The shares of Lilium (the electric vertical takeoff and landing vehicle manufacturer) plunged more than 61% Thursday, after the company revealed in an official filing that two of its main subsidiaries were likely to file for bankruptcy in the next few days.
This dramatic fall in the stock price is a result of the severe financial crisis that the German aerospace company faces. It was unable to obtain the government guarantees they desperately wanted.
Lilium GmbH, a Nasdaq-listed company, disclosed in a filing to US authorities that they had not been able to raise enough funding to continue operations of their two major subsidiaries Lilium eAircraft GmbH and Lilium GmbH.
The management concluded as a result that these subsidiaries are “overindebted”, and they will be soon unable to pay their financial obligations.
The company stated in its filing that “the management of the Subsidiaries informed the Company they will file an insolvency proceeding under German law, and at the same time apply for self administration proceedings in Germany.”
Lilium said that after filing for bankruptcy, subsidiaries won’t be held responsible for debts they incurred prior to the application. Creditors will also be prohibited from “foreclosing on the company for any claim.”
Lilium could be delisted from Nasdaq’s Global Select Market if the subsidiary files for insolvency.
German Government refuses to loan money to company
In order to stay solvent, the company requested EUR50 Million from the German Federal Government.
Lilium was left scrambling for alternative sources of funding after the Bundestag budget committee declined to grant the request.
Lilium announced in a press release last week that they “received a signal that the Budget Committee of the Federal Republic of Germany’s parliament will not approve an EUR50 million Guarantee.”
KfW would have provided the loan, but the firm’s financial situation was left in jeopardy after the decision.
Some industry figures have criticized the German government for refusing to provide support for Lilium.
Hubert Aiwanger is the Bavarian Economy Minister. He described this decision as regrettable and stressed the importance of supporting innovative sectors like electric aircraft.
Danijel Visevic expressed disappointment and suggested that Germany’s stance on eVTOL vehicles reflected a limited view.
Visevic said that legislators mistakenly view air taxis as luxury products for the rich when, in fact, they are a critical step in the shift to zero emission transportation.
Flying cars in Europe: The hope of Europe has been dashed
Lilium is currently struggling, which marks a drastic fall for the company that was once considered Europe’s leading player when it came to air mobility.
In 2015, the startup was founded with the goal of revolutionizing short-distance transportation by using electric aircraft that emit zero emissions and operate as flying taxis.
Lilium, a concept for eVTOL vehicle, captured the imagination of investors around the world, including Atomico, Earlybird and Chinese tech giant Tencent.
Lilium, in 2021 took advantage of the Special Purpose Acquisition Company boom by merging with Qell Acquisition Corp.
Lilium’s listing in 2013 was accompanied by a projection of aggressive growth. The company projected EUR240m of revenue by the year 2024, and profitability for 2025.
Lilium has been unable to achieve its goals since the IPO. The share price of Lilium has fallen by over 95%.
Lilium jets are as expensive as $9 million. A six-seater model was also in the works, and would have cost a buyer around $7 million.
Lilium is not alone in its struggles. While the eVTOL sector is promising, it has proved to be financially challenging, with many competitors also facing difficulties.
Volocopter was another German startup in the electric aviation sector that faced bankruptcy earlier this year. It had requested similar guarantees from the two German state governments and the federal government.
Volocopter, despite securing new funding remains vulnerable.
Joby Aviation, an eVTOL company in the US, has received $600,000,000 from the American Government as state assistance.
The post Lilium stock crashed 61%, is there still hope for flying taxis This post may change as new information unfolds.
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