German Air-Taxi Maker Lilium's Units to File for Insolvency, Shares Plunge

German air-taxi developer Lilium NV is facing a severe cash crisis, with its main operating subsidiaries set to file for insolvency in the coming days. The company, which was developing a ducted-fan-powered Lilium Jet, has been unable to secure sufficient funding to continue operations. In a filing to the US Securities and Exchange Commission, Lilium revealed that its subsidiaries, Lilium and Lilium eAircraft, are overindebted and will be unable to pay existing liabilities within the next few days.


The insolvency filing comes after the German government refused to guarantee half of a €100 million ($108 million) loan from the country's state-owned development bank, KfW. The government of Bavaria, where Lilium is based, was to have provided a guarantee for the remainder of the loan, but negotiations between the two parties have not reached an agreement in principle. Despite Lilium's continuous fundraising efforts, it has been unable to raise sufficient external finance to keep the businesses afloat.


Since its inception, Lilium has burned through almost €1.5 billion in its attempt to bring the electric ducted-fan-powered vertical take-off and landing Lilium Jet to market. The company had initially planned to achieve certification by 2026, but financial firm Iceberg Research believes there is little chance of the jet meeting that service-entry target. The ambitious timeline for certification and commercialization has contributed to Lilium's cash crisis, as the company has struggled to secure sufficient funding to support its aggressive growth plans.


Lilium had claimed a backlog of 780 aircraft orders, with around 100 orders described as "firm" commitments. Major airline customers included Saudia and Brazilian carrier Azul. However, the company's claims of a backlog of aircraft orders have not been enough to secure sufficient funding, and investors have become increasingly skeptical of Lilium's performance claims. The company's shares are traded on the Nasdaq exchange, and a delisting may result from the insolvency filing. Existing shareholders, including Honeywell, which invested in 2021, are also likely to lose the value of their investment in the company.

The insolvency filing and subsequent delisting of Lilium's shares on the Nasdaq exchange have significant implications for existing shareholders and the company's valuation. As Lilium's subsidiaries file for insolvency, the parent company may also be forced to file for insolvency, further impacting the value of the company's shares. The German government's refusal to guarantee a loan from the state-owned development bank has exacerbated Lilium's cash crisis, and the company's ambitious timeline for certification and commercialization has contributed to its financial difficulties.

In conclusion, Lilium's cash crisis and the subsequent insolvency filing of its main operating subsidiaries highlight the challenges faced by the electric air-taxi industry. The company's ambitious timeline for certification and commercialization, combined with the German government's refusal to guarantee a loan, has contributed to Lilium's financial difficulties. The insolvency filing and potential delisting of Lilium's shares on the Nasdaq exchange have significant implications for existing shareholders and the company's valuation. As the electric air-taxi industry continues to evolve, companies must balance their ambitious goals with financial sustainability to ensure long-term success.