Air Taxi Maker Archer Aviation Announces $142 Million Contract With US Air Force

A Midnight Archer aircraft displayed during the International Paris Air Show at the ParisLe Bourget Airport on June 19, 2023. (Emmanuel Dunand/AFP via Getty Images)

Shares of Archer Aviation soared more than 40 percent on July 31 after it announced it had secured contracts with the U.S. Air Force worth up to $142 million.

The San Jose, California-headquartered company—which makes electric air taxis—said in a press release that it has “significantly expanded its partnership” with the Department of Defense (DOD) and will supply the U.S. Air Force with six of its Midnight vertical takeoff and landing (eVTOL) aircraft.

The deal, which marks an expansion of a 2021 partnership through the Air Force’s AFWERX Agility Prime program, will also see the company increase sharing of additional flight test data and certification-related test reports, pilot training, and the development of maintenance and repair operations, Archer Aviation said.

“As a result of these contracts, Archer will create and provide innovative capabilities that will strengthen the national defense of the United States of America,” the company said.

The deal is valued at up to $142 million.

Archer Aviation completed the manufacturing of its first Midnight aircraft in May, although the aircraft has not yet been certified by the Federal Aviation Administration (FAA).

The vehicle can carry four passengers and a pilot, has a range of up to 100 miles, and is designed to perform rapid back-to-back flights with minimal charge time in between, according to the company.

Archer's founder and CEO Adam Goldstein (R) poses next to Stellantis CEO Carlos Tavares (L) in front of the Midnight Archer aircraft during the International Paris Air Show at the ParisLe Bourget Airport, on June 19, 2023. (Emmanuel Dunand/AFP via Getty Images)

‘Potential Paradigm Shift’

The firm, headed by businessman Adam Goldstein, says it plans to transform intercity travel, reducing commutes by cars on the ground that can take between 60 to 90 minutes to air taxi fights that take 10 to 20 minutes, while also reducing emissions and providing a more “safe, sustainable, low noise and cost-competitive” form of transportation compared with ground travel.

In its press release, Archer Aviation said the latest deal “represents a potential paradigm shift in military aviation and operations.”

“This historic agreement reflects the steadfast commitment by our Armed Forces to embrace the cutting-edge technology our eVTOL aircraft offer,” said Mr. Goldstein. ”It’s clear that the development and commercialization of eVTOL technology continues to remain a national priority. We look forward to working closely with the U.S. Department of Defense and the U.S. Air Force to integrate Midnight into their operational fleet with a focus on transport, logistics, and rescue operations.”

Meanwhile, Col. Tom Meagher, the lead for AFWERX Agility Prime programs, said the newly built aircraft “represent the cusp of the third revolution in aerospace, and these aircraft and their descendents will drive advances in capabilities and efficiency.”

“It is our mission to ensure the U.S. continues to lead the world in developing and deploying emerging aerospace technology,” said Col. Meagher. “Our contracts with Archer Aviation provide the U.S. Department of Defense and U.S. Air Force the opportunity to play a role in ensuring from the onset, and as the technology evolves, that we unlock the many benefits these aircraft have to offer the U.S. military.”

Shares of Archer Aviation were trading up more than 40 percent at $6.73 as of Tuesday morning and have tripled in value so far in 2023, Reuters reported.

Concerns Over Air Taxi Safety

The latest announcement comes just months after another electric aircraft, Joby Aviation, revealed in April it had cut a deal with the DOD to deliver up to nine air taxis to the U.S. Air Force under a $55 million contract extension.

The company expects to deliver the first two aircraft to Edwards Air Force Base by 2024, after completing initial testing and rolling out commercial operations in 2025.

Overall, Joby’s contracts with the Air Force are valued at $131 million.

Both Archer Aviation and Joby Aviation plan to utilize a ridesharing service business model, with the former stating that ride prices could be around $110 to $120 to begin with.

However, air taxis have been met with resistance from many experts owing to concerns over increased accidents, noise pollution, and privacy issues, particularly as the flights will be traveling over urban areas.

In November, Boeing Chief Strategy Officer Marc Allen called on regulators to ensure air taxis comply with the same strict safety standards as commercial jets as opposed to smaller planes.

“We have to unify around the importance of bringing all advanced air mobility vehicles and operating systems to market with airliner levels of safety, with air transport levels of safety, with commercial levels of safety,” he said during an address at the International Civil Aviation Organization.

Elsewhere, aerospace engineer Abdulghani Mohamed has warned how sudden wind gusts formed around city buildings could destabilize air taxis.

Despite those concerns, the FAA has said it believes air taxi operations will begin as early as 2025, potentially changing the future of transportation forever.