By Gerrard Cowan

Gerrard Cowan is a freelance journalist who specializes in finance and defense. Follow him on Twitter @gerrardcowan


Qell’s Barry Engle on taking Lilium public

Qell Acquisition Corp. (Nasdaq: QELL) was part of a wave of special purpose acquisition companies (SPACs) that entered the eVTOL market this year, announcing a deal to merge with Lilium in March. The news came as Lilium revealed the seven-seat commercial version of its eVTOL Lilium Jet, having previously disclosed only a five-seat technology demonstrator.

Before establishing the SPAC, Qell founder and CEO Barry Engle held senior roles across the automotive and engineering space, most recently serving as president of General Motors North America. With Qell this week confirming Sept. 10 as the date on which its shareholders will vote to approve the combination with Lilium, we spoke with Engle about Qell’s interest in the eVTOL manufacturer and its vision for a regional air mobility model.

Barry Engle Qell
Qell Acquisition Corp. founder and CEO Barry Engle previously held executive roles at General Motors Corp. Patrick T. Fallon/Getty Images Photo What drove Qell’s interest in Lilium?

Barry Engle: Our whole investment thesis was focused on opportunities in what we broadly defined as next-generation mobility, mobility and transportation. And from the very beginning, we knew that there was a lot of really interesting activity in the advanced air mobility space. We ended up looking at 100-plus different opportunities, and the one ultimately that we were most excited about was Lilium.

We saw it as a company, more so than any other, which had an opportunity to really be transformative, and to really change how we move people and goods from one place to another in a clean, sustainable, high-speed, and cost-effective way. We saw a differentiated technology different than any of the other peer companies that are in the space, and we believed that that technology enabled a different business model — a regional area network, as opposed to an on-demand taxi service. This technology enables aircraft which are bigger, with a heavier payload and the ability to carry more passengers, which we need for a regional air network. Why are you focused on regional air mobility?

Barry Engle: Several reasons come to mind. First, this is an effort to save people time. While there are time savings to be had in the urban environment, especially where traffic is bad, they’re going to be much more significant if you’re travelling longer distances.

The second thing is from a business standpoint, revenue is generated based on the number of passenger miles that have been generated. And so flying longer routes from a business standpoint obviously enables you to generate more revenue.

And lastly, by doing all of this in an organized network with established schedules, we believe that the operational efficiencies are going to be much higher than simply moving people on an ad hoc basis relatively short distances across town. So we can run scheduled routes, we can fill the planes more fully, get higher utilization.

We don’t mean to suggest that there isn’t an opportunity for the others. We’re super excited about the market and the opportunity to transport people in this way. We believe it’s a huge market, we believe there’s opportunities and space for a number of competitors. We applaud those that are serving other segments — their success helps everybody.

Lilium Luxaviation
Lilium anticipates that its eVTOL Lilium Jets will routinely fly trips of 60 to 75 miles (95 to 120 km), longer than the projected average flight distances of many of its competitors. Lilium Image Over the course of 2021, Qell’s share price has fallen from a high of more than $14 to just under $10 today [as of August 10], a period that includes the announcement of the merger. What do you think is behind that performance?

Barry Engle: If you look back historically, it’s a real aberration to see a run-up in the share price of a SPAC without a deal, as we did. They just didn’t trade like that at this point in their lifecycle. It’s been an exuberant period for SPAC investors, and subsequently we saw a bit of a correction, across SPACs in general.

But we have incredible conviction around this company, which we believe will stand the test of time. Good companies are good companies through good markets and bad. Some weakness in the stock market doesn’t impact in any way on the quality of this company and its leadership team and technology. What will going public mean for Lilium?

Barry Engle: Obviously accessing the public markets and the capital associated with that is an important enabler to allow the company to bring the aircraft to market. Developing an aircraft is not an inexpensive endeavor, and it does require capital. And so this is an important step to finance the company’s business plan.

I would suggest that additionally, accessing public markets is an important step for not only Lilium, but for the whole sector, as additional investment comes in to help everybody. In order for this to work, there’s a whole ecosystem that needs to be filled out, which includes things like air traffic control or management, all of the other elements and aspects of the ecosystem required to make the service a reality. And so this isn’t only about developing an aircraft and getting it certified. That alone only gets you part of the way there. There is a lot of additional effort and work.

So we’re super excited to see what’s happening more broadly. Because we do believe that as an industry, there will need to be efforts to build out some of the other important enablers and that is more easily done with an industry behind it as opposed to a single company. While we’re pleased with what accessing the capital markets enables as relates to Lilium narrowly, we also believe that broader public support both financially and otherwise is important for the entire industry.

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