Airlander is the future of zero-carbon aviation. The aircraft combines unique capabilities across a diverse set of verticals with low cost of ownership compared to other competing non-hybrid aircraft and up to 90% reduction in carbon emissions. Hybrid Air Vehicles Limited (the Company or HAV) has been developing the technology at the heart of Airlander since our founding in 2007 and has established the global lead in this sector. Across all variants, the market for Airlander technology has been independently valued at over US$50 billion over the next 20 years. The Company’s Financial Model forecasts the first aircraft entering service within 5 years of first order, or of completion of the current investment round, delivering first aircraft into service between 2024 and 2025.
One of the biggest challenges facing all sectors is to reduce our impact on the environment. Aviation in particular has come under scrutiny for its contributions to carbon emissions globally, which are expected to rise as demand rises. The industry has made great strides in improving the efficiency of the aircraft we use today, but these changes have not delivered the technologies needed to rapidly decarbonise services.
The need for sustainability is reflected in many of the other challenges facing our society. Regional connectivity is increasingly important to the health of our communities and our economies, but is also a growing challenge as we seek to reduce the carbon impact of transportation. Rail and road infrastructures are expensive to develop and come at an environmental cost.
We are critically dependent on limited, expensive, and increasingly vulnerable space and airborne services for communications, connectivity, and more. These services support systems including Global Positioning Systems, Internet of Things applications, self-driving cars, and keeping deployed troops safe. Space will remain an important growth market, but alternatives that provide short-term, flexible, mobile, resilient airborne surveillance and communications services are likely to be increasingly in demand.
The global nature of trade also has had an impact on cargo operations. International air freight has grown dramatically, but a gap remains between air and sea freight in terms of both cost and speed. Specialist solutions are also needed for delivering cargo to remote locations without infrastructure as we develop new parts of our world. Delivering these capabilities without dramatically impacting our environment is an imperative.
All of the challenges we face are set against the backdrop of a world that is increasingly mobile. People are drawn to new experiences, travelling further and to more remote places or spending time in communities to experience local flair. Wellness is a growing sector and more brands are seeking alternatives that allow them to offer experiences that transcend a simple holiday.
Airlander 10 offers a solution to many of these challenges. Across each of our sectors, we are able to offer an aircraft that is transformative for our customers. In comms and surveillance roles, Airlander offers a combination of payload and endurance better than any other comms and surveillance aircraft. In the tourism sector, Airlander offers an airborne experience that allows you to open the windows on a part of the world you haven’t seen before. In logistics, Airlander offers point-to-point cargo delivery with minimal fixed infrastructure.
Airlander 10 can deliver up to 90% fewer carbon emissions than comparable aircraft in many roles. This significant reduction is possible through the use of a buoyant lifting gas (helium), which offsets most of the weight of the Airlander airframe. This results in a relatively low power demand to lift the payload and move the aircraft through the air, which can be delivered through a combustion, hybrid-electric, or all-electric engine option appropriate to the role.
In developing Airlander, HAV has secured commercial revenues and other income of £81 million which has been supplemented by £7 million of EU and UK grant funding, approximately £22 million of equity, and £6 million of debt. These sums, which exceed £116 million, have allowed the development and de-risking of our business. We have designed, built, and flown a full-scale prototype Airlander under the supervision of the European Aviation Safety Agency (EASA), the European commercial aviation regulator.
We currently hold the Design Organisation Approval (issued by EASA in 2018) and Production Organisation Approvals (administered by the UK Civil Aviation Authority (CAA) in accordance with EASA, issued in 2018) necessary to commence the Airlander 10 design, manufacture, and test programme. We have applied for a Type Certificate for Airlander 10 and have worked with EASA, CAA, and the US Federal Aviation Administration (FAA) to establish the basis for Type Approval of the aircraft.
In preparing for the launch of the Entry into Service programme, we have defined a Programme Execution Plan which is the basis of project schedules, costs, and risks with this being a major input into the Company’s baseline business plan presented in this document. This plan is based on management’s view of the reasonable worst-case programme delay resulting from the Covid-19 pandemic. However, the Company is pursuing numerous opportunities with customers, strategic partners and governments which could see key critical path activities commenced up to a year earlier than forecast and thereby accelerating the Type Certification and delivery dates to the same degree.
The unaccelerated plan sees flight test beginning in January 2024 and the Type Certified production Airlander 10 to enter service with customers from 2025. We have also established the key processes, personnel, and business systems required to launch the programme.
Therefore, HAV is currently focused on securing launch and follow on orders for the production Airlander 10. We hold letters of intent for more than ten aircraft and have an anticipated mature demand from current conversations of approximately 95 aircraft. These customers include commercial organisations with a combined turnover in excess of £12 billion and we also continue to engage with major militaries.
In order to support this work, we are establishing partnerships that provide our customers with additional benefits. In 2019, we signed a Memorandum of Understanding with Vertex Aerospace to deliver proposals to the US Department of Defense. Vertex has a track record of delivery in aircraft maintenance, repair, overhaul, and systems integration, making them an ideal fit for that work.
Our baseline business plan reflects production of Airlander 10 commencing next year, delivering first aircraft to customers in 2025, and increase our delivery rate to 12 aircraft per year in 2027. This timeline reflects management’s reasonable worst-case view of the impact of the Covid-19 pandemic, and management are working to outperform this timeline through achieving the conditions required to commence key critical path activities sooner. Current discussions with potential partners, customers and governments offer opportunities for this.
Our strategy is to deliver value through maximising the efficiency of production infrastructure to deliver a common core aircraft to multiple market sectors. Alongside this, tailored services and aircraft modifications will be provided to customers in each sector.
Forecast revenue generation from Airlander 10 sales (and related products and services) under the Financial Model is expected to be £489 million with an EBITDA of £123 million in the first year of production at the forecast rate of 12 aircraft per annum.
HAV teams with 2Excel Aviation to offer customers joint proposals for operating Airlander aircraftSeptember, 2020
HAV joins Telecom Infra Project to improve internet connectivity for millions of peopleAugust, 2020
Letters of Intent secured covering 15 aircraftMarch, 2020
Vertex Aerospace Signs MOU with Hybrid Air Vehicles to Deliver Missionized Airlander 10 to the U.S. Department of DefenseSeptember, 2019
Production Standard Design FreezeJuly, 2019
Hull shape optimisation completed at Mercedes Benz Grand Prix facilitiesFebruary, 2019
Secured our Production Organisation Approval (POA) from the UK's Civil Aviation Authority (CAA) in December 2018December, 2018
Secured our Design Organisation Approval from the European Aviation Safety Agency (EASA) in October 2018October, 2018
Prototype Flight Test Programme concludedNovember, 2017
First UK Flight of AirlanderAugust, 2016
US budget sequestration and fiscal cliff cancels US Army programme permitting Hybrid Air Vehicles to purchase Airlander outright.January, 2013
First Flight of US Army programme aircraft (the LEMV HAV-304, which later became the Airlander 10 prototype).August, 2012
Hybrid Air Vehicles Ltd wins contract with Northrop Grumman to provide Persistent Wide Area Surveillance aircraft in $517m US Army program.July, 2010
Hybrid Air Vehicles founded. Undertakes development and flight testing of sub-scale demonstrator aircraft.July, 2007