Good afternoon, and thank you for attending today's Archer Aviation Second Quarter 2022 conference call. My name is Daniel, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to our host, Andy Missan, Chief Legal Officer. Please proceed.
Thank you, operator. Good afternoon, everyone, and thank you for joining us today to review Archer's second quarter 2022 financial results. My name is Andy Missan, the Chief Legal Officer of Archer Aviation, Inc. With us on the call today are Adam Goldstein, our CEO, Mark Mesler, our CFO, and Tom Muniz, our COO. We posted a shareholder letter detailing our Q2 2022 financial results and business overview to our IR website. This call is being recorded and an archive will be available on our IR website. Before we begin, I would like to remind everyone that during today's call, we will be making forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from those expressed or implied in the forward-looking statements.
These risks and uncertainties are described in the Risk Factors section of our annual report on Form 10-K, our 10-Q for the quarterly period ended March 31, 2022, and other filings with the Securities and Exchange Commission available on the SEC's website and on our investor relations website. Except as required by law, Archer disclaims any obligation to update or make revisions to such forward-looking statements as a result of new information or future events. Also, please note on this call, certain financial measures are presented on a non-GAAP basis. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in our shareholder letter posted on our investor relations website. We will begin with commentary, and then we'll open up the call to questions. With that, I'd like to turn the call over to Adam Goldstein. Adam?
Thanks, Andy. We are excited to share with you all today the continued progress that we have made. We are now at an inflection point in the company where we are advancing our commercialization efforts. This includes the development and certification of our production aircraft, building out the supply chain and manufacturing infrastructure needed to produce the aircraft, and kicking off efforts to prepare for our initial launch markets and routes for commercial operations. The proof point in the confidence of our development can also be seen by the actions of our partners. As we announced earlier today, we have received a $10 million pre-delivery payment from United Airlines on 100 aircraft as part of their purchase agreement for up to 200 aircraft.
We believe this is the first such pre-delivery payment of its kind in the eVTOL space, and it reflects the maturity of our aircraft development program and the confidence United Airlines has in our commercialization efforts. The technical progress of the Maker aircraft has been outstanding. It is an important aircraft for us because it has validated many of the key capabilities of our twelve-tilt-six configuration, software, flight control, and other key design decisions. The advancements we have made with Maker have proven we have chosen the right aircraft configuration that can balance performance against complexity. Archer's goal has always been to develop an aircraft that can perform rapid back-to-back 10 mi-50 mi flights while maintaining the lowest level of complexity possible to ensure the vehicle can be certified, mass manufactured, and operated in a cost-efficient manner.
Its performance since its first hover flight in the summer of last year has demonstrated the engineering excellence of our team. I believe the progress we have made with Maker has been nothing short of incredible and industry-leading in terms of time to execution. It's important to remember that the purpose of Maker is to be a test bed to support the development of our pilot plus four-passenger production aircraft that we are working to certify with the FAA. The advancements we have made in the Maker program have enabled substantial progress in the development of our production aircraft, and we are now at the point where we will shift the focus of our discussions towards the production aircraft. Given this shift today, I'm excited to reveal the name of our production aircraft, Midnight.
You can see a teaser silhouette rendering of Midnight on the cover of our shareholder letter, and we plan to do a more robust unveil of it in the near future. The design of Midnight was optimized around commercial operations with key performance requirements like payload, range, and speed intended to yield the best possible operating economics for the business. Today, the vast majority of our 400+ employees are working day-to-day on the development and certification of Midnight, as well as supporting go-to-market activities. This past week, we completed Midnight's preliminary design review, or PDR. The PDR is where we review and freeze the key design elements of the aircraft. PDR is not just another development lifecycle milestone.
It's about ensuring that we are on track from a program development timing standpoint, maintaining vehicle performance characteristics around speed, range, and payload, and not introducing any design complexity that would cause unnecessary risk to the FAA certification process or to scale manufacturability. I'm extremely happy with where we are at this point in the program. The talent on the Archer team is truly exceptional. As the aircraft development has matured, we are also building our go-to-market team. We have recently onboarded two leaders that are key to our commercialization efforts, Tom Anderson as our Chief Operating Officer for Urban Air Mobility, and Bryan Bernhard as Chief Growth & Infrastructure Officer. As Archer advances commercialization of our aircraft and launching our UAM network in major cities. Tom's deep experience in airline management, operations, and fleet maintenance will help us introduce and scale the UAM business utilizing Midnight.
Tom has spent his career developing and scaling commercial airline operations, including taking JetBlue from concept to operation. Core to the build-out effort is ensuring the necessary infrastructure is in place. Brian will be responsible for building and scaling Archer's operational footprint across our target markets. He spent nine years at WeWork expanding their infrastructure footprint as Global Head of Development. He was responsible for launching a majority of their key markets and has built hundreds of physical locations spanning across cities around the world. Brian brings to Archer expertise in not only scaling physical growth, but how to do so in accordance with all local and jurisdictional guidelines. We are looking forward to sharing more details on our go-to-market strategy with you on future calls.
I now want to take a few minutes to update you on our progress against the key milestones we've highlighted in our shareholder letters since February. Our 2022 milestones are focused on both Maker and Midnight. There's one Maker milestone and two Midnight milestones. Our first milestone is a Maker milestone, and that is to successfully complete the first full transition flight. The second milestone is a Midnight milestone, and that is agreeing with the FAA on our means of compliance with the certification basis established in the G1 issue paper we finalized last fall. The third milestone is also a Midnight milestone, and that is to select and break ground on our initial manufacturing facility. Now let's take those in order. As we announced two weeks ago, we've completed the first two phases of our Maker flight test program, hover and critical azimuth.
We are regularly flying many times per week and sometimes multiple times per day. We are now shifting into the third phase of Maker's flight test program, during which we will evaluate its system performance at increasing forward speeds. We remain on track to complete our first full transition hover-to-fixed-wing flight later this year. With respect to our second goal, we've continued to work closely with the FAA to facilitate agreement on our means compliance for our Midnight production aircraft. We believe we remain on track to achieve that goal. Finally, to successfully commercialize Midnight, we have to manufacture it at scale. That's why our other 2022 milestone is focused on manufacturing. We've evaluated over 200 sites across the U.S. in collaboration with Stellantis. We are on track to announce more details on our progress in this area later this year.
With that, I'm going to hand it over to Tom Muniz, our COO, to share with you some further insights into how the team has transitioned from the Maker to Midnight program.
Thanks, Adam. I'm very excited about Archer's progress in the second quarter and more recently with the successful completion of our PDR. We truly are at an inflection point. Our strategy from the outset has been to take the most capital and time-efficient path to developing our production aircraft and launching commercial operations. Maker was a key element to the strategy, and it's provided invaluable technical data and has served as a reference design point for establishing our production aircraft certification requirements. We knew from day one that it was better to start by building a demonstrator aircraft, Maker, in parallel with our work with FAA to set the certification requirements for our production aircraft.
This is because it has allowed us to have greater certainty on the certification requirements before getting too far along the development of the production aircraft when changes to design due to certification requirements become more challenging and costly. Our production aircraft, Midnight, has been designed and optimized around certification and our planned commercial operations. Midnight is designed for high-throughput Urban Air Mobility flights. Midnight is designed to be able to complete back-to-back missions with minimal time charging on the ground while passengers load and unload between flights. This is a key driver to the bottom line of our operating model. As Adam mentioned, our team successfully completed our PDR for Midnight earlier this week.
This is a major milestone in any development program, and I'd like to share some of the key performance metrics for Midnight that came out of the PDR and why they're important for commercialization of our aircraft. One of the most critical metrics we track is payload, the weight of the pilot, passengers, and baggage that the aircraft can carry. For an eVTOL, payload is the hardest performance metric to achieve as it is the output from all other design decisions that affect the weight of the aircraft. Midnight is expected to have a payload of over 1,000 lb, which we believe will be industry-leading. This payload is important because it supports our operating model of generating revenue from up to four passengers per flight. We are extremely excited that the output of our PDR has validated this key enabler to our commercial operations.
Another key metric is the minimum turnaround time needed to charge the plane, assuming it has completed a typical 20-mi flight. Our analysis is showing that only about 10 minutes is needed on the ground to charge between such flights. This metric is also critical to achieving our operating model, as this will facilitate fast turnaround times on the ground and enable higher aircraft, and therefore passenger throughput. I also want to touch on our metric of direct operating costs. The success of our PDR has given us even greater fidelity that these costs are going to land at or below our internal targets, giving us high confidence in our ability to make flying on our aircraft accessible with prices comparable to ground-based ride-sharing options.
As we move beyond PDR, we are ramping up our manufacturing and supply chain activities as well as progressing the build of an initial Midnight aircraft that will enter flight test next year. We anticipate parts for the Midnight aircraft will start arriving at our low-rate initial production facility later this year. We have already discussed the status of our manufacturing site selection, which remains on track. When it comes to supply chain, as we've discussed before, we are focused on collaborating with and sourcing from proven aerospace suppliers. We've selected suppliers for approximately 50% of the bill of materials for Midnight by cost. A couple recent examples are our selection of FACC to fabricate structural components for Midnight and Honeywell for our actuators and climate system technology. We will continue to announce relationships with key suppliers as they are finalized over the coming months.
With that, I'll turn it over to Mark to discuss the financials for the quarter.
Thanks, Tom. This is an exciting time for Archer. As both Adam and Tom have just outlined, the successful exit of our PDR moves Archer into its next phase of development on our production aircraft and advances our commercialization efforts. PDR provided us confidence that Midnight can achieve the key operating assumptions associated with our business model. This is important as we mature our go-to-market strategy. I'd like to briefly share with you how our confidence in three of those metrics for our Midnight aircraft, range, turnaround time, and aircraft cost, enable our business plan from a top-line and cost standpoint. Let's start with the top line. As we have discussed in the past, our revenue model has two primary drivers.
One, the direct sale of our aircraft to operators, like the contract we have with United, which we just received a $10 million pre-delivery payment on 100 aircraft. Two, the operation of a UAM network in the top cities in the U.S. and around the world with target mission profiles in the 10 mi-50 mi range. As Tom discussed, based on our PDR, our data supports Midnight's payload will be greater than 1,000 lb. This is an extremely important metric for us as well as the industry. We believe that commercial feasibility in both of our revenue models is predicated on having the ability to transport up to four passengers. The PDR process has provided us greater confidence that Midnight will be able to transport four passengers plus a pilot. Given that, we believe strongly that the Midnight aircraft can support these two revenue models.
Tom also discussed the validation of an approximate 10-minute charge time for Midnight following a 20 mi flight. Given our target missions are in the 10 mi-50 mi range, that is also a very important metric as we try to maximize the number of flights our aircraft can perform on a daily basis. This approximately 10-minute charging time means our Midnight aircraft can spend less time in transition on the ground, which should allow for more flights on our routes than if it took much longer to charge. Again, this metric is a key enabler for markets with high customer throughput, such as potential routes from Manhattan to JFK, LaGuardia, or Newark. Another critical metric that has been supported by Midnight's PDR was our aircraft cost. With approximately 50% of the suppliers selected for Midnight's bill of materials, we continue to track to our target cost to build our Midnight aircraft.
As we think about unit-level economics, hitting this cost target is very important. We have a target business model. Ensuring we stay within cost parameters while maintaining rigor around safety and quality is essential. We are well on our way to doing this. As the CFO, I'm very happy with how the team's work getting through PDR has supported some of our top-line revenue drivers and aircraft cost targets, providing us greater confidence to achieve our target business model. At some point in the future, we will share more detailed information about the specific elements of our target business model and unit-level economics so that investors can better understand the key drivers and assumptions around that. We are in a competitive space, and so we are sensitive to sharing too much while at the same time offering greater transparency.
As I discussed on the last call, in parallel to the significant technical and operational progress at Archer, we are making great progress in building a world-class accounting and finance team and implementing critical financial processes to enable the business. As we advance our commercialization efforts, our accounting and finance team is entrenched with our functional leaders to help make key data-driven decisions. Some examples are working with the supply chain team to ensure that the economics of the supplier agreements we sign support our business plan. Working with our data science team, running financial scenarios for potential initial launch cities and routes, and reviewing business cases for capital equipment to be installed in both our low-rate initial production facility and full production scale facility to ensure we are tracking the fully burdened cost targets.
I continue to stress that Archer is and must continue to be a very fiscally disciplined company, and having good decision support capability is a key part of our overall financial and data-driven rigor that helps us to allocate our precious capital in an informed manner. Within that context, let's turn to our financial performance for the quarter. We ended the quarter with $654.8 million of cash and cash equivalents on our balance sheet. We used $49.4 million of cash in the quarter. At this cash balance and burn rate, we continue to be one of the most well-capitalized companies in the sector. non-GAAP total operating expenses, which excludes stock-based compensation and warrant expenses, were $50 million, which was right at the midpoint of our estimates range.
Non-GAAP operating expenses increased sequentially by $10.4 million, as expected, as we hired more people to staff our engineering programs and build out the requisite general administrative infrastructure to support the growth of the business. We've also invested in parts and materials for both our Maker demonstrator aircraft and our Midnight production aircraft programs. We incurred a loss on adjusted EBITDA of $49.2 million, and the sequential expansion of that loss by $10.1 million relative to Q1 2022 was primarily driven by our increase in non-GAAP operating expenses for the reasons I just mentioned.
On a GAAP basis, total operating expenses for Q2 2022 were $80.2 million, which included $25.6 million of stock-based compensation, $1.2 million of warrant expenses for our warrants issued to Stellantis, and $3.4 million of separation-related expenses for our former co-CEO. These results were at the very low end of our Q2 2022 outlook of $80 million, primarily because of lower stock-based compensation. Finally, let's look at our Q3 2022 estimates for spending. Now that we've exited our PDR, we will see an uptick in spending to support non-recurring development costs related to bring up of Midnight suppliers and increase spending on parts and materials for Midnight aircraft per our plan.
We anticipate total GAAP operating expenses of $95 million-$103 million, and total non-GAAP operating expenses of $63 million-$71 million. This reflects expected stock-based compensation and warrant expense of approximately $32 million. Finally, we will be very active attending a number of conferences, meeting with investors, and engaging with the financial community over the course of the coming months. A detailed calendar is available on our website and in our shareholder letter. Investor education on the eVTOL sector, as well as Archer's progress and capabilities, continues to be one of the primary focuses of our investor relations function. We plan to hold a series of teach-ins over the coming quarters to educate all stakeholders on key topics for the industry.
In summary, Archer continues to be laser-focused on doing what we say we are going to do with respect to our operating and financial goals. Successfully exiting our PDR phase gate milestone has provided us the data and confidence that we can further advance certification and commercialization efforts for our Midnight production aircraft. Further, we are starting to validate many of the critical technical and cost variables that will enable our target business model. Customers see this as well, as evidenced by the $10 million pre-delivery payment that we received from United. We continue to execute all of this in a very financially disciplined and informed manner. With that, operator, let's open it up for questions.
If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question comes from Edison Yu of Deutsche Bank. Please proceed.
Hey, thanks and congratulations on the recent milestones. I had two questions. First, on the United prepayment, I was wondering if you could provide some sort of roadmap in terms of future predelivery payments and also what kind of milestones would be associated with that.
Hey, Edison. This is Adam. Thanks for the questions. United, you know, gave us $10 million deposit for 100 aircraft, and they did this really because of the confidence that they have in eVTOL as an industry, the team that we've been building, and really just the maturity of our technology platform that you've seen since PDR. I think the other thing that was really important here is that they're securing their spot here in 2025. There's gonna be extremely limited supply in the early years of the eVTOL market. It's really my belief that Archer will be one of, if not the only company in 2025 to have aircraft that you can actually buy and operate in that year.
You know, given Archer will also be operating aircraft, it's going to be limited in terms of number of supply. The first 100 aircraft, I think are gonna be really important for the go-to-market strategy. Now, we are also evaluating different launch markets, different launch scenarios, different routes. We had formed back in April the Joint eVTOL Advisory Committee, where we were working on operational matters and maintenance matters, and this has allowed us to really start to map out some of those early concepts here of our go-to-market strategy. As that starts to mature further, you will hear you know more updates and announcements around the different areas we will launch into and ultimately you know additional planes that will come online. I think more to come on that.
I'll turn it over to Mark to talk about, you know, payments and how the deposits work.
Yeah. Hey, Edison. I think you can look at the deposits and any future payment milestones sort of on traditional aerospace payment terms. We haven't disclosed those publicly, but you could assume that they'd probably be aligning with manufacturing and then ultimately deploying of the aircraft. I think it's probably going to be pretty typical of what you'd see in the market.
Understood. Second question, wanted to ask about kind of key learnings. You've been doing obviously ramping up on test flights. Do you have any sort of takeaways that you could maybe share, potential, you know, improvements or upgrades, based on either the test flights and also post PDR? Thanks.
Yeah. Hey, Edison, this is Tom. Thanks for your question. Just kind of answering that in context, right? Maker has always been part of our broader strategy to learn as early as possible about some of the key decisions that we've made with regard to the aircraft that we're carrying forward into the product. The biggest thing there is the aircraft configuration itself with twelve-tilt-six propeller configuration. You know, we've been doing lots of flight testing with Maker over the past couple of months, as Adam said, flying many times per week. Each of those tests is really specifically designed to get us data that we can use to validate key elements of the system. The flight control laws for the vehicle, the broader flight control system, as well as the aerodynamic model, and other features.
All of that data has given us great confidence moving forward with maturing the Midnight design. As you said, you know, we completed our PDR very recently. Essentially all of those lessons learned have been incorporated, and now we have high confidence that we'll be able to get through our certification and commercialization with as low risk as possible.
Thanks. If I could just sneak in one more very very high-level question. Do you worry at all about consumer adoption? I think, you know, this sort of UAM world that we're all sort of, kind of looking at, one concern that we've heard among investors is, look, this is a. You know, you're gonna need some big changes in kind of the infrastructure, the way we kind of operate. How do you think about just that at a high level?
This is Adam. I think there's two kind of perspectives to look at. You know, the first one is, will consumers want to take the vehicles? Then the second one is, you know, kind of the infrastructure that's gonna be necessary put in place, in order to do that. What's interesting is that, you know, I think one of the early go-to-market strategies is going to be flying from airport to city center, and those are what we call trunk routes. We already know that there is demand for people to take these routes, as we've seen in Rideshare. You know, the Lyfts of the world are showing, you know, substantial amounts of demand, for these routes.
We also know there's a willingness to pay, from the same, you know, from the same example of using Lyft. I think the demand will be there, and I think the cool factor of these vehicles on top of the convenience that the product gives will have a lot of early adopters be attracted to the market. If you take that and then you add a brand like United to the vehicle itself, which stands for safety, I think you have a high degree of confidence that there will be a lot of users that want to adopt the products pretty early. The second phase of, you know, kind of the question really relates to infrastructure.
I think what we've seen really over time is demand for products drives the use case of, you know, of products. Yes, infrastructure is certainly going to be very challenging. I think that's definitely going to be one of the tricks. We recently just hired a gentleman named Bryan Bernhard, who was previously the head of global development at WeWork for the past nine years. He obviously had to battle through an incredible amount of challenges to stand up as much real estate as WeWork has in the most recent history.
I am very optimistic that, with the right team, and with the right amount of demand, that we'll see for the product, that we will be able to get out there and really start to stand up infrastructure. My last comment on it is, the early infrastructure that likely gets stood up will be around airports. Having a partner like United, where when you walk in to talk to the airport and you walk in with a big customer like United, it's a different dynamic, it's a different conversation than if you walk in by yourself. I think, you know, that gives us a really unique advantage to get to market here.
Great. Thanks a lot.
Thank you. The next question comes from Savi Syth of Raymond James. Please proceed.
Hey, good afternoon. You know, on the supplier side, as you secure these suppliers, I was curious what type of agreements you're putting in place, and I'm trying to understand what your commitments are to them and vice versa.
Yeah. Hey, Savi, this is Tom. Thanks for your question. The way we think about these supplier agreements is in the context of securing our first several years of supply, essentially. We're negotiating long-term agreements that support production up to the rates that we've published in some of our previous guidance material. Strategically, we're focused on partnering with aerospace companies that have proven track records of delivering successful certified hardware because that's part of our broader strategy to minimize risk going to market. As part of that, we do have some commitments to fund non-recurring engineering for the development of materials to support us.
What we found is great partners in the supply base who are willing to really partner with us and drive to get these products and ultimately our aircraft to market on the timelines that we're tracking to. We've been very pleased with the progress on supply chain.
That's helpful. Thanks, Tom. If I might ask, I know on the last earnings call you talked about, you know, kind of things that the joint advisory committee is looking at, and you mentioned, you know, being able to maybe talk about in a future call some of the maybe locations that you're targeting. While it's still early days, I was wondering as you have those conversations and you gain more confidence with the Midnight, you know, what Midnight can do, have you had any kind of new learnings in terms of maintenance operations that are different from your earlier thinking?
Yeah. Thanks, Savi. This is Adam. We have, you know, the relationship with United I think is, you know, it's pretty special. They're not just, an investor or, you know, a group that's buying planes. They've, you know, dedicated a lot of time to helping us think through, you know, different operational matters and, you know, go-to-market strategies and maintenance strategies. I would say somebody at Archer, myself included, is probably talking to United on a if not weekly basis, every other day basis. We're pretty deeply, integrated with them. They've been very helpful in doing that. It's an iterative process. It's not like necessarily a big aha moment, that you have, but there's a lot of, you know, conversations.
We each bring something, you know, different, you know, to the conversation. United's obviously operated and serviced vehicles for many years, and so they can kind of guide us in some of our decisions that we're making. Also thinking, you know, about the way the world's gonna work in the future and kind of different strategies allows Archer to, you know, help bring something unique to the conversation. The discussions, you know, with United have you know, really led to the identification of locations and routes for our go-to-market strategies. We are, you know, the deposits that we announced relating to 100 aircraft are around the high-level conversations we're starting to have against very specific routes.
Those vehicles are being considered against very specific routes in, I think very, you know, attractive go-to-market, specific, you know, cities. We are maturing that strategy with, you know, with United, and as we, you know, continue to mature that, we'll start to, you know, give more details here, on that.
Can I clarify, Adam? Is the plan for Archer to do the maintenance support, or is that something that you would get, you know, some of your partners to do?
We're evaluating different strategies there. We have spoken with several different parties there. I think it's, you know, it's a little bit early to give the, you know, kind of full understanding of that.
Makes sense. Thank you.
Thank you. The next question is from David Zazula of Barclays. Please proceed.
Hey, thanks for the question. You've thrown out some really helpful operating metrics that you're planning on for Midnight ultimately. Can you confirm that the 100 mi range is, you know, with all of the, you know, planned flight systems on board as well as the 1,000 lb? And, you know, similarly for the 10-minute charge time, is that at the end of battery life? You know, some numbers get thrown around in this industry, so I just wanna make sure we're specific in talking the same language.
Yeah. Thanks, David. This is Adam. I'll give you an opener, and I'll turn it over to Tom. Going through PDR, you know, we really have to start getting really specific about the design of the vehicle. It's not theoretical, it's not just drawings. We're actually, you know, starting to sign up suppliers. The level of fidelity that goes into the engineering is very high. We have, you know, a very good understanding of you know where we think the speed, range, and payload of the vehicle is going to be. The main goal that Archer always talks about is our core nominal mission, which is a 20 mi-30 mi rapid back-to-back mission where we can carry a pilot plus four passengers, and that's what we've been designing around.
The target payload that we have with that mission is around 1,000 lb. That 1,000 lb also comes with a degree of margin that we built into it. We do expect the vehicle to grow as we go through the certification effort. That 1,000 lb has an additional several hundred pounds of margin that we put on top of that. We feel very comfortable that we will land with a certified vehicle that has 1,000 lb of payload. I also believe that's going to be industry-leading. The reason why that's been so important to us is you look back in history, payload, when it comes to aviation, is one of the critical drivers of economic viability.
We do think the ability to carry at least three passengers is core to establishing a profitable long-term business. As it relates to range, you know, the kind of numbers that we have always really thought about have been really focused on how many back-to-back missions can you do. The Midnight vehicle has been designed to do upwards of around 45 missions back-to-back. Now, we don't necessarily model that 'cause that would mean perfect execution every single flight. You can take some sort of knockdown number if you think about just the concept of operations around loading and unloading of passengers and people being late and weather and all different types of delays that can come into that. But that's what the vehicle's being designed around.
In order to be able to do that rapid back-to-back missions of 20 mi-30 mi, you need to design a vehicle that can go longer than 30 mi because you don't wanna sit on the ground charging all the time. A lot of these numbers can be, you know, changed around based on different assumptions that you have. For example, you can charge faster, but that just comes at the expense of using up your battery life cycles faster.
What we've done is looked at the concept operations and thought about a typical day where we might be charging at a higher rate during the peak operations and charging at a lower rate of you know during a slower period of the day where we have a typical charge time of between 10 minutes and 11 minutes throughout the day of our operations. Then I'll turn it over to Tom to talk a little bit more about the range of the vehicle.
Yeah. Thanks, Adam. I think you summarized it well. You know, we don't think of maximum range as really a design target for the vehicle as much as the direct operating cost and the real-world use case that Adam just described. Putting the numbers into context, right? While it's true the vehicle could fly up to 100 mi with a brand-new battery, in reality, what we care more about is this fast turnaround time, charge time between flights that lets us do, you know, tens of flights per day up to that theoretical maximum Adam mentioned of 45 flights per day. That's really the driver there.
You know, the way we make money is by selling tickets to put as many people as we can in the vehicle and then get the vehicle flying as many times as it can per day. All of that really boils down into our direct operating cost, which we touched on earlier. We're actually coming in better than our internal targets. That's why we have high confidence we'll be able to go to market with ticket prices that are comparable to existing rideshares, right, in that few bucks per passenger mile.
Thanks. Very helpful. All right, Tom, can you discuss a little bit the testing program as it's come so far and why, you know, you're comfortable be able to talk about range assumptions without having transitioned to forward flight yet?
Sure. Absolutely. As Adam touched on earlier, we completed on Maker the second phase of our flight test campaign. In that series of tests, we validated the robustness of the design to essentially crosswind landing capabilities because that's another again important piece of high utilization and uptime. We've demonstrated that the vehicle's robust up to you know very high crosswind limits. You know, we've been flying sideways, backwards, up to 15 kn. That really validates the flight control system as well as the configuration of the aircraft that we're carrying forward into Midnight. When it comes to validating range, though, that's not a primary driver on Maker. We will gather more validation data to support our aerodynamic model, which goes into you know estimating the drag of the vehicle, et cetera.
Really, where we get a lot of our confidence for the Midnight aircraft is in ground tests, both on the battery in terms of very extensive cell testing as well as wind tunnel testing. We've completed some wind tunnel testing already. We are currently building our final high-fidelity models to launch our final wind tunnel test campaign in the coming months. All of that data will come together to give us even more validation in our performance estimates. All in all, where we are in the maturity of the design, we're looking really good.
David, this is Adam just kind of chiming in here. I think the way that the industry will ultimately be judged will be the economic viability of these vehicles. I think that's gonna be a mix of speed, range, and payload, meaning how many people can you move, how fast, and how much is it gonna cost to do that? That's ultimately what we're solving for, and that's what we're so excited about here, and that's what the results of the PDR have been so, you know, exciting. That's why we felt very comfortable thinking about, you know, the advancement of our commercialization. I think that's what got United very excited about and that to the point where they said, "Okay.
The maturity of this program warrants a you know, a significant cash deposit." That's kind of the way we think about this. It's not so much just about, can you build the fastest, highest flying, farthest flying plane? It's can you build a vehicle for the mission, and then how do you make that economically viable?
I guess for Mark, just, you know, a tiny cleanup on that. Based on the, you know, extension of your agreement with United, you've, you know, disclosed in existing filings about United's stake in Archer is unchanged?
I missed the last part. This is Mark. Could you repeat that, David?
Oh, sorry. Just, yeah. United's stake in Archer is unchanged from what you've previously disclosed, their ownership?
Yeah, that's correct.
Thanks. Appreciate it.
Thank you. The next question comes from Andres Sheppard of Cantor Fitzgerald. Please proceed.
Hey. Good afternoon, Adam. Good afternoon, Mark. Congrats on the quarter and thanks for taking my question. I wanted to maybe get a little more clarity on the $10 million announcement that you've made today with United. I guess I'm just trying to understand. Will this eventually be recognized as revenue? I guess why now? You know, why not?
Closer to commercialization or FAA certification. Sorry, maybe the third part of that is where do you anticipate using this additional capital? Is it to fund CapEx, R&D, manufacturing? Just maybe give us some sense as to what the strategy is there and the timing. Thanks.
Hey Andres, this is Adam. I'll start with the why now, and then I'll turn it over to Mark. I think this really has to do, you know, just back to, you know, some of my earlier comments with the confidence that United really has around eVTOL as a category, but also Archer specifically. I think those are two of the really big drivers of this. The third kind of big driver is we have limited supply. If you go back to our stated manufacturing levels, we said we would build 250 planes in 2025, and that's what we're on track to do still. Archer is gonna be operating vehicles, and then we also have United. There also has been a lot of excitement around orders in the industry.
We've seen lots of announcements out there, and Archer has been engaged with many other different groups. I think there was this interesting balance here where Archer has matured the program. You could see it in the Maker flight test, you could see it across PDR, and then you can see it in a lot of the work that we're doing with United, we're starting to think about the specific routes and concept of operations. It made sense for them to commit here to lock in their spot to make sure they will get access to planes in 2025, and as a strong corporate sponsor to Archer as well. I think it's a big signal of them doing that now. I'll turn it over to Mark.
Hey, Andres. Again, I think you should look at this and because it is what it is is a standard commercial arrangement. This is a prepayment or a cash deposit that'll show up on our balance sheet as a cash deposit. Yes, to your question, this would eventually turn to revenue upon delivery of the planes, right? That's the simplest way to think about it. That's how the contract is structured. In terms of cash use, I mean, this is gonna be for general corporate purposes, which for us is, you know, R&D and all of the things we've been talking about for commercialization. It'll go towards, you know, the advancement of Midnight. It'll go towards CapEx on new factory, et cetera.
Got it. Okay. No, that's super helpful. Thanks for the additional color there. Maybe for my follow-up question for Adam. You know, there's been a lot of macro conversations in the industry about in regards to certification and the possibility of the FAA certification somewhat consolidating or mirroring the certification process in Europe, which as you're better aware than we are, is a little bit more stringent. I think they have the 10 to the negative nine degree of safety requirements. I'm wondering, I would love to get your thoughts. You know, do you see that consolidation taking place? If so, what impact, if any, might that have on your certification timeline? Thanks.
Yeah. We are speaking with the FAA at the engineering level on daily or almost daily basis. We're speaking with the FAA at the highest levels, as well. I have had conversations all the way up to the top with the acting administrator and have been reassured the confidence that the FAA will take a leading position, in bringing eVTOL to market. I don't see anything that tells me today that the FAA is going to back away from their existing, you know, stance on bringing eVTOL to market, and I do not see them adopting the EASA standards, but I'll let Tom chime in as well.
Yeah, just, obviously agree with what Adam said. The thing that I could add too is, you know, even since this 21.17(a) to 21.17(b) change, the FAA has reiterated we should expect no changes to airworthiness requirements. I can say over the last few months, that's what we've seen, just reconfirmation of what we had been already designing to. We don't expect anything to change. Even the, you know, they had to make an administrative change to our Q1 issue paper, essentially just pointing at, 21.17(b). In that document we've seen no changes. Just further confirmation that, we're on the right path.
Wonderful. Thanks so much guys, and congrats again on the quarter. I'll pass it on. Thanks.
Thanks, Andres.
Thank you. Just as a reminder, it is star one on your telephone keypad to ask a question. The next question comes from the line of Bill Peterson of J.P. Morgan. Please proceed.
Hi, this is Mahima Kakani on for Bill Peterson. Just touching on the United deposit again. As you look ahead to production, does this put United at the head of the line and potentially ahead of Archer's planned network operations? Can you also elaborate on your latest thinking on the mix between direct sales as well as, the passenger network?
Yeah, thanks, Mahima. This is Adam. Archer has always, you know, said the goal is to build a long-term UAM network. The path to do that, you know, is going to require capital, and selling planes is a good way to help fund the long-term business. As we've said to date, you know, we think, you know, 50% of our production, our base case, you know, will be sold and 50% of our production will be used. United is a great go-to-market launch partner. We're evaluating different scenarios in terms of, you know, working together on these markets.
I think the real goal here has to do with you know, finding the best way to get eVTOL to market, set up with infrastructure at the core trunk routes from airports to city centers, and get all this operational in 2025. We understand that there is a big lift to get there. Again, doing this with large partners, I think helps make that considerably easier. You know, the sort of theme and like kind of the you know the feeling that we've had over the past quarter is this you know advancement of commercialization is really you know been exciting. I think that's what everybody is feeling.
It's not just internally at Archer, it's not just at United either, but it's also with, you know, some of the local municipalities that we're starting to talk to with, you know, some of the strategies around our airports, that we've been, you know, speaking with. There's this kind of momentum that we're all starting to feel, and I think that's what's gotten, you know, everybody excited with where we're at today.
Okay. Thank you for that color. Maybe also to touch on batteries in terms of certification. We heard from The Air Current that there's a difference between pouch and cylindrical batteries. Can you share a little bit more on the details on the types of batteries that Archer is using today and then the ones you plan to certify with? As you see it today, what are the key risks and challenges as well as areas you'll need to convince the regulators that the batteries are safe?
Yeah, absolutely. Great question. This is Tom. I'll be happy to answer that. For competitive reasons, we don't want to disclose exactly what batteries we're using, but what I can say is that they're commercially available off-the-shelf cells manufactured by well-established companies. Cells that come with extremely high reliability and the data to back that up. Our approach has been essentially lower performance in terms of range and energy, but much higher reliability, much higher safety and ease of certification and commercialization. That's the strategy we're taking there. In terms of risks and the way we think about this, you know, the FAA has well-established certification requirements for batteries, right? DO-311A is an accepted means of compliance to get these systems certified, and we've designed to meet that standard.
Essentially we're doing our best to make this as easy as possible for the FAA and just make it not one of the, you know, main things that we're worried about or trying to push the envelope on. The nice thing is we can do that and still achieve all of our commercial targets with the aircraft because that's really what it's all about at the end of the day.
If I can add on there. This is Adam. You know, since the beginning, what we've always said is our goal is to find an efficient path to getting to market. Archer has always been about commercialization, and what we did was design an aircraft around a business case, which is these 20 mi - 30 mi rapid back-to-back missions where we can do, you know, multiple of these trips per day.
From there, it's just reduce the risk everywhere, reduce the risk to certification and reduce the risk to mass manufacturing. We've made a lot of decisions around that, and you can see that, you know, across a lot of our announcements. I think that message will be consistent across all parts of the aircraft.
Thank you. I'll hop back in the queue.
Thank you. There are currently no additional questions registered at this time, so I will pass the conference back over to Adam Goldstein, CEO, for closing remarks.
Thanks for attending our second quarter call. We are really excited about the progress in advancing our commercialization efforts. The success of Maker Flight test campaign, the results of the Midnight PDR and the United Airlines deposits are really strong proof points that we're on track to realize our commercial vision. This is really a generational opportunity, and it's, you know, now you get to see why I'm so excited, why the team is so excited to come to work every day. Midnight does have the opportunity to transform the world, and I can't wait to share more details with everyone over the coming months. Thank you.