Good day, everyone. Thank you for joining us Lytham Partners Spring 2025 investor conference. My name is Joe Dorame, Managing Partner of Lytham Partners. I would like to welcome Vertical Aerospace, which trades under the ticker EVTL on the New York Stock Exchange. For today's webcast, Stuart Simpson, CEO of the company, will be walking us through their slide presentation, followed by a brief Q&A session. Welcome, Stuart. I'd like to turn the floor over to you.
Joe, thank you. Great to be with you today and to have a chance to talk to you and all your viewers about Vertical Aerospace. I'll do a brief introduction to myself and the company, and then we'll go through some slides. The slide deck will make sure it's available for people that want to have a look in more detail afterwards. Starting with myself, I have had a 30-year career in engineering-led businesses, primarily in automotive, then logistics and tech. I was introduced to Vertical about 18 months before I actually joined the business. I spent 18 months looking around the industry, talking to customers, suppliers, investors, to get a sense of, is the industry real, and in particular, was Vertical placed for success?
The feedback kept coming back to me that Vertical was the real deal, a real aerospace company in this sector, treating this development with the respect it deserves. I joined the business. I've been CEO for about a year now, and I think Vertical is incredibly well placed for success. If I just step back and explain that before we go through the slide deck, what we've seen over the last 18 months is a shakeout within the industry in both physics and funding. What I mean by that is, you go back 50 years, this was fantasy. Five years ago, it was very frothy. We are now down to this being real. The number of players in the market has come down to really a handful that are going to be successful over the coming years and months. Vertical is well placed to be one of those.
We have the right design of aircraft, and we have the ability to raise funds. Now, just digging into that a bit more, why Vertical is a winner? We've had tremendous progress towards certification. We've got a very clear route towards certification under CAA in the U.K. and the ASA, and I think we've got the best aircraft. It's the safest in the sector, and it has the largest airframe, so we can take more people and things. Now, finally, we've got an incredible OEM focus. We are spending dramatically less than competitors, yet we are making a similar amount of progress. On top of all of that, we've introduced a hybrid variant for this aircraft that hugely changes market opportunity, dramatically increases up, but it doesn't undermine the core electric aircraft. We will still be certifying that in 2028.
Now, just starting to dig into this in a bit more detail, if we can go to a slide that shows the background we've had on our balance sheet. One of the reasons Vertical is in the position it is at the moment, where I think there's a huge dislocation between our market capital and our progress. This is because Vertical was sat with a convertible loan note, floating rate convertible loan note on its balance sheet. Now, that meant it was very challenging for us to go out and borrow money, but it also meant it was very challenging for me as a CEO to get into investor conferences, talk to banks like this fantastic opportunity today. On the 23rd of December last year, we cleaned up the balance sheet, so we are now highly, highly investable.
We took the floating rate convertible loan note, $130 million was equitized, further $130 million, we fixed the transaction price, convert price, and then immediately went out and raised $90 million new equity, which gives us the cash runway for the rest of this year. We've said to the markets we'll be out raising money this year. What we did there was really clean up the balance sheet and get ourselves investable. Just to bring that point home, in the whole of last year, I managed to get to one banking conference. I've done nine, I think, this year. That is because all of a sudden, we have an investable balance sheet and people can come listen to the story and make their own judgment. We are in a transformed position. Now, that's the Vertical background.
If we now step back and look at the market, the market is at a tipping point. Over the last few months, we've seen approximately $1.8 billion flow into the sector. The market is really starting to determine the winners in this space. Coupled with that huge inflow of funds to the companies that are emerging as the winners, there's also been a step change in regulation. A great example is in the U.K., where I'm a member of the Future of Flight Industry Group, working directly with the government, and legislation will be in place for these to take to the air in 2028, both in the U.K. and Europe. In addition, one of the other questions around the industry was infrastructure.
What we're now seeing is capital flowing into the infrastructure market. are over 360 vertiports, as they're termed, contracted by 2028, and we expect over 1,200 to be built by then. The whole market is starting to go from this nascent phase through to being very, very real. You can see that with the funding going into it, the step change in regulation, and the funding flowing into infrastructure. What does the market look like? There are several surveys that are out there, reports from many different businesses. It's really a discussion about when the market becomes a trillion dollars. That will evolve over time. It's different how you cut it, whether it's low altitude for commercial, whether it's for passenger carrying. There is no question at all that the market is real now. There are many different surveys out there that you can access on the market.
If you just think about why people are so convinced of this, if you look across the globe at the number of mega cities there are, they are growing quite dramatically between now and the next 5, 10, 15, 20 years. I'm sure as many of you know, whenever you fly into these global mega cities, the infrastructure is really starting to creak around the edges. Specifically, I've been in New York three times in the last six, eight weeks. Every time, it's taken me around two and a half hours to get from downtown Manhattan out to JFK. You can multiply that out across New York, L.A., Miami, Mumbai, New Delhi, São Paulo, etc. All across the world, there is a huge challenge in terms of urban mobility and how people can get around.
Now, you can't build out of it because the roads are already full and there isn't any space, and you can't tunnel out of it because underground is already generally full, whether it's with logistics infrastructure such as mass urban transport or all of the connectivity that we need. This means that all of these cities are looking to this low altitude economy to solve the challenge of urban mobility. That absolutely is a problem that we are going to solve. A couple of examples now, you can look at them at your leisure on screen, but we just pulled out a couple of cities where we've done a lot of work with our customers to map out what we see as the time savings that we can get. Miami, London, São Paulo, Osaka, you should be able to see on your screen.
It is very clear there are huge savings to be made. Specifically, if I think about New York, it takes around two, 2.5 hours to get in and out of Manhattan. This aircraft will do it in nine minutes. It is absolutely revolutionary in terms of changing this urban transport. I think the problem is very clear if we now turn to why it is not solved. There are potential solutions to this with a helicopter. The reason helicopters have not solved this transportation problem splits into two buckets. First of all, operating costs. The second one is environmental. Now, just touching on operating costs, every hour that a helicopter flies, you are going to lose over the course of a year something like 15 minutes.
When you roll it up over the course of a year, a helicopter spends a significant amount of downtime, very, very significant amount of downtime, making sure that maintenance is properly done. The reason for that is they have between 50 and 60 single points of failure through a highly stressed mechanical system. The helicopter is constantly having to be checked and serviced to make sure it's safe. If you look at the VX4, not just our aircraft, but this sector as a whole, certainly for us, we have zero single points of failure, zero. We are also not a mechanical system. We're fully electric. What that means is our aircraft, for every hour of flying, it has approximately one minute of servicing costs. This means that this is an aircraft that can be deployed effectively all the time.
This operating cost step change is hugely significant in terms of making this a commercial proposition for our customers. Now, looking at environmental factors, even if helicopters were allowed to fly in cities, at the minute, there's been a huge pushback for the last 30 years across the world why they are generally not allowed in and around cities unfettered. The reason falls into three buckets: safety, noise, and pollution. Safety, first of all. Helicopters are just not as safe as this type of product. Our product is being designed to the same level of safety as a large passenger carrying jet. In numerical terms, that's 10 to the - 9, or one in a billion chance of catastrophic failure. That's somewhere between 1,000 and 100 times safer than a helicopter.
Very, very dramatically different when you think about this from a mass transit perspective, putting the aircraft in the skies above major cities. Second is noise pollution. Helicopters are extraordinarily noisy. Our aircraft is near silent. It will not be heard above the buzz of the background of a city. Final thing is environmental pollution. There is no pollution source on these. These are electric aircraft. What this does is gives permission to local, regional, and national governments to facilitate putting these into the cities to solve the problem we have got of urban transport. Against that, how does the Vertical aircraft stand out? The Vertical aircraft, relative to its competition, we are delivering this as the safest product in the market, a 10 to the - 9 safety level. It is at least 10, if not 100 times safer than competition.
In addition to that, we are certifying it under the CAA and the ASA. This means that that standard of 10 to the - 9, our other competitors are not certifying to that level. We are definitively the safest aircraft in the sector. If you then look at capacity, our aircraft has the largest airframe, as I mentioned before. We will launch with four passengers, but we can quickly scale to six. Importantly, we can also take luggage. If you think of those use cases I mentioned before, of airport to downtown urban area, we are the only ones capable of taking four people plus luggage, 30 kg each, which is approximately what the average luggage is for a business class passenger flying transatlantic, for example, to London to New York.
Our airframe is configured for success, the safest in the industry and the largest, both from a people and luggage capacity. How we see that manifest is we've got an incredible customer order book. We've got around 1,500 orders spread across airlines, across leasing companies, across mobility providers. You can see some of the names there with American Airlines, AirAsia, Japan Airlines, Bristow, the largest helicopter users in the world, Avalon, world's second largest aircraft leasing company, GOL in South America. We are incredibly proud of this customer base, and it's all a testament to the capability of the aircraft. Now, how have we managed to do that? How do we think about this certification? As you could see on that chart, the previous chart with the map, we are certifying our aircraft under the CAA and the EASA. We are the only European player.
We're based in the U.K., in the southwest of the U.K., about an hour and a half from London. Our regulator is the Civil Aviation Authority that is using the same standard as the EASA, the EASA being the European body. The benefit of this is the standard to which we're certifying was written in 2016. We can go on the website, we can double-click on it, download the engineering stack, and lay out very clearly what we have to do as a company to hit that standard. This is why we're confident and have been able to publish very clearly certification date in 2028, something we're really proud of. Now, what it means, very importantly, because we are certifying under the CAA and the EASA to the 10 to the - 9 standard, the highest in the world, it opens up the whole world to us.
Our aircraft is globally portable. It does also mean that aircraft that are not at this standard will not be able to come in and fly over all the major European cities, London, Paris, Berlin, Munich, Madrid, etc. This is a fantastic position for us as a company. We are the only people doing this 10 to the - 9 certification. Now, just turning to how we have brought this to life. As a company, we are incredibly focused on being an OEM. We are designing, engineering, assembling, selling, and servicing the aircraft. We leverage incredible tier one aerospace suppliers. They know how to certify the aircraft, and we can leverage their skills and competency. Remember, before certification, there is effectively no revenue.
You have to certify this aircraft, after which you've got a very large moat around you because this is a challenging and difficult thing to do. Hence, using suppliers decreases that certification risk. They've got incredible capability in this space. On the right-hand side, we've got tremendous customers, as I've already laid out, but we don't carry operating risk. What we do do is sell them an aircraft into which, for every airframe, we sell at least one to two batteries per year. I'll come back to the significance of that. Now, turning to the business. As we look forward, the business, once the aircraft is certified, ramps fairly quickly through aircraft revenue and battery technology. Battery is quickly growing to become 50% of the revenue of the business. Every battery will have a margin of over 40%. This provides a very robust and investable business model.
Turning now to battery. Batteries are a critical piece of enabling technology. We buy the cells from a company in Taiwan called Molicel. We do all of the packaging, crash control, control software, thermal runway software. We manage these and they're proprietary, and they underpin this tremendous razor razor blade business model whereby every airframe that we sell, we will be selling one to two battery packs in a year for at least 20 years. Now, just turning to hybrid. Just 10 days ago, we announced a hybrid opportunity. This takes the range of the aircraft from 100 mi to 1,000 mi and the payload from 600 kg to 1,200 kg. It opens up the defense industry as well. We've been working on this for 18 months. We've done the hard bit. You can see in the picture there a battery pack, an engine, an EPU.
We've written the control software for all of those. This really unlocked our ability and the reason why we came to market to provide an update. We're incredibly proud to bring this to market, and it creates a huge opportunity, particularly if you think around defense in Europe. We are the only European player, and as defense spending in Europe ramps up, this gives us a great opportunity. Now, just starting to wrap up before we move to Q&A. We presented to the market in November a Flightpath 2030. We are the only player in the sector to have put out very clear operating and financial targets through 2025, 2028, 2030, and beyond. Certification in 2028, 150 aircraft delivered by the end of 2030, ramping up through 200 units at the end of that year into 700 units going forward.
We're confident to do that because of this certification route by working with the EASA. Just looking specifically at 2025 targets, we're incredibly excited this year. We will be expanding our flight test envelope over the next few, certainly over the next few weeks, six to eight weeks. We'll be doing full-scale piloted wingborne. Just to dig into that, wingborne for us is a huge step. In the U.K., there is a joint liability with the regulator. What that means is whenever we do a flight, we have to have convinced our regulator that it's safe to fly because it's their liability as well as ours. If we look specifically at piloted wingborne, we're committed to do this next. This is when the aircraft takes off as a conventional aircraft and flies in public airspace over hospitals, schools, villages, and towns.
Now, for us to do this, that means our regulator is happy and comfortable that our aircraft can fly in public. That's a huge step. When you see maybe some of our competitors flying in America, they do not have this regulatory oversight that we do. If we were based in America, we could be doing this all day, every day. We are comfortable and ready to do this. We are just working with a regulator to convince them and make sure they are as happy as we are that this aircraft is safe to take to the skies in public. A huge achievement when we do it over the coming weeks and months. I think just touching on the last thing. We are incredibly capital efficient. Everything I have said before about the best aircraft, the incredible progress we have done at a fraction of the spend of others.
This is driven by the OEM focus that I talked about, but also the fact that we are very small. We have around 350 people. We're based in the U.K., and our engineers cost around about a third of what they do in Silicon Valley. That means that we can drive this business to provide an incredible return on invested capital. You can see on the screen there how much we've spent relative to others. Frankly, I think we've got as good, if not better progress towards certification. Just wrapping up, I think Vertical has transformed in the last 12 months. We've cleaned up the balance sheet. We can now tell the story. We're an investable proposition. We've got, I think, the best aircraft in the sector. It's certainly the safest. It's certainly got the best capacity, taking up to six people plus their luggage.
We have a clear route to certification. With that, it would be great to turn it over to Q&A.
Stuart, that was impressive. Thank you for that overview. Let's expand on a few questions here. First, circling back, help us understand the importance of the company's recently announced hybrid powertrain and how it expands your market opportunities.
Yeah. The hybrid was something we've been working on. I signed this off 18 months ago, and the team have wrestled this to the ground. By last summer, we actually had a hybrid on the bench working. We chose to talk about it now because in the background, we've been planning the R&D route, driving that forward, but importantly, having some very deep conversations with customers. We felt now was a great time to announce it. As you know, there is a huge upswing in defense spending in Europe.
That's something we are now incredibly well positioned to take advantage of. This aircraft is stealthy, silent takeoff and landing. It's got a very, very low noise and heat signature. Now with the hybrid, it's got an incredible range of payload. This hugely opens up that defense market to us, getting close to doubling to the size of the business, which is tremendous for us. Absolutely fantastic.
That's great. You'd mentioned wingborne testing. Can you provide a little bit more color on the importance of that and when you expect to have this phase completed?
Yeah, of course. When I updated the market in January, then again in March, what I talked about was wingborne flying in the July to September, October period. I'm really pleased to say it'll be towards the start of that period that the team have done a remarkable job with building a brilliant relationship with our regulator and continuing to deepen that. We are weeks away from doing it. The importance of it, I touched on earlier. We are working with our regulator. Every flight we do is with their blessing and their permission. We have to prove that this is a safe aircraft. The U.K. is a pretty small island. When you're flying 120 mi-150 mi an hour, you're very quickly over people, towns, villages, swords. The regulator has to be safe, not just us. We are very confident in the aircraft, but we've provided over 20,000 documents to the regulator to provide evidence of that safety. We're working incredibly closely.
We hope to get the approval, the permission to fly, the permit to fly. As soon as we do, we'll be in the air. It is a step change for us as a business because this is effectively a blessing from the regulator that this aircraft is safe. A huge change, huge step change.
That's great. Can you provide us more color on your partnership with Honeywell and how it has evolved?
Yeah. We've been working with Honeywell for around about six years. It really comes back to the business model there. We are a very focused area. We really take this issue of certification and safety seriously. When we sat down and thought about how the business should evolve, we were very clear. We've got to work with the best in the industry and leverage the world's best tier one aerospace providers.
Honeywell absolutely drops into that space. We've spent six years deepening that knowledge and really integrating them into our company. We're very, very proud to sign off a certification and production contract that'll be worth up to, if not more than, $1 billion. What we are signing for is a flight control software, incredible piece of kit that's already been certified in other aircraft. We will then configure it to work on ours. All of the suite of technology that interacts between the aircraft and the pilot—the visual displays plus the inceptors or the joysticks—all of that comes together. It all works together. For us, that's a brilliant package. Really importantly, and also very excitingly, Honeywell, I know, have got ambitions in autonomy and autonomous flying.
That dovetails very well with us, both for the electric aircraft, but really importantly for the military variant as well, the hybrid. Incredibly proud to have done the deal with Honeywell. They're a brilliant, brilliant business.
Great. Last question. Looking forward, what are the keys to success that investors should be looking for in 2025 and 2026?
Wow. I mean, there is so much going on. I think from our perspective, if people are interested, they can go to the website. We've got Flightpath 2030 on there. They can dig into that and really see what's out there. I can't stress enough the question you asked. Wingborne flying is so different for us in the U.K. because of this regulatory oversight versus other people that are doing it without oversight in the desert. That will set us apart. That's a major achievement when that happens.
Later in the year, we'll be doing full transition. What we mean by that is a vertical takeoff, accelerating until you're flying on the wings, you're highly efficient, and then slowing down to land vertically. We'll be doing that over the course of the year as well. Those are two things in the near term. Through the course of 2026, we will sign off the final design of our certification aircraft and build the first of those to start the test flying for the certification campaign.
Great. Before we wrap up, Stuart, do you have any final comments you'd like to add?
Joe, thank you very much for the chance to come and talk to you and all your clients. I genuinely think there is this huge dislocation between our skills, our capability, our progress, and our market cap. We are well placed for success in this sector. I think we are going to do a brilliant job over the next few years. It's going to be incredible. Thank you.
Thank you, Stuart. Thank you all for watching. If you have any questions or would like to schedule a meeting with Vertical Aerospace, send me an email at dorame@lythampartners.com. If you'd like to Lytham Partners, you can visit our website at lithiumpartners.com. We hope you enjoy the conference and have a great day.