All right, let's get started here. I'd like to welcome everyone to day two of Sidoti's March Small Cap Conference. I'd like to thank you for joining us here for Vertical Aerospace's presentation. With us from the company, we have Stuart Simpson, the company's CEO. He's going to run through a presentation, and then we'll get to some Q&A at the end. If you do have a question, please enter it through the function in Zoom, and we'll get to as many of those as possible. With that, I'll turn it over to Stuart for the presentation.
Hi, good afternoon, good morning, everybody. Thank you very much for coming along. Great to get a chance to talk about Vertical. Just wanted to draw your attention to a couple of things before I start going through the deck. There has been a bit of a shakeout in this industry over the last, say, six months or so, defined by physics and funding. We are on the right side of both of those. We've got the right physics. The winged aircraft works. That's where the funding is flowing. It's been about $1.8 billion flown into what I think will be the winners in this sector over the last six months, which is fantastic. That shakeout is taking place. In terms of where Vertical fits in that paradigm, I'll expand on it as we go through the deck.
We are the second in the world with a tilt rotor aircraft, number two in the world to ever have flown a full-scale piloted aircraft, which sets us apart. We have a very clear route to certification under the CAA and EASA, and that is globally transferable. I think we have the best aircraft in the space, the only one with the highest level of safety in the world, and the capacity to take up to six people plus luggage. We are incredibly capital efficient as a focused OEM. With that, I will turn to the deck. Charlotte, just to let you know, I cannot actually see on my screen any pages.
Anyway, if we go to the first page where we talk about what has happened over the past few months, if we just roll back six months ago, this company was not an investable proposition because we had a floating rate convertible loan note around $260 million on the balance sheet. It meant that I, as CEO, could not go out to investors and say, "Give me X million, I'll give you Y million off equity as a % of the business," because we did not know at what rate the floating rate debt would convert. We have fixed that. As of December last year, we have cleaned up the balance sheet. We went out, immediately raised $90 million. We only targeted $50 million. We nearly doubled that. We are in great shape. We have secured funding for the year.
To put it in context, I could not get into investment conferences at all over the last 18 months. I've now done, I think, six in the last four weeks. We've met more investors. Now we've got a cleaned up balance sheet. We have got a great story to tell, and people are welcoming us in to talk about it. With that, why do I think Vertical is a great opportunity? The global market for these aircraft and this type of aircraft is enormous. There are many surveys out there backed or underpinned by some of the largest investment banks and consultancies in the world. It's really just about when this becomes a trillion dollar market, how many years down the road is it. Within that huge market, Vertical will be a winner for those reasons that I mentioned before. We have got a clear route to certification.
We've made incredible progress. We have got a fantastic aircraft, highest safety standards with the best capacity for people and luggage. We have a very, very focused business model. We work with tier one aerospace suppliers to build the aircraft, which means we de-risk certification. We don't carry operator risk because we're going to sell these. This means a quick return on capital relative to some of our competitors. To show you how that lands and why that makes a real difference, we are the only player in this whole space who talks very clearly about a certification date, a cash break even date, and we're confident enough to put that out as part of a flight plan in 2030. Just like a normal stock corporation, this is what we're going to do financially and operationally over the next one, three, five years.
I think it puts us in a great shape. Now, just touching a little bit on the wider industry, I said there's been a shakeout. What we're seeing is the winners are emerging, of which Vertical will be one. Huge amount of capital flowing into the industry. I think $1.8 billion in the last few months. If you look at the market cap of just two of our peers, they're up at nearly $10 billion. This is where I see this huge disconnect between our progress and capability relative to some of our peers, where I feel we're hugely undervalued. To be clear, the money that's flowing in is from highly credible long-term investors. You can see some of the names on screen there. If I step back a little bit from this, 50 years ago, this was fantasy. Five years ago, this was very frothy around SPAC.
There's been a shakeout. The winners are emerging, and that is all underpinned by evolution of regulation. In the U.K., we're part of the Future of Flight Consortium. The government are clear. These will be flying in 2028. The infrastructure will be ready, and the regulations will be ready. The final point is capital is flowing to infrastructure projects. Over 350 already up and running. We anticipate 1,200 by 2028. Now, just turning and getting a little bit deeper into the market and then through into Vertical. If I start with what the problem is and why the market is so big, there is a staggering amount of time wasted by people in and around the global mega cities. The number of these are increasing quite rapidly over time, and it's a global phenomenon.
There's only going to be three or four in the US over the next 10-15 years. The vast majority of this issue sits outside the US, outside in the rest of the world, whether that's Seoul, São Paulo, Tokyo, Osaka. You can very, very clearly bring it to light if you think about New York. If you think about flying into JFK as a business class customer wanting to get downtown immediately straight to work or straight out for business dinners, you have to, at the minute, take a few ways that are not very time efficient. You cannot build out this. There's not enough road space. You cannot tunnel out because of the cost, the time, the complexity. You have to sort of look up.
Just to give a graphic representation of that, I went through this a couple of weeks ago, took about three hours from landing the aircraft to getting to Manhattan, three and a bit hours. With this product, with our customers, you land, you grab your luggage, you jump on the aircraft, you're in downtown Manhattan in a few minutes, seven minutes for this. You get into London City in about nine minutes from Heathrow. It is a complete change and liberation of time for people. There is a massive problem. I'm sure many of you have experienced it, whether you're traveling in the cities mentioned there or all around the world in the global mega cities. The question I have, given this is an obvious problem, is why there is no solution that hasn't been jumped on by people?
Because you look to helicopters and think, "Wow, why doesn't this solve it?" There are two reasons, two really important reasons. First is operating economics. The second is environmental. I'll start with environmental. Helicopters are extraordinarily noisy. For those of you who live in Manhattan, you'll know there's already a lot of residents who don't like the number of helicopters that are there. In London, we have basically one helicopter route. It is because residents in densely populated urban areas don't like the noise these things generate. You then add on to that safety and pollution. They're just not allowed into that environment. These products absolutely address that. They are near silent with zero emissions. They absolutely will be let in. This is what we're finding as we talk to regional, national, and local governments.
If we then turn to the other one, operating costs, this is a real eye-opener. Helicopters are amazing vehicles, but they have between 50 and 70 single points of failure, a highly stressed mechanical solution to air travel. If you then think of our aircraft, we have zero single points of failure, zero single points of failure. What that means is a helicopter, on average, over its lifespan, for every hour flying, there's three hours downtime where you're making sure and checking and doing service and maintenance on the aircraft. If you look at ours, our service and maintenance will be one minute per hour. What this does mean is you've got an asset that can be deployed 23 hours a day, and that completely changes operator economics. Now, down the right-hand side of the slide, you'll see an Uber Black.
The reason for that is we have plotted out over 1,200 routes with our customers. We pull them in every year for three or four days. They work with us hand in glove, looking at, "Okay, what are the routes we're going to do? How should we think about them?" When we map those out without stressing the utilization of the asset, very regular utilization, we get a cost per seat per kilometer between $1.50 and $2. What that means is that puts it at a cost per seat per kilometer equivalent to an Uber Black. While these will be supply constrained for 10 years at least, because getting a supply chain up to build these composite materials, etc., will take time, it does mean that the ultimate endpoint is mass market transportation once the supply chains are up and running. It really does. It does not just displace helicopters.
It creates a whole new market. A little bit about why the market, the problem is there, how we fit into it, and why helicopters aren't answering it. Now, specifically turning to Vertical, we are a pure play OEM. It's one of the reasons we'll be a winner. If you look at the left-hand side of the slide, you'll see our suppliers, Tier One Aerospace. These people know how to certify an aircraft, as do we. Between the team we have, we've certified over 30 aircraft. You look at the right-hand side, we've got an incredible customer base. These are all our customers. They provide us amazing insight and knowledge of what the aircraft has to do and how it will be deployed. We don't carry operator risk, which is fantastic. Now, how does that play out?
How it plays out is we are spending about 25% of what the others spend, so 75% less. It's driven by two things. Our absolute focus on being an OEM, we are not building up a supply chain. We're not building an app. We are an OEM designing, engineering, assembling, selling, and servicing this aircraft. Every airframe we sell, just to point this out, it's an incredibly important point. Every airframe we sell, 20-year life, we'll be selling one to two batteries a year into that airframe, high margin, highly predictable over the next 20 years, a bit like the razor blade analogy. Back to why we're so efficient. We have 350 people, very focused, based in the U.K. We pay them about a third of what they would get paid as engineers in Silicon Valley. Really importantly, we can attract the best global talent.
The reason for that is we can get the best people to come work for us. One, they know this aircraft's going to succeed. Two, because we're based in the southwest of the U.K., the cost of living is significantly less. They actually have more money in their pocket at the end of a month. We have the best talent in the world. Our Chief Engineer has got 30 years of rotorcraft. He's a North American guy. We have people from all over the world supporting this. Bringing this fully to life, we have spent around about $1 billion less than our competitors, a phenomenal, phenomenal amount. If we now turn to the aircraft that we're delivering, as I mentioned at the start, we are putting the best aircraft in the skies in this sector.
This level of safety in our aircraft, no one else can match. This is 10 to the minus 9, equivalent to a large passenger-carrying jet, same as an Airbus, for example. This definitively sets us apart. We can do this because we are certifying under the CAA in the U.K., the Civil Aviation Authority, and EASA, the European body. We are doing that concurrently. An incredibly important point. No one else is doing this. What it means is when we certify to that safety level, we will be able to sell this aircraft all around the world because it is the highest level of safety in the world. Anyone else, unless you are certified under EASA, you will not be able to sell into Europe. These will not be flying in London, Berlin, Munich, Madrid, Paris, Torino, Milan.
We have effectively a monopoly over the European market because of this level of safety, and no one else is striving for it. If you then look at the aircraft we're bringing to market, I have no doubt that this is the best aircraft. We launch, you can see a picture with two large executive-class passenger seats, and you can bring luggage. No one else can do this. I've sat in our competitors. They're amazing, but they're very small. It's like comparing the inside of a Cadillac Escalade to a Fiat 500. Ours will be the Escalade, large leg room, elbow room, luggage capacity to a Fiat 500, where there really is minimal passenger room, let alone luggage capacity. We are scalable. When you think about selling this to an airline, they'll launch it at the sort of higher end for passengers plus luggage.
That'll then cascade down where you'll want six economy seats in this, which we can scale to. Minimal recertification. You take out the big seats and put in six economy seats. No one else can do that. Really interesting, if you think about how defense markets are potentially opening up, this is the largest airframe in the industry. This is the one that can carry more people and passengers and components. How do we do it? We're incredibly proud of this. We have the largest and the most powerful battery in the sector. We have been developing this for many years. We have 1.4 megawatts of power. If I turn to torque, which is what's really important in this type of design, back to a Cadillac Escalade, we have the same amount of torque as 27 Cadillac Escalades. This is how incredibly powerful the aircraft is.
Yet this aircraft will weigh about one Cadillac Escalade. It's a remarkable engineering feat. It is underpinned by the battery. We've got many hundreds of years' worth of cell testing that we've done, many, many hundreds of years' cell testing we've done. It's incredible. We will be building this battery ourselves. As I said before, brilliant underpin on the return to capital because we will be selling one to two per year into every airframe. I think within about five years post-certification, we'll be selling around 50,000 or manufacturing selling around 50,000 batteries at a very nice margin. We've spent about $1 billion less. I think we've got the best aircraft underpinned by the best battery. How do we look against public progress in terms of the aircraft?
We are one of only two companies with a tilt rotor aircraft that have done full-scale piloted thrust port. You should be able to see that on the screen. You can see in the picture, the rotors are orientated horizontally. What that means is the rotors spin, they lift the aircraft up, and then you tilt the nose down slightly, and the aircraft can move around at kind of 20-30 knots, 20-30 feet. As I say, one of only two people in the world, two companies in the world to have done that. If you look to phase the next phase, piloted wingborne, we have committed to doing both that phase and the following phase, piloted transition this year. Wingborne is an incredible step for us. The reason for this is we are doing this in the U.K. in a small island.
The prior phase we did on a private airfield. So we're not in public airspace. As soon as we move to the next phase, we are flying in public airspace. Now, what that means, why that's so incredibly significant is our regulator, the Civil Aviation Authority, has a joint liability with us. So when we get to this point that the aircraft is flying in a public airspace, that isn't just us being confident. That's our regulator saying, "Wow, this design is safe to fly in public." If we were based in America, we'd be flying it in public every day through that phase. We're not because we need the regulator to support that. It shows the confidence we have that we've publicly said we're going to do it this year. We know we're safe. If we're in any other country, we'd be doing it.
Because of this joint liability, we have to convince our regulator. Now, just starting to wrap up, I did mention briefly that we relaunched the company last year with Flightpath 2030. We are the only people in the space that have set out clear financial and operating goals. You can go on our website, click on it, see what we've committed to. The key thing is certification in 2028, 150 aircraft delivered through Q3 2030, an exit rate of 200 aircraft per year, ramping up to over 700 with cash break even 2030 and a margin above 40%. We understand the criticality of certification. As I said, we are the only one saying, "This is how we do it. This is when we do it. And this is the business that flows from." We have a bunch of operational milestones.
I've touched on those already, so I won't go through those in detail. They're just wrapping up with a Vertical investment opportunity. I think we are hugely undervalued. We are a hidden gem. This is because we could not get out to people last year because of the structure of the balance sheet. We have tidied up the balance sheet. We've cleared that. We are now an investable proposition, as evidenced in the $90 million we pulled in very quickly in January. I have now got the privilege to be able to talk to you today, get out and talk at other conferences and meet potential investors. Against that backdrop, we have got definitively the safest aircraft in the sector. It has the best people and luggage capacity. We have a clear route certification and a clear timeline that no one else can provide.
And we are incredibly efficient, spending over $1 billion less in the last three years than our competitors because of this laser-like focus on just bringing the best aircraft to market. I think we're in great shape. Really enjoyed getting a chance talk to . Very happy to now move to Q&A.
All right. Great. Thanks, Stuart, for that. Let me kick it off here. Could you just help us better understand this capital efficiency and how you're able to make so much technical progress, spending so much less than your customers? What is that a major function of? Is it the engineering of your vehicle, or are there other factors playing into that? [crosstalk].
Yeah, there's a couple of things. I mean, I think one, we have been really consistent. If you look at some of our competitors, they bounce around, "We're doing this. We're not doing that. We're doing this. We're doing this.
We haven't changed. We couldn't tell anyone we haven't changed, [crosstalk] but we've been laser-focused on, "We are an OEM. That is what we do." I am not trying to be up the supply chain. I'm not trying to run an app. We are designing the best aircraft with the best tier-one aerospace suppliers and selling it into some of the best airlines in the world, American Airlines. I met with the CEO last week. He was like, "We love this. You guys are transparent. You're honest. You've got a clear route certification. And 2028 is when America might be ready for these." That is one thing. We haven't changed direction. We're just laser-focused on this. The other I mentioned before, being based in the U.K. really does bring a big benefit.
We've got incredible—we're based where the Concorde was designed, where the Concorde was first built. There's a huge aerospace heritage nearby. We can draw incredible people to this part of the world. It's very well known in aerospace circles. When they come here, the cost of living is relatively low, so we can pay them proportionately less. The focus means we have fewer employees, and the location means we pay each of those employees less. That's how we can do it. It really does make a difference. As you saw, we've spent about $1 billion less than our competitors in the last three years. Yet we're further ahead than most and on a par with some. Hopefully that makes sense.
Yeah. Yep. No, great. You mentioned certification with the CAA and EASA. Can you just talk about maybe the timeline there?
Is there any funding or capital required to get to that point?
Yeah. Great. Great question. We are absolutely extremely excited to be certifying under CAA and EASA for this clarity that it brings. This is why, from a timing perspective, I do not have to go and do anything else. Laser-focused on this. You can go on the CAA website. You can double-click, download the work stack, and say, "That's what we have to do." I can build that out for the engineers and say, "Deliver that." That gives me confidence in 2028. In terms of cash burn through to certification, the way I look at this, this shakeout driven by physics and funding, the funding one is really critical here. It is really the funding you need to certification. Our burn rate, you can take that. We are going to ramp up this year.
I've said it'll be $110 million-$125 million. The exit rate will be higher. It'll ramp again next year. You kind of keep that thinking going. You'll come to a number of what it thinks it's going to be. We haven't announced publicly. That is very, very different to some of our peers burning $500 million a year without a certification date. We are, I think, definitively going to be spending way, way less than competition to get certification simply because we have clarity, focus, and we know exactly what we've got to do. We will ramp up. This year will be a bit more, following year a bit more as well. We have an efficient route to certification in 2028.
Okay. And why aren't your other competitors pursuing certification? Is the safety dynamic not there, or they have to? [crosstalk]. Why is no one else pursuing these certifications if that opens up the European market for you?
The reason is we have always been based in Europe. We knew the standard from 2016. Effectively, the company launched just after that. We could point to it and say, "Our aircraft has to meet that challenge." You simply can't do that with the FAA. While they are all striving, and to be clear, I want all our competitors to be successful. The market's going to be huge. I really want us all to succeed because that moves the industry forward. I think they don't have the benefit of a clear set of standards against which to certify against.
They all want to certify, but you can see them just thinking, "Okay, how do we do it?" We can't really commit to a formal date because we don't quite have that clarity and precision of what's required. It is a real differentiator for us. It really does set us apart and creates this moat around Europe of effectively a monopoly for many years.
Ok. Maybe you could talk about the economics of the model once you're kind of up and running and producing vehicles that are being sold into the market. [crosstalk] How much is garnered from the initial sale versus the recurring battery sales? Do you have aspirations maybe of having a service element of your own, or are you going to stick to strictly being an OEM supplier to the market?
Y eah. Great. Great question. We've been very conservative as we pulled this together. I think we've talked openly about the split between aircraft and battery sales being 50/50, plus minus, as that evolves over time. The way I look at it, that's all we've talked about. There are many other things you can hang off this that we haven't talked about in public. I can't talk about them today. You sort of alluded to it there with other service things, pilot training, etc. For the minute, we get the aircraft certified, that airframe, 20-year life, one or two battery packs a year. It creates a great downstream opportunity on that battery as a service is how we think about it.
You're right. As an OEM, there's plenty of other things that we'd hang on that, and we will talk about and expand on over the coming years. I think we've talked very openly about 40% company margin.
And within that, you've got a blend of the aircraft weight a little bit less and the batteries a little bit higher than that, which is why the batteries certainly should be thought of as this incredibly valuable revenue stream, highly predictable, high margin, evolving over time as we introduce new battery technology. That gives you price leverage as well as you can give the aircraft a little bit more, whether it's capacity from a mass perspective or a little bit longer range, etc.
Does your battery technology have applications outside of just your vehicles or your aircraft? Can you sell that into a broader market application, have that be its own business on the side?
That's a brilliant question. Absolutely. We haven't talked about that. Our model is we sell the aircraft, we sell the battery, that battery comes back to us, and then it'll have a second life. We haven't talked about what that could be, but there are many other opportunities for it. To bring one to life is the battery is only degraded by about 7% when we take it back. That is because of the nature of the power drain you have for vertical takeoff and landing. At that point, you've got this incredible battery pack, the best in the world, and it's even at that stage way overqualified for what you'd need for a conventional takeoff and landing aircraft, for example. There are multiple, multiple routes to reuse the technology.
All right. Great. We're at the end of our allotted time here, so I'll leave it to you, Stuart, maybe for some final thoughts, and then we can wrap it up.
Thank you. First of all, thank you for getting the chance to talk today. It's been great to be able to get out and talk about Vertical. I hope I've piqued a little bit of interest in us. I do think we are an incredible opportunity if you look at our evaluation relative to our peers and the progress we've got, the aircraft capability, the safety standards, and the route to serve. I think we're an incredible opportunity. I hope we get a chance to talk to you all again. Thank you.
All right. Great. Thank you. Thanks, everyone, for listening in.
Thank you.