FILE PHOTO: Midnight, an all-electric aircraft from company Archer Aviation, is seen at the Salinas Municipal Airport in Salinas, California, U.S. August 2, 2023. REUTERS/Carlos Barria/File Photo
(Reuters) -Archer Aviation on Thursday announced an agreement-in-principle with Stellantis under which the automaker would bear up to $370 million of labor-related costs to support a planned ramp-up of the air-taxi maker's aircraft.
The funding will give Archer access to much-needed capital to fund the production of its flagship 'Midnight' aircraft to 650 units annually. The company had cash and cash equivalents of $360.4 million at the end of June.
Archer has since secured an additional $230 million of equity capital, including from Stellantis and United Airlines.
Stellantis, which is Archer's largest shareholder, will receive shares in the company on a rolling quarterly basis based on the labor costs incurred.
The electric vertical take-off and landing (eVTOL) aircraft industry faces battery and infrastructure hurdles and requires funding to ramp up production but is yet to achieve certification to carry passengers in the United States.
Investors have soured on U.S. eVTOL players this year, with shares of Archer down 35% and those of rival Joby Aviation down 21.8%.
Archer shares rose after the news of the agreement but gave up those gains as the company reported another quarterly loss.
Archer also said aviation firm Future Flight Global planned to purchase up to 116 Midnight aircraft worth up to $580 million and has made an initial deposit.
Separately, the eVTOL maker announced plans to launch an air mobility network in Los Angeles, with operations beginning as early as 2026.
The planned network in one of the most congested cities in the United States will allow passengers to go to a nearby vertiport, or vertical take-off and landing location, and then fly 10 to 20 minutes in Archer's Midnight aircraft to their destination of choice within the network.
The San Jose, California-based company did not disclose the size of investment for the planned Los Angeles project.
(Reporting by Aishwarya Jain and Abhijith Ganapavaram in Bengaluru; Editing by Mohammed Safi Shamsi and Anil D'Silva)
