Frankfurt (Germany) (AFP) – A German flying taxi firm was Tuesday saved from collapse after investors swooped in to take it over, in a case that has fired debate about support for the country’s startup scene. Lilium had already filed for bankruptcy in October and was expected to fold entirely this week unless it could secure new sources of funding. But the startup, which has been developing small electric-powered jets that can take off and land vertically, announced a “major breakthrough.”
Mobile Uplift Corporation, a company set up by a consortium of European and North American investors, had signed a deal to buy the assets of the crisis-hit German company, Lilium said. Lilium, which is headquartered in Munich, did not disclose the price of the deal or further details about the investors. The agreement is expected to be finalized at the start of January, which will “allow us to restart our business,” Lilium CEO Klaus Roewe said.
Founded in 2015, Lilium had attracted substantial interest, with 100 firm orders for its jets to date and hundreds more pre-orders. Among future buyers was Saudi Arabia’s flag carrier Saudia, which this year signed a deal to buy 50 of the firm’s aircraft with options to purchase 50 more. The firm’s flying taxis should be able to carry four to six passengers up to 175 kilometers (110 miles) at a speed of 250 kilometers an hour. But it has yet to conduct a manned test flight. The first trial is expected next year, followed by the first deliveries to customers in 2026.
Its investors, mostly from the United States and China, provided some $1.5 billion (1.4 billion euros) in financing, but Lilium burnt through huge amounts of money in development costs. It was forced to turn to the state for emergency funding, but the German parliament’s budget committee refused in October to approve a loan guarantee to the tune of 50 million euros. It then filed for bankruptcy and launched a hunt for new investors. Lilium employed more than 1,000 people, most of whom were made redundant ahead of this week’s deadline to secure new investors. However, many will reportedly return now that a rescue deal has been agreed.
Another German flying taxi startup, Volocopter, has also been facing problems, particularly in terms of financing. The manufacturer was forced to scrap test flights in Paris during the Olympics as the certification for its aircraft engine did not come through in time. Lilium’s predicament has fueled a debate in Europe’s biggest economy about whether enough is being done to support startups. Critics have long lamented a dearth of funding to help support the growth of young, innovative companies, comparing the situation in Germany unfavorably with that in the United States and elsewhere.
In October, Lilium’s boss Roewe stated that other countries were actively backing his firm’s rivals in a highly competitive field. The country’s Startup Association had meanwhile warned of “lasting reputational damage to Germany as a location” for the tech sector if Berlin failed to provide support for Lilium. Others, however, cautioned that backing the startup with public money was a gamble. The firm was not in trouble “because the state did not want to step in as an investor,” said the Sueddeutsche Zeitung daily in a commentary. “Lilium failed because the company has not been able to produce decent results even after years of investment and research.”
© 2024 AFP
