking about the aftermarket business as a percentage of total revenues within your mix once we get to production, and what would the margin profile look like for the aftermarket versus the OEM sale? Seb, you want to take this question? Yeah, I mean, obviously, the recurring revenue will grow as we introduce the aircraft starting in 2026, and we have given estimates of what the revenue could look like by 2035, you know, provided that we've looked into the number of flight hours that we expect out of our customers and the number of aircraft flying, so I think Oliver, you may have a better picture in terms of how much that represents from a I have to unmute. Thanks, Sepp. And hi Austin.

And for sure as we have said several times in the past we foresee over the years a lot of improvement coming in with a battery system and as we speak.

We are already discussing with some suppliers about next generation batteries.

Which we are going to bring in a couple of years after entering into service.

What I would say as we speak we don't see necessarily a need to upgrade the propulsion system as such and you May know also when you. When you look into conventional aircraft you are largely not changing so what conventional aircraft are doing.

The optimize the gas generator that try to squeeze some one or 2% points.

The efficiency of the compressor of the turbine.

As we have an electric motor that runs as an efficiency well above 90% honestly is not so much of the gain to be expected.

The propulsion system side on the battery side, that's by definition a completely different story, because we believe by the end of the decade or perhaps even before our operating range, which is the starting point is 175 kilometres would be well above 200 kilometers.

Austin Muller: Great question. I just want to give you a little bit about the trajectory of this business. So you can imagine it is a service business, so it starts to kick in after the first deliveries. We see it ramping up then, and this is interesting, it is ramping up over proportionally. You can imagine the main driver for this business is the exchange of batteries. And the more aircraft you have in the universe, of course, the more often you need to exchange the batteries. So this is the portion, I would say, with the strongest growth potential, although it starts a bit later.

The next regeneration that we already have line of sight of.

Got it okay. Thanks, Thanks for that cost and then just on the battery front just clarification here do you expect any if any differences in performance from primary and secondary battery suppliers.

No.

The batteries, we are working on and you know the first one we get as we get more than a thousand months as we speak is from custom sell T in Germany, but we have engaged into a partnership.

Within robot and Goshen in Slovakia.

They will also start delivering batteries by mid of the year, we always look into refining.

Oliver Vogelgesang: To give you an exact percentage... You know, I cannot do it right now, without closing all the business plan details. But having said what I wanted to mention before, it starts, I would say, to be visible in 2027 with the first battery exchanges. But then, in the year 2030, I gave you an idea it's beyond the five billion revenue line, and it will grow more proportionately after that. I don't know if it helps you with your modeling, but on the margin, I would like to say it is a high-margin business, so we expect to get even higher margins compared to the OAM business. It's a low-risk business, so it is one of our key priorities to really get a grip on this business. And yeah, that's what I can say for the time being. And also, just to clarify, that's over $5 billion in revenue in 2035.

The recipe a little bit.

But we are basically looking into if I cut it a bit shot into the same type of battery.

However, we are also looking with Goshen and others on what next generation batteries.

And we see still a good trajectory with high silicon content batteries.

But we are also looking into lithium metal batteries already so the whole battery industry is going to move forward.

I think we are really clearly at the forefront with our high silicon content prelease gated batteries and we will be so for quite a while but it doesn't mean.

We are satisfied so we are going on.

But initially our intention is dual sourcing also to derisk our supply chain.

And then when working with new suppliers like within a button potion. She will also see.

What they have in their labs and what they can provide and then to say okay is the next generation for sure we are going to make use of our suppliers.

Oliver Vogelgesang: The margin for it, I think, for a good example, you can kind of think of, If you look at the other aerospace aftermarket companies that do proprietary soles, products, that's kind of what we're looking at for marketing. Okay, that's helpful. And then just to follow up, I know you've already started collecting PDPs, and you're aiming to collect additional PDPs once you get some manned test flights under the belt with the aircraft. But are you confident that, with, you know, 730 aircraft in the backlog, that potentially those PDPs, if you collect them, 30 to 50% of the price of an aircraft, that might be able to replace, like, a Oliver, do you want to take that? Austin on the PDPs.

Suppliers are going to deliver.

Excellent okay. Thanks for taking my questions.

Thank you.

Yeah participants as a reminder, if you wish to ask a question over the phone. Please press star one one telephone keypads.

And now as we wait for additional questions that I think is a good opportunity for us to take some questions from Lilly.

William shareholders on the <unk> technology platform.

She comes from traveling Pete is there any concern that competitors, making it to market faster will harm your progress or future profitability I think the lithium jet is a better design, but I wonder if timing and fight heritage will be important.

Hum.

Yeah. Thanks for the question in any way great to have our value retail shareholders with us and asking questions.

Honestly I'm not really concerned about the cost.

The lithium that features a couple of USPS.

The only aircraft flying regional we are the <unk>.

Only jet aircraft.

We are one of the very few aircraft.

Austin Muller: It's important to understand what the triggering points are in a classical aerospace business; you have two years in advance of delivery, typically one year in advance of delivery. What we try here, but not every contract is the same. Yeah.

Being certified to the highest safety levels. So we will be eligible to basically deliver in every country of the world and we have.

Some areas like the Asa country, where others not certifying to the SCB Tau standards will not be eligible to deliver.

Oliver Vogelgesang: But what we try and the trend we see is that important program milestones, especially for premium sales, are the elements which trigger, Can we achieve 30% or more? So far, based on what we saw in the 45 firm orders, yes, we can. Will it be the same with the big airlines? We will explore that, and we will come back to you later. But I think what is important to collect the PDPs is to achieve the first flight as a key milestone, the type certificate as a key milestone, and this will trigger a significant PDP payment.

I would also say, especially in the premium segment.

I wouldn't dare to say, we are without competition, but maybe we are without competition.

Our value proposition I would say the uniqueness of the attractiveness the performance and lastly, the safety of the product.

<unk> also that we don't perceive a necessarily a lot of competition on the other side.

When we are going to enter into into service in 2006, and maybe some of our competitors are going to do I believe there will be such a storm in the market that would be such a demand.

It's more.

Sebastian Borrell: And therefore, it is one more argument why we have the entry into the market strategy as we selected and focused in the first two or three years basically on the premium segment, because it is a higher aircraft price. We get higher PDPs, and we can link them primarily to those. And maybe I just can add, this is Sebastian again. In the commercial discussions we have, given the maturity we have, especially in the aftermarket, we provide a lot of data on how we're going to be supporting them, and a lot of, I would say, levels of comfort understanding how we can provide a nose-to-tail solution. The percentage of PDP being provided prior to delivery is not a hot question in the discussions we have commercially.

Playa driven market than a demand driven market.

Everybody will have to ramp up their production.

My past experience I can tell you I know what it means.

So we're not going to expel hundreds and thousands of aircraft immediately so I'd, rather believe it would be more the distribution market for a couple of years and Lillian being in a very comfortable position.

Costs were not another me too product like many others up.

USP.

And we also have a good trajectory in terms of developing our product further.

We'll just have limits in terms of rent range extension that we don't have so I'm not concerned.

Wishing everybody well so yes, we are kind of in the competition.

But.

I would not say.

Say.

Sebastian Borrell: It's much more about the demand and the network and working together. And you mentioned 700 aircraft under the MOU. We also have a cooperation agreement where we haven't stated the number of aircraft. And so you can imagine that there's a lot of silent activities going on, which is not only converting what we have, but we also have a lot of discussions. Obviously, the world is pretty big, and we're talking kilos.

It's not in the first place in this competition, so I'm really not worried about it and again it would be a more.

Sales.

Supply revenue market.

The demand driven market.

Great. Thanks costs.

Do we have any other questions.

From at this moment, we do not have any further questions from the phones.

Alright, great well. So then I guess, we can and this concludes our 2023 business update we look forward to speaking with you before our next quarterly update in May.

Austin Muller: Excellent. Thanks for all the details. Thank you. Now we're going to take our next question, and the next question comes from the line of Savi Syth from Raymond James. Your line is open. Please ask your question.

Check our website for industry and industry events, we'll be attending and its Meanwhile, if you have any questions. Please reach out to the lithium investor relations team and once again. Thank you. So much for your participation today and have a great day.

Savanthi Syth: Just on the, as a follow-up to kind of Bill's line of questioning here, what's your approach to kind of building these aircraft? Are they going to be kind of fully compliant one through six or certain aspects of it? And just I know cruise flight, or manned flight, is kind of the target for your end. But you know, do you expect to start flying these? And you know, how many flight hours do you think you might get this year on this kind of certification-conforming air? Yeah, maybe I'll take it.

That does conclude our conference for today. Thank you for participating you may now all disconnect.

A nice day.

Okay.

[music].

Okay.

Okay.

Yes.

[music].

Sure.

[music].

Klaus Roe: Hi Fabio, that's nice to have the question. So we are going to start with a manned flight, so we are not even provisioning an aircraft to be remote controlled. As I said before, we foresee a total fleet of six aircraft, three to be completed by this year. It will be, the first flight will be in the last part of the year, so we won't count hundreds of flight hours this year.

Klaus Roe: The overall flight test program, as we speak, is foreseen to be something between 800 and 1000 flight hours. And this is what you need to learn to understand your aircraft and also prepare for the certification tests. And the aircraft will not be identical for a simple reason. You allocate certain tests to certain aircraft because you have to instrument them accordingly. So I think there will be no two aircraft that are the same. The aircraft itself, yes, but as we are targeting certain tests on certain aircraft, the instrumentation will be different. There will be some overlap because we need to have redundancy and fall back in case an aircraft is under maintenance so that we can continue the flight test, but this is well laid out.

Okay.

Yes.

Yes.

[music].

Hum.

Tom.

Yes.

[music].

Yes.

[music].

Yes.

[music].

Klaus Roe: And it's, I would say, very similar to what I did when we certified the A320neo. We had a similar size of aircraft, flight test aircraft, and also the same philosophy, some being very heavily instrumented and then specialization on certain instrumentation depending on the flight test purpose. Does that answer your question? Is that super helpful?

Savanthi Syth: And yes, yes, it does. Just on the follow-up, if I might, you have a lot of tier one suppliers, you know, contributing here, what's their role in the certification process? I know you talked about doing a lot of component testing this year. Are these, you know, already certified components so that you can move faster?

Okay.

[music].

Savanthi Syth: Or just, you know, what's the benefit of using these kind of tier one suppliers? Yeah, so suppliers, it's either we certify or the supplier is doing a lot of certification work. And then the aircraft comes with a so-called GDP, which is the Declaration of Design and Performance, which offsets a lot of work that we have to do. So basically, what we are doing, we do extensive tests on our deliverables, which is the propulsion system, the battery system, also the total aircraft. But for sure, we are also making a great deal of use of tests which are performed by our suppliers. And as we have the who's who of experienced suppliers assembled around us, we can really make lots of use of what they are doing. Because they for sure have the components first and they have done similar qualifications and certifications before means they have all the test means. They have the people who know how to run those tests; they have the people who know how to compile the necessary reports.

Klaus Roe: So that is really of great help for us. So, like we are discharging a large part of the development work, we can also discharge a large part of the certification work to our suppliers. Ultimately, for sure, it all flows into the type certificate of the Lilium Jet. So we have to sum it up.

Klaus Roe: But the physical doing is, to a large extent, also offset by our supplier for paying to you. Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. And now we're going to take our next question, and it comes from the line of Griffin Boss from Be Riley Securities. Your line is open; please ask your question. Hi, thank you for taking my questions. First, can you just give some more color on what level of performance you're expecting to achieve with your prototype propulsion systems? And then, what gains you're expecting with the next iteration and when that next iteration might occur? Yeah, hi Griffin.

Okay.

Yes.

Sure.

Great.

Okay.

Yes.

Okay.

Okay.

[music].

Griffin Boss: So for the propulsion system, we expect right from the beginning the performance that we need, because otherwise we wouldn't be able to lift off the aircraft and go to transition flights and go to high-speed flights. And the same is true for the battery system. And for sure, as we've said several times in the past, we foresee a lot of improvement coming in with the battery system. And as we speak, we are already discussing with some suppliers about next-generation batteries, which we are going to bring in a couple of years after and into service. Whilst I would say, as we speak, we don't necessarily see a need to upgrade the propulsion system as such. And you may also know that when you look into conventional aircraft, you are largely not changing. So what conventional aircraft are doing, they optimize the gas generator; they try to squeeze some one or 2% points out of the efficiency of the compressor of the turbine, as we have an electrical motor that runs at an efficiency well above 90%.

Okay.

Yeah.

[music].

Sure.

[music].

Klaus Roe: Honestly, there is not so much gain to be expected on the propulsion system side. On the battery side, that's, by definition, a completely different story. Because we believe by the end of the decade, or perhaps even before, our operating range, which at the starting point is 175 kilometers, will be well above 200 kilometers with the next battery generation that we already have a line of sight on.

Yes.

[music].

Griffin Boss: Okay. Thanks. Thanks for that cost.

Okay.

Klaus Roe: And then just on the battery front, just clarification here. Do you expect any differences in performance between primary and secondary battery suppliers? No, the batteries we are working on, and you know the first ones we get, and we get more than a thousand a month as we speak, are from custom cells here in Germany. But we have engaged in a partnership with InnoBat and Goshen in Slovakia, and they will also start delivering batteries by the middle of the year. We always look into refining the battery recipe a little bit, but we are basically here looking into the same type of battery. However, we are also looking with Goshen and others at what next generation batteries are, and we still see a good trajectory with high silicon content batteries, but we are also looking into lithium metal batteries already.

Yes.

Okay.

[music].

Okay.

Okay.

[music].

Klaus Roe: So the whole battery industry is going to move forward, and I think we are really clearly at the forefront with our high silicon content pre-lithiated batteries, and we will be for quite a while, but that doesn't mean we are satisfied, so we are going on. But initially, our intention is to dual source also to de-risk our supply chain, and then when working with new suppliers like InnoBat and Goshen, we will for sure also see what they have in their labs and what they can provide, and then to say, okay, the next generation, for sure, we are going to make use of what our suppliers are going to deliver. Excellent Okay, thanks for taking my question. Thank you.

Yes.

[music].

Sure.

Sure.

Yes.

Okay.

[music].

Okay.

[music].

Thanks.

Yes.

Okay.

Okay.

Okay.

Thank you.

[music].

Yes.

Okay.

[music].

Yes.

[music].

Yes.

[music].

Yes.

Okay.

Yeah.

Yes.

[music].

Yes.

Yes.

Okay.

[music].

Okay.

Griffin Boss: Dear participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Nadia, while we wait for additional questions, I think this is a good opportunity for us to take some questions from Lilium shareholders on the Say Technology platform. This question comes from Trevin P. Is there any concern that competitors making it to market faster will harm your progress or future profitability? I think the Lilium jet is a better design, but I wonder if timing and flight heritage, um... Yeah, thanks for the question.

Okay.

Okay.

[music].

Okay.

[music].

Okay.

Sure.

[music].

Klaus Roe: And anyway, great to have our valued retail shareholders with us and asking questions. Honestly, I'm not really concerned about it because the Lilium jet features a couple of USPs. We are the only aircraft flying regionally. We are the only jet aircraft.

Yes.

Okay.

Okay.

Great.

Klaus Roe: We are one of the very few aircraft that are being certified to the highest safety levels. So we will be eligible to basically deliver in every country of the world. And we have some areas, like Africa, where others not certifying to the SCVTOL standards will not be eligible to deliver.

Okay.

[music].

Okay.

Yes.

Yeah.

Okay.

Okay.

Okay.

Sure.

Okay.

[music].

Klaus Roe: And I would also say, especially in the premium segment, I wouldn't dare to say we are without competition, but maybe we are without competition because our value proposition, I would say the uniqueness, the attractiveness, the performance, and lastly, the safety of the product really stands out so that we don't necessarily perceive a lot of competition. On the other hand, when we are going to enter into service in 2026, and maybe some of our competitors are going to do so, I believe there will be such a storm in the market; there will be such demand that it's more a supply-driven market than a demand-driven market, and everybody will have to ramp up their production. And from my past experience, I can tell you I know what it means, so we are not going to expel hundreds and thousands of aircraft immediately.

Okay.

[music].

Okay.

Okay.

[music].

Okay.

Okay.

Thank you.

[music].

Okay.

[music].

Klaus Roe: So I'd rather believe it would be more of a distribution market for a couple of years, and Lilium being in a very comfortable position, because we are not another me-too product like many others are. We have a USP, and we also have a good trajectory in terms of developing our product further, where others will just have limitations in terms of range extension that we don't have.

Okay.

[music].

Yes.

[music].

Okay.

Okay.

[music].

Klaus Roe: So I'm not concerned. I'm wishing everybody well. So yes, we are kind of in a competition, but I would not say Lilium is not in first place in this competition, so I'm really not worried about it. And again, it will be more of a sales or a supply-driven market than a demand-driven market.

Operator: Great, thanks, Klaus. Dottie, do we have any other questions? Rama, at this moment, we do not have any further questions on the phone. Okay. Well, so then, I guess we can end.

Yes.

Yes.

[music].

Yes.

[music].

Rama Bondada: This concludes our 2023 business update. We look forward to speaking with you before our next quarterly update in May. Please check our website for industry and trade events we'll be attending. And in the meantime, if you have any questions, please reach out to the Lilium Investor Relations team. And once again, thank you so much for your participation today. That does conclude our conference for today. Thank you for participating. You may now all disconnect and have a nice day.

Yes.

[music].

Okay.

Tom.

[music].

Operator: Although this short video is entirely titled the song might be repeated several times in its entirety. And that's what I think, there's a lot of stuff that says how many hours were practiced but there's a lot in particular that you can just listen to and refer to randomly And that's what I think, there's a lot of stuff that says how many hours were practiced but there's a lot in particular that you can just listen to and refer to randomly, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? All right, Jeremy!

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