#114 Marc Allen, Electra.aero: Changing aviation without going vertical

It forces you to suspend belief for a minute because we all grew up in one world, and in this one world, the, the Newtonian laws told us that you could either have access like a helicopter or efficiency and safety and reliability like a fixed-wing airplane, but you could not have both. Well, what we've discovered is that the beauty of this third era of aviation, right, which is the era of electric architectures, unlocks new capabilities that you could not achieve with a turbine or with a piston, and it's these new capabilities that let us solve that long-standing trade-off. For the first time ever in the history of man, we can have both. We can have access like a helicopter, but the efficiency, safety, reliability, affordability of a fixed wing with a fixed forward propeller. We don't need tilt systems that create all kinds of dynamic change. We don't need to transition on and off wings. No. We can do this in a really pragmatic, effective way. This is why it will change the world

Hey everyone, welcome back to The Vertical Space. Today's guest is Marc Allen, CEO of Electra, what makes Marc particularly interesting isn't just his understanding of technology, it's his understanding of the markets. Throughout his career, he's focused on a fundamental question: What problems are customers actually trying to solve for? In this conversation, he explains why breakthrough technology alone isn't enough, why commercial adoption matters more than technical achievement, and why he believes Electra's ultra-short aircraft can create an entirely new category of aviation. And the timing couldn't be better. Just last week, Electra announced a major milestone. The FAA formally established the certification basis for the EL9, advancing the company toward type certification and bringing its vision of direct aviation one step closer to reality. By way of background, before joining Electra, Marc served as chief strategy officer of the Boeing Company, where he was responsible for the long-range strategic direction of one of the world's most complex global enterprises. He served on the Boeing Executive Committee for nearly a decade, including as president, Boeing International. As head of all venture businesses, he led Wisk Aero's restructuring and full acquisition, focusing on the future of autonomous flight and serving as chairman. Earlier in his career, he led Boeing Capital Corporation, the five billion dollar customer finance business, and served as president of the Embraer partnership, president of Boeing China, and general counsel of Boeing International. He holds a law degree, serves on the board of Procter Gamble, and is engaged in senior advisory roles across numerous international policy, justice, and educational organizations. A licensed pilot, Marc brings an aviation's understanding of what aviation can and cannot do today and what the next era must make possible. At Electra, he leads a team of engineers, pilots, and entrepreneurs working to bring direct aviation to market Marc Allen, what a great pleasure and honor to have you on The Vertical Space. Welcome

Thank you. It's great to be here, Jim

Marc, is there anything that very few in the industry agree with you

Suspending belief

on?

Yes. two things. First big thing is people disagree on whether we can get an airplane with a fixed wing and fixed forward propellers into as small a place as a helicopter. And, that's the big one, and we love taking our prototype all around and demonstrating it in helicopter-like spaces for exactly reason. The second thing, that people disagree with me on is that we can't change the world without being very pragmatic. You know, it takes both the blend of, avant-garde technology that's at the edge of the most novel things we've thought of, but it also takes a really pragmatic, thoughtful, experience-based business case, attention to safety and certification, design focus works its way out into customer value. we can't just live at the edge of, you know, tech for tech's sake. It's gotta turn into customer value. And I do think there are plenty of people who actually disagree with that, who think that the right thing to do is only to make the case that what's being done is at the most radicalized edge of tech development

that's great. so to both your points, one, do people disagree that you're capable of your ultra-short landing?

yeah, few-few-fewer people every single day, Jim. Fewer people every day. But there are plenty of people who just can't imagine it. And, and by the way, they're not wrong. I couldn't imagine it when I was first introduced to this. When John Langford first put this in front of me, I was still at Boeing. I was the chief strategy officer, I looked at the technology, and he was talking about flying off of building tops, and I thought to myself, "This man's crazy. He's lost his rockers. The old man who's been so brilliant for so long is just, he's gone over the edge." Nope, not the case. Turns out deep dive, get into the tech, understand the physics, understand the new tools, 'cause it's an entirely new set of aerodynamic tools we've had to build to, to, to proceed with this program. Understand that they really do show this unlock, and it's real. but it's so-- it's, it's, I don't know, it's mystifying. It is, it, it forces you to suspend belief for a minute because we all grew up in one world, and in this one world, the, the, the Newtonian laws told us that you could either have access like a helicopter or efficiency and safety and reliability like a fixed-wing airplane, but you could not have both. Well, what we've discovered is that the beauty of this third era of aviation, right, which is the era of electric architectures, unlocks new capabilities that you could not achieve with a turbine or with a piston, and it's these new capabilities that let us solve that long-standing trade-off. For the first time ever in the history of man, we can have both. We can have access like a helicopter, but the efficiency, safety, reliability, affordability of a fixed wing with a fixed forward propeller. We don't need tilt systems that create all kinds of dynamic change. We don't need to transition on and off wings. No. We can do this in a really pragmatic, effective way. This is why it will change the world

And, The second part was the customer unlock. You know, you don't have to necessarily have the most, aggressive or forward-looking technology, but you need to be able to have a customer value unlock. What's the principal customer value unlock that comes from your ultra-short capability?

The rule of Six

Air service needs to meet you where you are. It's all about saving time and doing that affordably. It has to go where you live, where you work, where you play. you can use the air in the same way that you, you use a car today, a massive improvement in connectivity, connectivity of people and goods. So at the end of the day, access lets you bring aerospace in. And what does it take to earn the right to come in close? Well, first, the vehicle has to do it, has to operate in small spaces. you have to be quiet because aviation noise is, it's unwelcome in most environments that I know that are close to live, work, and play spots. it's got to do it affordably, otherwise all you have is a cute toy that a couple of billionaires get to fly as opposed to something that democratizes the market space. to be completely safe you don't have a commercial offering if it doesn't enhance the levels of safety that we know today. And it's got to fi-fly far and carry a lot. That's payload range, right? It's got to go where people want to go. we, we actually talk about this as the rule of six. And the, the, the, the idea behind the rule of six that nobody, nobody can have an entitlement to this market of direct aviation going from where you are to where you really want to go, unless they can do six things: like a helicopter Quietly. Payload and range. You know, that's almost one word, but it's actually two elements. Affordability, and then the sixth is the most important role of aerospace, which is safety. And we've never been able to do all these six things in one platform before. That's the unlock for what we're doing

It's exciting to imagine, a future where you have all these new points of interface between ground mobility systems and the air, right? Because up until now, it's just been airports for the most part, and a few heliports, but we know the story with those. But unlocking that and being able to transition between those two modes of transit at lots of different locations is exciting to imagine, but I think it's also hard to imagine until we have, the thing in our hands and can start to experience it for, for most people

Regional mobility gap

Yeah. Y-you know, Peter, we, we talk about the regional mobility gap, or maybe a better way to describe it, frankly, is just pain, the regional mobility pain.

Right

single day, every single day, Americans take 32 million trips between 50 250 nautical miles, okay? Those range trips are trips that are oftentimes far too long to drive comfortably, but they are far too short to fly efficiently with commercial air service. And that's the gap where this market exists. If you look at those 32 million trips, of them start more than 40 miles away from an airport. More than 40 miles away from an airport. So that means, you know, air service is a non-contender, which is why less than 1% of those 32 million trips every day just in continental America, not Hawaii, not Alaska, not the non-US, less than 1% of those trips go by air today, okay? And, and we've identified roughly 2,700 routes in that mix there are more than 1,000 people per day going from spot A to spot B And we've built this wonderful demand mode choice analysis. You can see it on our website at the Direct Aviation market Outlook, which helps us identify using traditional transportation demand mode choice analysis tools, which passengers would elect to take the direct aviation EL-9 alternative the ground alternative based on cost based on time savings, which range from one to even more than three hours of time savings on these twenty-seven hundred routes. And so all of a sudden you've got a tool that lets you start looking at network analysis out what an operator could do with the vehicle to save money. And by the time you get to two point six two point eight percent penetration, from less than one to almost three percent penetration going by air of those routes, you need twelve thousand to sixteen thousand EL-9s in the first ten years of operation from twenty thirty to twenty forty. That's the scale of the market we're talking about. And it's not, you know, that's not penetrating those routes, know, at ten percent, twenty percent. It's three percent penetration. And, and just to give you the, the benchMarc, if you look at the distances between two fifty and five hundred nautical miles, so the next step up in regional mobility, fifteen percent of those trips go by air. So fifteen percent go two fifty to five hundred, less than one percent go from fifty to two fifty. It's an extraordinarily big opportunity to drive that penetration, change behavior, and just frankly make people's lives better.

No, totally. And it's this type of regional mobility pain is something that we've lived with for so long that we almost don't consciously acknowledge it anymore. It's just kind of a part of the landscape. And you s- you think about, you think about how people arrange their lives, where they choose to live, where they choose to work, all of those trade-offs, and really the way that, you know, the way that the United States has kind of laid itself out around these massive metropolitan areas and the outlying areas. it's a function of the available transportation networks that we've had in this country for the last few decades, and the, the exciting thing about revisiting those assumptions that over the long term, it leads to a wrinkle or a rearrangement in these very sort of fundamental aspects of how we, how we look at ability to get around, how we look at mobility, and, and how we make decisions around that, which is, which is really exciting.

that-

I imagine, I imagine the people that are skeptical of this particular approach, some of them are probably very experienced and have a lot of sort of strong reasoning for why they feel skeptical about this. But what have you so far to yourself about the technology, about its viability, perhaps the performance envelope in which it works? I'm really curious about the weather conditions in which you can safely operate this way with these very short approaches, very short takeoffs. But I'd love it if you could take us through that a little bit and sort of shed some light on, on that and how does that map against the skeptical arguments that you're hearing?

Crosswind and gust performance

Yeah, it's great. What I do, I do think that back to the pragmatism of what we're doing, one of our core advantages is that what we've built is just an airplane. Now, it's a, it's a new category. We call it the ultra-short because it's able to take off and land in such ultra-short distances. But it, but it's still just an airplane. And what that means is we start off understanding all that it's gonna be high levels of confidence and fidelity that are harder than if you're designing an entirely new type of craft like, like they're doing under the power lift regulations. we will have an airplane that flies into known icing and is certified to do that. We have, we have a technology demonstrator that's in front of hundreds of people demonstrated landing in 90 degree, 15, one five knot crosswinds Now for, for those of you in the general aviation community, you know that's a, a 90 degrees to the runway, 15 knot crosswind. That's a real crosswind. And we get questions from people about crosswind performance of this blown lift system. just, you know, if you look at the demonstration we did in Charleston, South Carolina, boy, it's a great example. airplane is coming in with a crab of about 35 degrees, maybe even 40, and it's got that 15, you know, knot direct crosswind across the landing area, the access point as we call them, and it's landing in front of, you know, the CEOs and C-suite leaders from all of the major airlines a couple blocks away from the Harris Teeter.

about gusting? you perform in wind gusts?

Yeah, g-gusting or cha-- gusts are challenging because, of course, you're changing the fundamental aerodynamic, you know, effect, with each gust. so what we've had to, you know, do is design a system is also itself able to be-- that the system is responsive, not just the pilot, is a way to think about this. So we have a flight control computer, That is using deep algorithmic tech to control and modulate a distributed propulsion system. So the, the pilot's not controlling eight throttle levers and, and eight propellers and trying to use the, you know, distributed pro-- you know, thrust himself to address things like gusts. No, the computer's doing that, and the propulsion is distributed, in a way that is also directly integrated to the actuation surfaces. So as the actuation surfaces move, the, the computer's making choices about optimization, which allows us to do things like gust control, that you-- it would've been very difficult to do this before in any prior generation system. all that, of course, is enabled by the fundamental basis, which is a fly-by-wire thrust-by-wire systems, right? So that we are, we are bringing the advantages of the computer and the deep algorithmic tech into this vehicle in a way that we just have never seen before for a craft of this size.

if you're able to, make such slow approaches and such short landings, at what point do you always just land into the wind given that you require so little space? I mean, I know that today's airports, you, you have to use the runways, but when we're looking ahead, at what point do you just always land into the wind?

Yeah. We, we think that that is out there as an ultimate d- you know, des- I'll call it a design opportunity, but it really depends on where you're landing, whether or not that's truly available. and so you're always gonna have to be thinking about what are your obstacles, obstacle clearances, and so, you know, is the full arc really available? Anywhere you can have a genuine circle and have, you know, easy, understanding approach patterns over obstacles. 'Cause remember, on a commercial basis, you gotta have-- this has gotta be instrument flight procedures. It's gotta be, you know, suited to operate at that ninety-nine point nine nine nine nine, drawn out to the right, level of reliability, including in incl-incl-inclement weather. and so all of that, it'll take a while before you have enough infrastructure that you have circular landings that are vetted like that to the degree they need to be. but yeah, absolutely. It's, it's very plausible, and we expect it'll become more and more, of the case that you'll see around the, around the, infrastructure that's designed

Part 23 certification approach

and Marc, at approach, you're flying well below the power-off stall. if I recall when we had John on the podcast about two years ago, I think he mentioned the approach regime is somewhere between 30, 35 knots. which I, I imagine is, significantly below power-off stall speed And so isn't aerodynamically that a definition of powered lift, where, so much share of the lift is derived from thrust? And so how do you certify that low speed regime under Part 23, without this becoming a, a special condition project?

Yeah. Yeah, Luka, you know, the, the great thing is there's nothing new in the conceptual framework you just described. We've been flying, you know, backside power and STOL aircraft that are certified for a long time. Think about the, the old Helio Courier. Think about the C-17. so that's not, in that sense, new either to the certifying authorities or anybody that being able to do backside flying. it is the ability to use the electric engines to create much higher levels of confidence in the redundancy across the propulsion system that matters, and, and it gives us greater and greater confidence about flying that, that approach all the way to the ground. and it creates just as a matter of the distribution of the propulsion, much more lift than ever before. But the fact that there's more lift doesn't actually change the, the, the sort of fundamental nature of what we're doing, which is known and has been certified, again, just an airplane.

and on the specific question of stall and, slow speed

Yeah.

with blown lift, has the FAA agreed the method or, or is

Yeah

an open question?

Okay. Well, I, you know, I'm not gonna make any news on this podcast that we haven't put out already, but what I'll tell you this is I have an extraordinarily high level of confidence, in our, basis being concurred in by the FAA. I won't go further than that at just this moment, although depending on the timing of this podcast, I might be able to give you an update. the, you know, back to your question about the, the actual parameters, we have found more lift in the system than originally anticipated in the first models. we are, as a matter of ordinary practice on our, on our prototype, which remember is a two-seat, aircraft, we're rotating at twenty-seven knots, and that's not limited by lift, that's limited by tail strike. Okay. we've, we've flown, you know, under twenty knots. all of this is on, remember, effectively a one seventy-two wing, which has a traditional power off stall of, what, about fifty-five knots. so yeah, there's, there's a lot of capability in there. For the product itself, which is a twelve thousand five hundred pound gross takeoff weight vehicle, you can, you can expect to see rotation speeds that are around thirty-five knots, might be a tad bit lower, might be a tad bit higher. What we'll see as it pencils out and gets into first flight. but yeah, we, we feel really confident in the tech precisely because we've had now two years, two and a half years of flying on the prototype

When you got a guy like Marc on the, episode, you have a really unique background, Marc. So I wanna ask you, the aviation industry has spent years talking about sustainability, regional connectivity, air logist-logistics, both commercial and military, and next generation aircraft. But very little has fundamentally changed. From your perspective, what has the industry been missing about how air travel, logistics, and even military aviation actually need to evolve?

What the industry got wrong about air travel and logistics

boy, it's a really hard question, Jim. I'm gonna answer it from my personal perspective, what I missed, okay? 'Cause that's, that's-- I own that. I can't talk quite as well about what the industry missed, but I can tell you what Marc missed. The requirements have been super clear for a long time. So for example, things like runway independence in the military context, that's been a super clear requirement that n-nobody's really been able to solve well for a very long time. and in my old, roles, you know, at the PriorCo, I thought about the future and what were the biggest, know, sort of earthquake-level changes that could come to industry, I, I always used to articulate it as two. One was autonomy And the other was electric propulsion. And, and autonomy I could wrap my brain around, and I was, you know, fortunate to be a part of some really interesting, initiatives and funded investments at Boeing to drive autonomy in ways that I think will change the world over the next twenty, thirty years in aviation. On electric, the contrary f-- was the case for me. I, I couldn't wrap my brain around how to come at it because, of course, you know, you can't electrify a triple seven. That, that's obvious. and so you, you know, I kind of hit the wall. And, and for all of the big manufacturers, for Boeing, for Airbus, even for Embraer, there is a way in which they, I think, are structurally challenged to think about electrification. Because you've got this forty to fifty x difference in energy density between jet fuel and battery, and so you can't ever really think about swapping the one for the other because you just lose so much in efficiency. So your head hurts, and you just go back to more traditional designs. But what you have to understand and which I, I finally was able to recognize I left Boeing and started to think about what's next and where the future was really going, was that, one, electrification would have to emerge first in small aircraft. And two, it would have to emerge only in spots where it was doing something that the first and second era airplanes of pistons and turbines couldn't do it. And so this ultra-short aircraft is a good example of something you couldn't do this ten years ago, because you couldn't do this with eight turbines on the wing. It-- the business case just doesn't close. The weight's crazy. You can imagine all the reasons it falls apart. Likewise, you couldn't do this with pistons because think of all the gearing, the weight, the risk of the joins if you try to run gears out to eight propellers from a single, uh, turbine in the fuselage. So, so it was only the advent of an electrical system where the high voltage, low voltage integration was viable, you could run the high voltage power out on wires carrying electrons to very lightweight electric engines on the wing, that you could suddenly make this distribution of propulsion as possible as it is today. And, and once that clicked and I realized that John Langford and the team at Electra the only ones who were really thinking about how to do something that others couldn't do with turbines or pistons, then I realized this is the winning answer. And it does not mean that all of the future electric propulsion aircraft will be ultra-short. It doesn't mean that at all. It's one category of things we can do that's new and adds capability. But there are other things that we can also use electric and hybrid electric architectures to do that you can't do with turbines and pistons that are valuable. so that'll be the fun of this, which is getting really good at the underlying tech and then challenging the current design constraints at the platform level Finding the places where you can unconstrain the design because of the electric architecture, and then building out those next aircraft. And, you know, we, we were able to begin to, structure the tools that are needed to run the analyses on those trades in the work we did for NASA that was, recently released by NASA ACES, the Advanced Aircraft Concepts. And it's, it's a program that's focused on building efficient environmental emission sustainable, aircraft for 2050. so the work we did there, you know, is a, it's a, it's a first public viewing of some of the work we've started to do to make sure we have the tools to answer that question of what else, what other third era aircraft can be built that add capability to the entire aviation ecosystem, and then comes full circle back to where you started the question, using those new capabilities to answer the requirements that the customers, both commercial and military have.

Leaving eVTOLs to bet on ultra short STOL

I'm really curious to, uh, to learn more about your switch from, leading Boeing's venture portfolio, chairing chairing Wi- Wisk, with a huge bet on autonomous eVTOLs. and then you left that to, run an eStol company. what is it that you have seen inside the eVTOL bet that made the eStol look so much better?

First off, just as a matter of language, I never use the, forbidden word eSTOL. And the reason I don't use it is simple. let's imagine for a second three vehicles. One's a Cessna 182 Turbo, the other is, let's call it the, the Helio Courier, and the third is our EL-2, prototype. All three airplanes have roughly the same gross takeoff weight, just around three thousand pounds. The, the Cessna probably needs something like fifteen hundred, sixteen hundred feet takeoff and landing roll. The Courier, which is a STOL, needs about a third of that, about five hundred to six hundred feet. Our aircraft, which is reliably a hundred to a hundred and fifty, needs a fifth of what STOL needs. And so that's why we call it ultra-short to differentiate it. Because ultra-short is to STOL what STOL is to conventional. And I know it's kind of a bit of a, you know, thing to wrap your brain around because it's so different, but language matters, it reflects the capability. So, so just sorry for the digression, but that's why you'll hear us refer to our aircraft as the ultra-short. on the, on the other question, which I've now entirely lost sight of I apologize for that. remind me again what you're asking for

question was, what is it that you have seen inside the eVTOL world, with Wisk and, a good chunk of the Boeing's venture portfolio that made electric takeoff and landing so much better?

you, you bet. You bet. Thank you. Beautiful, by the way. Great learning. learning machines here on this podcast. the, the, the Wisk, you know, I talked about it a lot when I was at Boeing. Wisk was all about autonomy, it was all about proving that autonomy could be done at commercially safe levels of operation in bringing that into the national airspace. That's a big, big deal. Everything that's in those two sentences enormously difficult, important to the future of aviation and will be world-changing. and so that, that's very much where, where my focus was and where the company's focus was at the time on, on Wisk. now Boeing had a lot of eVTOL experience. There were five different programs that Boeing, over the course of time, had built, and, you know, many of them were not publicly disclosed because we did them for, customers and, and they're not disclosable items. but as a result, we had a lot of experience with building eVTOLs and then understanding what the constraints were of those vehicles. And of course, the primary constraints come back to where I began with the rule of six, which was significant constraint around payload and range. And those constraints meant that there was a lack of real pragmatic value in the commercial marketplace, which led to then what was really the unlock, which was challenging the first principle of, well, do you really need to take off vertical or can you, can you capture the value of access in another way? And so what, you know, Electra has designed began with that challenge to the first principle.

are you saying that you were always skeptical even inside Boeing as to being able to hit those six, principles even with, the multiple projects that Boeing has explored over the years? Or was there some specific milestone, or perhaps looking at a specific, metric that all of a sudden, made you personally cross from a eVTOL is the future, the company has been working on it across so many projects, to, no, that doesn't really close economically?

I, I, I never left the camp that autonomy is the future. Never left that camp. And that's what the path to autonomy is framed around. It's best framed around what is happening right now on the ground at Wisk from a commercial perspective. There are other applications of autonomy for military that are obviously happening elsewhere with other investment. But on the commercial side, the path to autonomy is through Wisk. And I, I remain as, you know, as much a believer in that today as, as I was then. The, the question of how best to use electric is really a separate question. And, and that's the question that ultimately is getting answered by us here at Electra and demonstrating that we can create a solution that has maximal market value. 'Cause it's, it's not just-- it's back to where I started in terms of, forward and what's the right relative to the customer requirements and customer needs. There's no doubt in my mind that eVTOLs will sell and fly in various environments. They absolutely will. And I know that because helicopters sell and fly today. And so there's no doubt that hel-- you know, eVTOLs will challenge that market when they bring silence into the equation and when they reduce costs. I think they'll do both of those things. at the end of the day, the amount of cost they'll reduce relative to a helicopter will be a fraction of the cost that we are able to reduce that same trip. And that's gonna be where the preference is for making market. And then our ability to fly, you know, ten X the distances five X the payload is gonna make a very big market and a very attractive platform.

So what was your insight then about the autonomous part that the industry is trying to solve What was the insight at, at, at Boeing that, you know, made you perhaps not want to dedicate the rest of your career to pursuing that particular goal?

Oh, no, I never-- like I said, I never moved away from autonomy. My, my, decision to away from Boeing had, had nothing to do with, any, faltering confidence in the exciting future that autonomy promises. I, I think autonomy is, it remains, you know, at the front of so much. And you can see it happening now in terms of ground mobility. I mean, Peter was talking earlier about the aspects of all this, and we, we see it, as we are, watching our friends with Teslas do things while, quote-unquote, "driving cars" we never thought you could do driving a car because you're in full self-drive mode. We, we watch it when we land at the airport in Atlanta and climb into the autonomous Waymo to wait-- make our way through the city streets, in ways that we never thought were possible just a few years ago. the level of, of value that that capability is bringing to ground autonomy is evident, and I, I don't think there's any debate in my mind that it'll likewise bring a lot of value to the aviation domain. Now, where will it begin? I, I think it'll clearly bl- begin in the military, who's investing in it. We see it first in the CCA program that's seeking to bring autonomy alongside fighters in a pairing structure. We see it in investments they're making in other autonomous systems, you know, that are at scale for cargo purposes. And whether they're airplanes that are autonomized or whether they're larger and larger drones that operate autonomously, the, the clear gravity is there. I mean, it is there. The gravity is pulling all programs that direction, so the tech will only continue to mature

So

All right

thoughts on, on some of the, eVTOL projects out there that are also in this, you know, short range market?

Yeah. Oh, look, there's some great tech out there. I've got a lot of respect for the builders and the leaders of these companies. and I've, you know, had the chance to see the inner workings of a lot of them, and I've got deep, deep respect for the engineers and the aviators and the manufacturers and the, leaders that are, that are making these things real. they've obviously secured a great deal of capital, which will help continue to foster the development of the tech. so I wish them nothing but the best. I do think that our platform is the right platform to change the world at scale. and that's why I'm here, and that's why I'm committed to what we're doing. but I've got a lot of respect and a lot of time for those guys.

Marc, Let's say six months after you joined Electra, John Langford, who was terrific on the podcast a couple years ago, John said, was talking to investors, and the investors said, "What's the biggest change that Marc Allen's brought to the company in the last six months?" What would he have said?

All-In On the EL-9

Well, I'm, I'm one who's never gonna put words in someone else's mouth. but, but look, you know, this is first of all a team sport, and we've got an extraordinary team, and we've, we've built it up a lot in the last two years. you look around at our bench and you see the kind of aerospace expertise that's been brought to bear, we've got leaders of the supply chain and manufacturing domain, we've got leaders in the, i-in the defense domain, we've got leaders in the functional domains that matter to build a company. So I think, I think, you know, we've all been really pleased to be a part of a team that's grown a lot and well over the last couple of years, bringing the right kind of people to the team. it was obviously a significant moment for the company when we launched the product, the EL-9. you know, that was a big strategic decision, to move, away from being a company that was, about prototyping and engineering services contracts with the government, and to put a stake in the ground and to say, "We're gonna build a product. We're gonna make a bet on the market 'cause we believe we understand the customer requirement, and we believe we've got the right tech and that we've proved it out sufficiently on the prototype that we can now take that risk," and then to begin to put together the schedule around all those commitments. So those were huge decisions, and obviously undertaken with the board's approval and support. we've been moving out full rate, and that was, you know, November twenty twenty-four was when we announced the product dec-decision. and, a-and that, that to me has been a real important inflection point in the life of the company it's that moment where we said, "Look, you know, no kidding, we're gonna be maniacally focused on building the EL-9, and we're gonna, we're gonna take a lot of other things and take them off the table. We're not gonna be distracted by things to the left or things to the right. We're going straight ahead to the EL-9. That's our product. That's what we're gonna put into, into, into production. That's what we're gonna earn the production certificate for. That's what we're gonna build hundreds a year on." that's, that's a huge commitment. There's a ton of risk in that, and that's what we're gonna do.

And when your team lined up reasons to do it and reasons not to do it, what were the reasons not to do it?

Oh, easy. I mean, you know, whenever you start any airplane program, you're taking on existential risk for the company. That's, you know, every airplane producer in, you know, in history has, has faced that. but it's-- we-- look, we're excited to be a generational company. You know, we're excited to, to really advance this third era of aviation a way no one has before. I don't think you get to win without taking risk. I don't think you get to win without stepping into the unknown a little bit. there, there have certainly been further learnings around the flight physics apply in this environment around ultra-short aircraft that we've been learning as we continue to fly the EL-2. And so if you drew a line from November 2040 here, it's been a year and a half. So we've had a lot of continued learnings, as we develop the understanding and as we continue to put things under trade secrets and patents, you know, we're, we're obviously, improving our ability to design and develop the EL-9 and bring it to the market. And we didn't have that, you know, in our pocket in November 2024. So all of that last 18 months of learning, you know, would you have loved to have had that when you launched? Of course, you would've. Would we have done things differently at the time of launch? Sure. There are some things we might have done a bit differently. but for the most part, it's tracking. and, and, and I very much like the consistency with which we've been able to operate since setting the strategy.

An important part of that is also operator training and how that's gonna be laid out. What is the path for, pilots to go from wherever they may be today to being trained and able to, fly the EL-9?

Yeah, it's great. So, you know, the airplane is designed with the keep it simple in view. And, and so one of those, you know, important points was designing an airplane. And so where it sits in terms of passengers, in terms of, gross takeoff weight, in terms of, you know, its operating, conditions, all of it enables us to drop it into things like the Part 23 cert you mentioned earlier. It allows us to drop it into no flight attendants and, and conveniently on pilots, it allows us to drop it into multi-engine land, right? So you'll need a commercial rating, a multi-engine land to fly it for commercial operations. It won't require a separate type rating because of where its weight falls. those are very intentional decisions. Keep it simple. start with a framework that we believe will be easily trainable. And yeah, there will be familiarization, but it won't be a type rating. so, you know, much of the airplane's operating envelope is gonna feel like flying any other nine-seat airplane that, that you might have otherwise flown to if you're a multi-engine, pilot. and there will be some very distinct aspects of the, takeoff and landing on which you'll get familiarization. But remember, while you'll be familiarized with how to do an ultra-short takeoff and landing, you can also always do a completely conventional takeoff and landing in this aircraft as well.

And, and so are you guys gonna provide that training directly, or how is that gonna work?

Oh, absolutely. Yeah, we-- so we have an, a team. It's led by a gentleman named Ronaldo Araujo, and Ronaldo, had long led the customer support function for Embraer. and, and we're fortunate to have him building out the in-service operations team, and, and training is a part of what he's building out with our operator customers

Marc, three years from now, what's the mix of your commercial versus defense revenue?

You know, three years from now, we're still in the middle of finishing certification. So our revenue three years from now is military, it's defense. You know, we anticipate making deliveries of aircraft to the Department of War before civil cert underneath a military flight release that allows us to be doing training, validation, testing with the military while we're doing the same training, validation, testing, with the FAA. so that, that from a revenue standpoint, you know, the launchpad here is defense without doubt. then civil certification happens late '29 through 2030. We never talk points in time. We always talk, you know, landing zones, and, and that's the landing zone. So civil cert happens during that timeframe, at which point civil deliveries also start. Early days, I expect to see fifty/fifty between military and commercial as the civil comes up, up the curve. And then over time, it settles toward eighty/twenty, eighty commercial, twenty, military

marc, ahead of our call, I, I re-listened, to the John conversation. That's why I keep making references to what John said before, it helps me frame the conversation. But, anyway, on defense, that was barely a conversation that we had with John a couple years ago. It, it didn't really, didn't really come up as a priority in the sense that you're describing it right now. but, after you arrived, inside a year of that, Electra Defense was stood up. there was an MOU with, with Skunk Works. I think another ex-Boeing defense, leader, joined, the company. And so you now you have contracted work with, with several services, three services, I think. is that where the patient money is? or is that, you know, real conviction? And, the reason I'm asking is that, to an in- to an, to an outsider looking in, the trouble is that every AAM company discovered this same story at the same time, which coincided with the commercial timeline slipping to the right and the, VC market tightening for these kinds of opportunities. And so commercial AAM held its original, squiggly 2028 timeframe, and if VC money were still easy, would, would there still be an Electra Defense or, or is this-- You know, is that pull coming regardless? And, why has it

3 Distinct Markets

bubbled up?

Yeah, thanks, Luka. Look, before I took this job, when I presented to the, board of Electra, you know, what my vision was for the strategy and for the way forward, built a really simple chart, and I said, "Look, the right way to think about this market is in three categories." The first category is defense, the second category commercial replacement, and the third category is direct aviation. But they're three distinct markets. and for me, it was just self-evident because I wasn't thinking about this first from the perspective of, you know, any of the prior conversations that AAM had had about, you know, marketplace where they're going. I was simply thinking about this from the capabilities perspective. That's just kinda how I start thinking about issues. I start by looking at the capability, I ask myself, "What, what problem can the capability solve?" And the capability of an ultra-short aircraft is just perfectly fit for the needs the military has for first and last mile delivery, especially in runway-independent environments, especially where you're trying to solve for missions that historically have been performed by, you know, trucks and helicopters environments like the Middle East, where there are short distances over land. And all of that changes when you're suddenly staring at the Indo-Pacific and the tyranny of distance over water, and you've got to move those first and last mile logistic legs, but, and you've got to get into a place may-maybe it's a clearing, or maybe it's a bombed out runway, or maybe it's a beach. Except for me, that capability was just obvious. and as I, as I made that presentation, there was, you know, strong alignment and, concurrence up and down the chain, and I, I, I think that E-Electra had long seen that too, but maybe had not manifested it as much. I, I didn't-- I can't, I can't tell you that I listened, to the way that the company described itself in those prior years, before I arrived, perhaps in, in the same way that you did, Luka. but, what I can tell you is that from moment one, unique of being able to start with a defense launchpad where the capability lined up so well with the customer need was clear, and then it lets you step into the commercial market, which is not direct aviation yet, and this is now about replacing, you know, existing nine-seat aircraft like Technams and Cessna Caravans that are going airport to airport. But by bringing in a vehicle that is as efficient, as cost-effective as they are, but has a ton of upside potential into future marketplaces. And then three, getting into that direct aviation market, market space where you've got demand for twelve thousand to sixteen thousand vehicles over the first ten years. And you can imagine, just as I'm talking, you know, I described earlier at the very start of this call why pragmatism matters. It's so important be in a place where you can expand a market first Rather than build a whole new market. That's just a true principle of starting and running businesses for me. and those first two categories are expanding markets as opposed to starting entirely new markets. The third one is starting an entirely new market. it's just, it's just perfect how they fit together, because the defense launch pad will lead into that commercial replacement, all of which will prove out teething issues, prove the airplane's performance, get people used to the silence, the capability, the ultra-short performance, and then get you into the pier in the middle of Charleston, two blocks from the Harris Teeter. So the logic of it, to me, was just, it, it was just very powerful, and it's one of the reasons why we've been running a very steady course, ever since.

What, what's the hardest thing or most significant thing that you've done for the defense customer that you would not have otherwise done for the commercial one?

We're Building A Truck

Look, we're building a truck, okay? This is a truck. It's gonna be a commercial end item. will the military want to make modifications to the truck? Sure. And there will be separate then contracts and, and, and lines of effort around building those distinct modifications. But our goal, back to keep it simple, is build the truck, show the military the value of the truck, and this is an Amazon Sprinter van of the air for them. So this is not about creating, you know, a bunch of new technology projects to make it fit the military until the military asks for and contracts for those very specific modifications. Right now, what we're building is one truck. It'll have commercial and military application

And the, the contracted work that you already have with the DoD, what is the threat environment that you're designing for actually?

Yeah, the contracts we've been operating on with the, with, with the three services you mentioned earlier is all designed around the technology learning. So you're-- when you ask a question about threat environment, I think what you really are asking about is kind of what distinct capabilities are they now capability-- are they now contracting to have bought?

No, actually I'm asking about whether this is a contested logistics platform or a permissive environment platform. Where, where does

Yeah

being survivable? survivability is, is actually my question

So w- you know, with respect to survivability, there are some things I'm not gonna talk about in this podcast, but we, you know, w- w- if you came in, we could walk you through work that has in fact been done on heat signature, on acoustic signature a- and the like, that gets you to, assess in what environments you would use it. I, I, I'm not gonna-- is an aircraft that's more survivable, I suspect, than, than you think. but it-- we're not, we're not calling this the ultimate survivable aircraft. This is an Amazon Sprinter van, you know. So it's like we're not gonna, we're not gonna push this to solve of edge cases and until there's a customer that wants to contract to solve a bunch of edge cases. But it's a Amazon Sprinter van that has very appealing, aspects of survivability to it

And Marc, tell me again, you, you talked a little bit about the use case for the military. What, within the military under what scenario is being displaced?

Well, let me just give you a couple of examples that have come our way, not in, in recent history and, and that help make the case. there are of times we hear anecdotally across the services when, you know, an exercise is on pause because a piece of equipment has gone bad without which the exercise can't proceed. You know, think about, you know-- Well, I won't give any examples here, but, in that, in those cases, you know, you're looking to a C-17 or a C-130 to fly in a s- a single piece of equipment that could have traveled on an EL-9. you're using strategic airlift for what are tactical airlift needs. so that is just a mismatch between the requirement and the available, the available platform when you're dealing with over water long distance environments, right? Because you would have just used the truck if you were on land. You would have used the helicopter if you had shorter legs required. but when, when you can't, when you've gotta have the legs, you've gotta put on a fixed wing, there's just not as much available, tactical airlift. So, so that's just one very real part of first mile, last mile, that we hear about and we see. two is the genuine displacement for trucks. So the ground-based logistics framework that's been used in the, operating environments that are on land doesn't work over water, so there's a replacement for trucks. and then three, there is a replacement for what has been tried to be solved with tiltrotors as example. Now you get more load and you get more speed if you use an existing tiltrotor system, but you don't get the reliability levels that everybody wants to see. and we know that, right? We kn- we know that tilt has been challenging, and it comes right back to the fundamental of the rule of six and being able to solve for access, but do it with a fixed wing, fixed forward propeller system

And Marc, what's the path, to an actual funded line in the clear is that on the cust- end customer side in terms of, which service will own it, what program office? is that a novel concept for them, or is it a, a relatively easy tuck into the existing program offices or, what color of money w- is this going to be in the, early iterations?

Yeah, no, this is very novel. I mean, th- this is creating a new capability that's never existed before. it is, you know, meeting a set of requirements that have been met with different types of platforms. I mean, think about the last conversation, right? From, trucks to strategic airlift to helicopters, all of a sudden, here's an airplane that can pick up, and, take on board missions that are better fit for it than for them. and so that naturally raises a ton of interesting roles and missions, questions, and conversation. and so there's, there's plenty of work to be done to sort through, you know, where this lands. I won't go through who we're talking with. I just don't normally discuss publicly the conversations we're having with customers. but I can tell you that we are working across services because, for all those reasons, it's naturally going to be a platform that, that I think is gonna, gonna need to land in several different spots of the, of the Department of War.

How do you assess the fit for that particular use case for, the EL-9 versus some of the eVTOLs that are also looking for a DOW customer?

I'm not, I'm not sure I understand the question, Luka, so yeah, maybe I may ask you to repeat it. But if, if you're asking about would they compete in this mission, they, they can't do the payload and range

Yeah, that was the question. a handful of AAM companies, eVTOL companies are looking at the defense, use case and, redefining or, or tweaking their designs to accommodate that mission. So from, from where you are sitting, are there some, structural, limitations that they're going to run up against? Or how do you envision, coexisting in these environments with these other platforms?

Okay. I think I see the shape of the question better now. yeah, there has been public discussion by some of them about building hybrid electric systems to try to solve for the payload range challenges that they face. they still are proposing to do vertical operations, at the end of the day, the-- it is the vertical operation itself that necessitates, you know, thrust to, weight ratios greater than one. And the advantage of taking off on a wing is taking off at a ratio that's about 0.6, and that has massive, massive, massive implications for energy and power required, and that changes what you're left with in terms of payload and range. so at the end of the day, the idea of, going vertical, is, is not... I-it's understandable, but the real question is for, again, first principles, what are you trying to solve for? You're trying to solve for access. And if I can give you a fixed wing, fixed forward propeller airplane that gets into all the same spaces, I promise you, I will be giving you it to you cheaper, flying farther, carrying more, and with a more reliable structure. It's just the reality of not having to have the dynamic challenge of doing the transition from wing born to non-wing born flight. It's just the difference of not having to, you know, carry all that weight in a vertical takeoff

think that's a really important point that may be worth, hovering on, pardon the pun, for a bit longer. this, this difference between the power required for takeoff and landing, versus cruise in the EL9 versus what some of the eVTOL companies, have to deal with. Can you discuss that difference and, and

Yeah

your

 The power required for takeoff and landing vs cruise in the EL9 vs eVTOL companies

power system?

Yes. Well, I'll, I'll start with our power system. It's a hybrid electric. It's a series hybrid electric power system, like a Prius. you pour in jet fuel. It, it, you know, is-- comes into the, turbo generator, which itself then it has a gear, that is mated into the generator system. so you pour in jet fuel and you get out electrons. They flow in series through the batteries. We've got four independent batteries. They're, running across two buses. those two buses carry charge from the batteries out then to the eight electric engines on the wing. So that's the structure of the hybrid electric propulsion system that we operate. It means that, you know, we can operate in any environment because as long as you have jet fuel, you can operate. we w- in ordinary operations, you'll rarely see the battery get to less than an eighty percent state of charge. That twenty percent depth of discharge is a big advantage for us because it means over time, the battery will last about five times as long as a battery that is instead discharging down to twenty percent with an eighty percent depth of discharge, which is where most of the all-electric vertical takeoff and landing systems currently are. So a significant reduction on the battery replacement costs that are otherwise a huge proportion of operating costs for those vehicles. that system, is, you know, generating the propulsive thrust, thrust, that turns into the airplane's operation, taking off wingborne from, from, from start and to finish of its operations. For any vertical takeoff system, whether it's a traditional gas turbine helicopter or whether it's an electric vertical takeoff and landing aircraft, the nature of lifting, heavy metal straight up in the air is just so energy and power intense, right? That it just, it's hugely costly. And then the dynamics, it's the aerodynamics of, of bringing aircraft from an environment where it's in the air but not wingborne, i.e. it's not generating lift on the wing, to one where it's generating lift on the wing and able to fly is itself a delicate dance of physics. And it's why we've seen all of the, eVTOL companies so gingerly step through that envelope. And, I don't know, you all probably know better than I. I can think of at least one of the leading eVTOL companies that has, built a vehicle that can manage that transition with enough assurance that they have a pilot regularly on board now. but I don't know that it's more than one that's done that. I think there's one that has, has executed it least once, but I don't think it's more than many times, and I don't think they've done it, regularly. and I think there's one that, that hasn't ever done it, with a pilot on board, or one or two. So maybe there are two now that have done it with a pilot on board. You know, again, it's just like, you know, I'm grasping because there's not a lot of public details, and yet here we are, you know, a decade the development of their systems and, and massive, you know, billions and billions of dollars dollars invested into their technologies and just reflects how difficult that very thing is. So you challenge the first principle, and you ask yourself, "Do I really need to do that very, very difficult thing, or can I deliver across a very valuable range to a customer without them needing a long runway? Can I get them into the space of a heliport? And if I can, then why would I, why would I go through all the pain, all the cost, all the expense of the other?"

Marc, we had, Andrew Clare on just recently, from Elroy Air. And so when I'm, I'm thinking about the defense being your focus and, we talked about the use case, some of your responses are somewhat similar to the capability of Elroy Air. If you line them up side by side from a defense contested logistics perspective, how are they different?

Yeah, I mean, fundamentally, we've built an airplane system for, humans 'cause we think that war fighting is fundamentally a human endeavor. So it's an airplane, it flies people, and it's always flown people for us for two and a half years. so it's not a drone system. That's one very important difference. second is just scale. You know, we're a twelve thousand five hundred pound gross takeoff weight vehicle. I don't know what theirs is, but it's, fraction of that. third, I think they've invested, more heavily in autonomy as part of their baseline solution. we have a foundational level of autonomy built into our fly-by-wire system, our flight control computer, our thrust-by-wire systems, et cetera. but it is, it is as built as a truck, it is currently a manned system. those are probably the three biggest distinctives, and the fourth is they do vertical operations. They don't do ultra-short operations. So those four things are, are pretty significant

But, in a contested logistics scenario, you're both moving equipment forward that doesn't require a helicopter. It happens to be they're carrying things forward that are a little bit smaller than what you'd be bringing forward. Regardless of whether it's autonomous or, or manned, at the end of the day, you're both bringing items forward faster, maybe cheaper if it's compared to a helicopter, than would otherwise be used with a truck or a helicopter. There's a commonality there. Except you're bringing a human forward and they're not with an autonomous vehicle

Yeah. Look, I, I don't disagree with your points of commonality, but it's just that don't miss how significant the points of the discommonalities are too. So, for example, the fact that they go vertical versus ultra short that they are subject to the same Newtonian laws that all the vertical operators are. And that's, that affects cost in a big way, okay? And that ultimately affects payload and range in a big way too. also, moving people as opposed to cargo is, is, when you think about dispersion of forces, you have to move people and cargo. It's, it's not just spares, it's people, cargo, and spares. And so there's a pretty significant, element to being able to move people reliably and safely, that goes into this as well. So I would, I would, I would not disagree with you on the points of I just, I, you know, when I think about the places where we are not common, they're, they're also pretty significant. Now, we are both hybrids, and it's the hybrid electric commonality that I think most people focus on

Marc, you mentioned a couple times the fly-by-wire envelope protection and the thrust-by-wire or power-by-wire. I'm not sure how you, called it, but what is, what is the precedent for that under Part 23? has there been an air... I don't think there's been a, a Part 23 fly-by-wire certified aircraft yet. Correct me if, my memory is mistaken, but, is that also inside Part 23, or is that a, a special conditions project?

It's inside Part 23. Yeah, we, we've been fortunate to work with the FAA now for, gosh, almost four years in the emerging tech division. We did workshops on every system and subsystem of the airplane so that by the time we were submitting the cert basis and our application, it was really fundamentally a joint, a joint project in, in so many ways because we had just been able to learn so much from them and, and through that working together. and so all of, all of the, all of the conditions that have been determined around the application were, were, were conditions that we worked on with the FAA in the run-up to it. on the question of other aircraft that have done, fly-by-wire in small airframes, you know, some of the best known examples live in the business jet community, and there are some really, you know, wonderful fly-by-wire applications and developments that have been done there. And of course, in the eVTOL community, you now see fly-by-wire also being done. And, and, you know, one of the eVTOL companies is also building a conventional, takeoff and landing airplane, and they are seeking a Part 23 cert on that for their, for their FBW as well. So in that sense, you know, it's, it, it's, it is new and novel to some degree, but it's also recognizable and it has a good precedent and track record to another degree, so we feel pretty good about that. We're working with Honeywell, of course, so we're working with one of the finest, designers of fly-by-wire systems in the world who's got a lot of experience with the regulatory community on this.

how much of that, is still kind of open to be, agreed upon versus a well-agreed path that you're executing on?

You mean with the FAA?

Correct

Yeah, and this is where, you know, be- because I don't wanna make news for you, I'm happy to go off the record at the end of this and give you a little bit of that detail and insight

works. Yeah. Sorry, no, I'm, I'm not trying pry I'm just, genuinely curious about the state of that, cert, leading edge at this point. But anyway, one other thing that, you know, hopefully, you can comment on is the powered lift, SFARs again, right around the time that, that John was with us the first time, he defended, pretty aggressively, against, some of the proposed reserves and, and, dual control, recommended, regulations. And, and it turns out that the SFAR the reserves, allowed, single control training. so in that sense, it, it de-risked a little bit the eVTOL path. listening to your comments about your cert path, was that even a necessary, argument given that you're heading down the Part 23, path and not the SFAR? To what extent that the, does the SFAR affect your path?

It doesn't. We're Part 23. We're simply Part 23. the FAA did a rewrite to Part 23 back in the, the twenty-teens that's been very helpful and effective, to creating the pathway so, so that the FAA, is able to address the elements of it that bring in some novel, technology deployment. But it's just fundamentally an airplane. it's fundamentally a Part 23 path. It's, it's one of the reasons why as we built the team, we've brought in people who have a lot of experience with Part 23 certification. You know, we've got the, longtime, chief product officer from Piper Aircraft on our team. we've got people who have done cert for a number of, Part 23 development programs like HondaJet, Eclipse Jet. we've got people who have come in, with experiences from, Pilatus and the PC-12, PC-24, the chief engineer, works with us. So, you know, we've, we've assembled a team that's done Part 23 over and over and over and over, for the obvious purpose. Yeah, the obvious reason to, to use that expertise, that experience as an aviation company, to, to put together a very strong, very credible plan, hand in hand with the regulator and to go through in the right way.

Marc, just talk a little bit about commercial. y- let's say you're successful the next couple of years with the defense side. You're looking at, a certified aircraft, landing zone 29, 30 area. talk a little bit about the commercial approach. Who's the customer? what's your vehicle displacing that's being used today? what's the use

The Commercial Use-Case

case?

Yeah, great. we have a backlog of 2,200 plus orders that's spread across 63 operators They are a mix of passenger and cargo, but overweighted toward passenger. They're sixty percent non-US, forty percent in the US, so it's a pretty global community. just this year, we've started to convert LOIs from LOIs to firm fixed contracts with significant non-refundable deposits, PDPs in the, the l- parlance of commercial aviation, pre-delivery payments. so we are, we're just, you know, beginning to walk down that path. And, and of course, Bristow was our first announced, deposit of, you know, PDP customer, with a firm fixed agreement. they are very intentionally spearheading advanced air mobility as a new category, so they are thinking very much about the direct aviation market and how to service it. and they are looking at route structures both in the US and non-US, principally around passenger, service to begin. but they-- I expect, you know, as they think through the Part one thirty-five landscape, they may also find themselves flying for others. And so we've talked to them about what it looks like to do what many regional operators do, which is to partner with larger airlines who are trying to solve first and last mile delivery for their passengers. the, the, the kinds of people that you've seen our backlog, like I said before, regional operators. think about JSX, JetSuiteXpress, you know, formerly known. think about Cape Air, Surf Air, now Southern. think about St. Barts Commuter, down in the, in the Caribbean. they're all solving for customers who are trying to, again, achieve last mile options that are always faster, cheaper, and closer to the place they're really trying to get to. for some customers, the vehicle's gonna solve for operations they can't do with other airplanes because of noise restrictions, you all will be able to kind of look around the US and see a bunch of interesting political dynamics where different airports are being shut down or threatened to be shut down because of noise restrictions. And, you know, you go from flying jets to flying turboprops because you can't fly the jets under the noise restrictions anymore, and you, you're gonna try to s- you know, get the, the, the, the turboprops to sneak in under those bars. So noise becomes one, value on what is just a direct commercial replacement if you think back to those three markets, defense launchpad, commercial replacement, and then direct aviation. we have others, who are working with us to design entirely new direct aviation route structures, looking at access points, in places that are close into urban environments that are otherwise very difficult to get to, trying to solve for those thirty-two million trips that are happening every single day in the fifty to two hundred and fifty nautical mile segment. so we're working, with them to bring them together with developers who are looking at the infrastructure. So the, you know, some examples of these are, people who are looking to put barges into urban environments, where they can have vertiports, teleports, and ultra-short, access Access points on those barges. people who are looking to put ultra-short access points into the middle of housing developments in Florida. and so that, that partnering up the pairing of regional operators and developers is clearly part of how the ecosystem is gonna stand up and, and take shape. And then lastly, you know, we've had, conversations with, gosh, you know, eighty percent of the, the largest, you know, major airlines, the one twenty-one guys who fly the big stuff, who do want to understand how to expand the catchment area, to help increase overall, demand for air services. know, think about the passenger who today has to drive four hours from West Virginia to Dulles Airport to get on a flight going to London. And what does it look like when you can offer that passenger a forty-minute, ultra-short flight from the parking lot of the mall near them in West Virginia land at Dulles Airport and go straight by courtesy car to their plane to London? Well, you, you can't do that at most big airports that are so congested, right? Because, you know, if you're a big airline, you're never gonna trade a, a landing slot for a small airplane. You're always gonna look to upgauge and put a bigger airplane on it. if you show me an airplane that can enter the airport environment like a helicopter, flying on approach paths that are non-intersecting to the air routes being used for the big planes, land on tarmac that's available, by hangar space, by ramp space, et cetera, to enable that operation, it's a really interesting, really interesting thing. And so we've got se-several different projects with the FAA right now, working to, put together the data necessary to justify the safety and performance of those kinds of novel, airport operations too. So, you know, what I'm showing you obviously is there's a real range of use cases that's gonna get built up across the customer set. Like any good airplane, it's gonna hunt in a lot of areas. And so far I'm talking principally passenger, service, but there are interesting cargo applications as well that we can talk about.

I've often thought Electra had a really interesting model. You, you have a- almost the best of many worlds. when you're talking to your potential commercial customers after 2030, and they're probably comparing you to some of the leading eVTOL companies today, cost-wise, cost for operation per passenger, how do they compare?

The, the way to think about this is on a CASM basis, right? The the cost on the average seat mile. what does it cost me to move a passenger a mile? if you look at the Bell 429, think about it as a helicopter comparator. It's, it's r- it's about $2.65 for CASM. The eVTOLs, we expect to see land around a $1.90. So $2.65 down to a $1.90 from Bell 429 to an eVTOL

And they would say the same, about a buck 90, the eVTOL companies

Well, it depends on whether or not they include their battery replacement costs. But if you ask them to include their battery replacement costs, yes, they would

Okay And then you, your chasm?

So our Chasm will come in around 80 cents, which is you're right on par, right on par with the, w- w- sort of what I'll call the most affordable nine-seat, passenger airplane comparator

it almost comes down to that. But when you're talking to to the airlines today, I know you're talking to Bristow, and, we've had David on many times. if somebody says, "But if only you could do this," What would be the one if only when it comes to the commercial marketplace?

"It's the 20% Stupid"

Well, look, if, if we wanted to make life easy, we'd start by beating the existing nine-seaters by twenty percent on chasm, right? The, the reason, the reason I say that is from my prior days in commercial aviation, I think a nice rule of thumb is if you wanna bring a new airplane into operation and go head-to-head with existing airplanes, you wanna beat it by twenty percent, and that takes care of the switching costs, and that gives the operators the reason to, to come your way. but if you build that airplane just to fight on chasm alone, you're gonna trade off ultra-short capability. You're not gonna solve for the rule of six in a way that, in my view, gives you that access like a helicopter in enough environments. And so that was one of the hard, you know, design decisions we had to wrestle with. We had to ask ourselves, "Are we just trying to build something that competes for replacement in the existing commercial market, or are we trying to change the way people move regionally? Are we trying to change the regional mobility pain gap?" Which necessarily means g-- using, existing GA airports that no commercial operator would use 'cause the runways feel too short for the safety margin they need for commercial operations. It means flying to parking lots and barges and getting to the place where we have access points on the tops of, parking lot buildings and places. Like, all of those things require an airplane that can do the extraordinary performance I was describing earlier on this podcast. And so, so that's, that's the big trade. If, if someone said, "What else could you do?" they'd say, "Take off twenty percent more cost." because that would enable that second market to open up really fast. Now, we're not gonna do that because we're gonna change the world, and that's what the commitment to the ultra-short performance is all about.

Now, a- as we start to wrap up the podcast, when you got a guy like you on a podcast, you gotta make sure you're asking the right questions. And you're very well-spoken for the short time you've been there on, the unique advantages at Voltera, clearly. what question would you ask yourself, given your experience at Boeing, given your very unique perspective on the globally paged marketplace? What would you ask yourself in, and given obviously your now experience with, with ultra-short vehicles and their competitors, both on the defense side and on the commercial side? What question would you ask yourself that you think most of our listeners would wanna hear?

You, you look, what we should talk about for a minute before we wrap up is, is just, what the trend lines look like when you think forward. instead of coming back to the horizon of the technology, where does it go from here? it's really important to remind ourselves that we're at the very bottom of the S-curve on the electric propulsion architectures. so even in our last discussion about cost, like here's a good example. comparators who are, you know, 20, 30-year-old airplanes are not getting any cheaper because they're at the top of their S-curve. But I promise you, in 10 years of operation, the cost of the E9 is only gonna go down. So that twenty percent that we don't, you know, start with as an advantage, we'll wind up there for sure. up there because we'll take weight off and give more performance and payload to the passenger and to the co-operators we go. we'll take cost out because batteries will get more efficient. know, we, we know that on the 100-year sweep of, of view, batteries have been improving at two percent a year. if you look at the last 20 years, they've been produced-- they've been improving more like three to five percent, the five percent starts getting more to be the average as you get to the last couple of years. So we can pencil out where those battery improvements are gonna go and what that'll mean. And, and as a result, we've got an airplane that's a bridge to the electric future. As batteries improve, we get more and more performance out of this airplane. As other s- sources, energy sources come online, whether it be L-LNG or hydrogen, we've now built the electric architecture that can take on any of those sources, and put them to use. that's where it gets really exciting. And that's where then you, you step back and say, "Okay, well, beyond a nine-seater," which remember, we, we, we chose nine seats, and we chose the weight very intentionally to put ourselves in the, the center of a bunch of intersect-intersecting regulatory regimes to keep it simple. Part 23, no type rating, et cetera, et cetera. know, now when you expand that and you step out to bigger airplanes you ask yourself, "Well, what else can the electric architecture do? Maybe it's not ultra-short anymore. Maybe now it's efficiency and cruise, and what does that look like that I couldn't do with a turbine or a piston?" That's where it gets fun. And so, you know, we should not miss the horizon that's out there, that this is the bottom of the S-curve, that everything's gonna keep changing. This is genuinely a third era of aviation, and, we're excited to lead it.

Marc, given the S-curve and diminishing returns on investment, it just, kind of, triggered a, a question in my mind that I have to ask you given your long time running strategy at Boeing. and during that stretch of time, n- neither prime launch, the clean sheet, single aisle narrow body. this is-- I, I'm zooming out, I understand, from the industry, but I would appreciate your insight. And, that single aisle market segment has not really seen, like I said, a new airplane in roughly 40 years, perhaps. Yes, there have been, re-engineering, derivatives. derivatives. Uh, the 797 has been studied for a number of years. only recently there have been talks from both, both of the primes about their, vision of, of the timeline on when a new narrow body might be introduced. from your strategy seat, have the barriers to this, clean sheet airplane, the certification cost, the capital, all of it, has that grown so high that even the incumbents who, raise those barriers can no longer clear them? in a weird way, it seems like a genuinely strange observation that two companies with the most money, the most engineers, the most certification experience, have effectively stopped designing new airplanes in the segment that matters the most. How do you view that dynamic, especially given your comment that, hey, a lot of these platforms have reached the, the right end of the S-curve, and the industry could really benefit from some new breath of, fresh technology and

The 3rd Era is Real

innovation?

Yeah. Look, it's one of the reasons I'm, I'm really excited to be right where I am right now because the constraints you articulated are real. The need to innovate is real. you're right, there have been a lot of very interesting comments in the press just in the last week, from both the, the companies you named suggest that it's, it's still gonna be a little bit of time, until they're ready to announce the next thing. and you know, none of that is a surprise on, on one hand. On the other hand, we all know that this is a moment in time where there's so much technology change afoot we've got to grab hold of it and drive forward. that's why I said earlier that there really are structural impediments the large primes doing what we're doing on small aircraft. They need to work on large aircraft to move the needle sufficiently in terms of economic terms for, for, for a quarterly earning. That's just, that's just the reality of, you know, the kind of constraints I faced in the prior role. it's gotta happen in small airplanes, and it's going to take the innovators, and the entrepreneurs to drive this third era forward. But the third era is real, and the mistake would be to think that because there are structural impediments to doing much of this innovation, in the large prime environment, that the innovation's not going to happen. It just means that if we don't do it in America, it'll happen somewhere else. And so it's so important for it to happen in America, and it's so important for national security purposes. It's so important because of the multiplier effect that improved mobility always has on economic prosperity. We've got to do this. So it, it-- this is a very mission-minded effort, by everybody at this company for many of those reasons.

It's funny, Luka, to your question, and we asked one of our guests many years ago now this question, and he was very knowledgeable about Boeing And he kind of implied that, listen, the best return on capital right now is to get the most out of what we have as opposed to investing in something new. and that must be a real challenge for the leadership of these big companies who think, you know, at the end of the day, I'm responsible to my shareholders, and the shareholders may be just better served to get more out of what I got, rather than this new... clean sheet narrow body. Is there a chance to do something different than we've traditionally done?

the, the capital markets are extraordinarily efficient. I, I expect when either company's ready, they'll have-- they'll, they'll find and they'll, they'll secure the necessary funding from the marketplace. I, I, I don't doubt that for a second

So what's then, to, to Luka's question again then, then what's the single biggest reasons they haven't done it?

Yeah. Well, I'm not gonna divulge to you the single biggest reasons that we might have talked about back during my time in those roles

Okay,

can imagine

maybe top three reasons then.

Sure, Luka, sure.

Where Innovation is Coming From...

we'll, we'll stop scratching here in a second. But when he said, "Listen, at the end of the day, the best use of the capital is to get the most out of the vehicles we already have," that must be one of the greatest impediments to building a clean, cheap vehicle

Look, I-- what, what you guys are really trying to, push for is, you know, where, when, where will commitments be made to new innovations and to new vehicles? And, and there, a-again, that's such a multifaceted and, and interesting, question. It's so important, obviously, to the future of our industry, but also to the future of each, each of these companies. you're, you're not gonna get me to share out of school anything that I shouldn't share. but, but most importantly is to recognize that there is innovation happening, like it's happening now. And this is exactly why I keep telling the story of what we're doing, because is necessary for a whole ecosystem to come together to support new type of aircraft like Ultra Short to the market. And whether that's regulators or capital or support from, local environments that support the operations, customers that need to step into it, suppliers that need to take the risk and invest, you know, in big ways to bring together all the pieces of the bill of materials. it takes an entire ecosystem, and it's gonna happen through small companies like ours. So the, you know, you're asking for a question about Boeing and its decision-making. I'm not gonna share any answers with that to you, with, with you on that one right now. but there are really important implications from it that I hope are coming through hope you take home.

One of the implications, given that you've, ran corporate development at Boeing as well, do, do you see that most new entrants ultimately get absorbed

Yeah, it's a great question. It, it definitely has happened, pretty regularly. I mean, we've all seen the sort of small-- medium fish swallows small fish, large fish swallows medium fish, and it's happened over the years to the point where, you know, all of the US aerospace went from like, you know, 400 companies to about five. so that is a, that is a thing for sure. Our intention is to build an airplane company here. You know, our intention is to build something lasting and, and meaningful. And, we think we've got the, we think we've got the right approach. We know we've got the right technology, and now it's about building the right team, and putting up the factory and getting airplanes out the door

Marc, well, you've been very generous with your time. Is there anything we haven't asked that you'd like to, address to the audience?

Jim, just thank you. thank you and Luka and Peter for the time together and, and for the conversation. I, I appreciate your interest for sure, and I appreciate y'all telling the story of, this third era. It's, it's a ton of fun to be working on it and to be at the edge of what's developing. Lots more to come.

Great, Marc.

Thank you very much, Marc,

You're welcome