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Eve expected to be as large as Embraer in 10 years

Embraer’s Eve and Zanite agreed to merge air mobility businesses — Foto: Divulgação
Embraer’s Eve and Zanite agreed to merge air mobility businesses — Foto: Divulgação

In less than ten years, Eve Holding, Embraer’s urban air mobility company whose shares started being traded on Tuesday on the New York Stock Exchange (NYSE), may reach the Brazilian plane maker’s current size and become its main business. By current projections, the company is expected to reach revenues of $4.5 billion in 2030, against the $4.2 billion recorded by the aircraft manufacturer in 2021, and be at the head of a market estimated at $760 billion in 2040.

“Embraer has two lines of action: business efficiency and innovation. Eve is an example that this strategy is working,” CEO Francisco Gomes Neto, who attended the opening ceremony at Nyse along with the management team of Eve Holding, told Valor. The company already has non-binding orders for more than 1,800 eVTOLs (electric vertical take-off and landing vehicles), the so-called flying cars, which constitute a potential backlog of $5.4 billion.

Despite the figures, the debut on the American stock exchange was not smooth. Penalized mainly by the increase in interest rates, global inflation and investors’ flight from risky assets, the shares fell 23.5% in the first business session, to $8.66 each, in a movement that was already expected by analysts because of the recent negative performance of other stocks in the industry. In Mr. Gomes Neto’s evaluation, it is relevant the fact that the company has managed to move forward with the operation amid adverse market conditions.

The funds raised in the transaction — an IPO via merger with Zanite Acquisition, a special purpose acquisition company (SPAC) that was already listed at NYSE — were lower than expected. But, according to Mr. Gomes Neto, they are enough to finance Eve’s operation until eVTOL is authorized.

Initially, the estimate was that it would take about $500 million to reach certification of the aircraft, scheduled for 2025. Zanite’s financial partners, however, contributed less funds and Eve Holding raised $377 million. As a result, Embraer holds about 90% of the new company’s capital, compared to just over 80% in the original proposal.

“With more experience in relation to costs [of the project] and with competitive engineering, which is available in Brazil, the vision at this point is that the funds are enough,” the executive said.

According to Mr. Gomes Neto, one of Eve’s major distinctions in relation to its peers is being able to count on Embraer’s support, knowledge and global facilities. Other companies that are developing the so-called flying cars will have to build this structure, he pondered.

In addition, Embraer’s engineering team, which is recognized globally for its competencies, is participating in the development of the eVTOL. “We are confident that Eve’s design is simple and more favorable to operation than other designs,” he said.

The first 1:1 scale Eve prototype is due to take off in Brazil, at the Gavião Peixoto plant, in São Paulo state, in the next few weeks. There is still no decision on where the aircraft will be manufactured, and an international consulting firm has been hired to help define the assembly process. “We are going to make logistics and manufacturing network studies to decide where and how this process will be,” the Embraer CEO said.

In a note, Eve co-CEO Andre Stein called the IPO at Nyse a “historic milestone” in the journey started nearly five years ago by the startup incubated at EmbraerX. “This deal is a key enabler of our mission to become a leader,” he said.

Jerry DeMuro, also co-CEO, pointed out that the non-binding orders signed by major customers, including Azorra Aviation, Falkon Regional Aircraft, Republic Airways and Skywest, “provide powerful validation” of Eve’s business strategy and vision.

With the crisis triggered by the Covid-19 pandemic, which was especially hard on civil aviation, and the cancellation of the company’s commercial aviation sale to Boeing, Embraer had to reduce its operations and adjust to the new market reality. Eve’s success is one of the relevant axes for the company’s resumption of growth.

Source: Valor International

https://valorinternational.globo.com

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Embraer completes business combination between Eve, Zanite

Embraer’s Eve and Zanite agreed to merge air mobility businesses — Foto: Divulgação
Embraer’s Eve and Zanite agreed to merge air mobility businesses — Foto: Divulgação

Embraer unveiled that it has completed the business combination between its subsidiary of air vehicles for urban mobility — the so-called “flying cars” — Eve, and U.S.-based Zanite Acquisition. The merger gives rise to a new company, Eve Holding, now listed on the New York Stock Exchange. Embraer closed down 7.98% on the B3.

Embraer Aircraft Holding holds 238.5 million shares of Eve Holding common stock, representing approximately 90% of the existing common stock. The remaining shares are held by Zanite’s market shareholders — by the sponsor and certain third party investors that entered into subscription agreements to purchase common shares at the closing of the business combination, Embraer said.

“The business combination is in line with the company’s innovation and growth strategy, and its consummation reinforces the company’s commitment to achieving these goals,” Embraer said. The merger was unveiled in December last year.

In a note, Eve co-CEO Andre Stein said the transaction provides the startup with “growth capital and positions Eve well to execute its development plans, aided by our ongoing strategic partnership with Embraer.”

“We intend to further strengthen our position as a leading global UAM [urban air mobility] player by delivering an effective and sustainable new mode of urban transportation,” he added.

Co-CEO Jerry DeMur indicated that the closing of the deal puts Eve on course to continue developing its solutions.

Last week, Eve revealed that since December its order backlog rose to 1,825 units from 1,735 electric vertical take-off and landing vehicles (eVTOLs), made through non-binding letters of intent from 19 customers. Among the customers are fixed-wing operators, helicopter operators, sharing platforms, and leasing companies.

Source: Valor International

https://valorinternational.globo.com

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Embraer’s Eve starts certification in civil aviation agency

Embraer's Eve's flying car to be certified for flying in 2025 — Foto: Divulgação
Embraer’s Eve’s flying car to be certified for flying in 2025 — Foto: Divulgação

On its way to being listed on the New York Stock Exchange (NYSE), Eve, Embraer’s urban air mobility company, started the process to obtain a type certificate for its electric vertical take-off and landing vehicle (eVTOL), or “flying car”, with the National Agency of Civil Aviation (ANAC).

This certification will confirm that the new aircraft model, which will be produced on a large scale, meets the legal criteria for airworthiness. Eve expects to certify its eVTOL in 2025 and put it into commercial operation in 2026.

According to the Brazilian aircraft manufacturer, with the initiative, Eve formalized with the regulatory body the commitment “to demonstrate compliance with international technical standards and mandatory airworthiness requirements for certification”.

The eVTOL will follow the process of obtaining the type certificate in the “normal category”. “Eve, with the support of ANAC, will continue the interactions with the main foreign aeronautical authorities, soon formalizing the type certificate validation process in accordance with its global business strategy”, it informed.

In a statement, ANAC´s Airworthiness superintendent, Roberto Honorato, stated that this is a relevant step. “The process aims to achieve the best security standards, in order to allow eVTOL access to the global market,” he said, adding that there is still a lot to be done from a regulatory point of view in relation to the new technology and to the urban air mobility ecosystem.

According to Eve’s head of technology, Luiz Felipe R. Valentini, the formalization of the certification process continues the discussions already underway with ANAC.

“In addition to demonstrating Eve’s commitment to the development of the project, it allows institutions to evolve together in defining the requirements and means of compliance applicable to certification,” he explained.

Eve’s “flying car” aims to offer comfortable transport, with low noise and zero carbon emissions. Initially, it will be manned and will have capacity for four passengers. With 17 announced partnerships and 1,735 aircraft on the order backlog, valued at $5.2 billion, Eve projects revenue of $4.5 billion in 2030 and a market share of 15%.

The merger between Eve, a startup that was incubated at EmbraerX and launched as an independent company in October 2020, with Zanite Acquisition, was announced in December. The transaction values Eve at $2.4 billion and is expected to be closed in the second quarter. Zanite is already listed on Nyse.

Source: Valor International

https://valorinternational.globo.com

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Embraer’s Eve will have four major business areas

Conheça a Eve, a marca de 'carros voadores' da Embraer | CNN Brasil

Eve, Embraer’s urban air mobility company, will operate in four major business areas and not only in the production and marketing of its electric vertical take-off and landing vehicle (eVTOL). On its way to being listed on the New York Stock Exchange (NYSE), it will operate in support and services, operations, and air traffic control, with the development of management software for the so-called flying cars.

“All the numbers available point to a large market. This is what attracted Embraer and led it to incubate this project in EmbraerX,” said Tuesday the Eve CEO, Andre Stein, at the Credit Suisse 2022 Latin America Investment conference.

According to the executive, this is a market of more than $750 billion by 2040, considering the urban air mobility ecosystem. For Eve, the initial conservative projections suggest potential revenue of $4.5 billion by 2030, with a 15% market share.

Launched as an independent startup in October 2020, Eve is in the process of merging with U.S.-based Zanite Acquisition, in a deal that values it at $2.4 billion. The deal was announced at the end of 2021 and is expected to close in the second quarter of 2022.

According to CFO Eduardo Couto, Eve plans to be listed at Nyse as of the second quarter. “This is a relatively new operation for Brazilian companies, mixing M&A with a traditional IPO,” he said.

Eve is joining an already listed company, which has about $237 million of cash. Another $305 million in new money will come into Eve’s cash reserves from the deal, so that after the merger the company will have raised more than $500 million to develop its project. Embraer will be the controlling shareholder, initially with an 80% stake in the company.

According to Mr. Stein, the decision to launch Eve as a company independent from Embraer will maintain the agility characteristic of startups while providing access to the resources and structure of a global leader, in this case the aircraft manufacturer. “Eve will be able to seek new partnerships very freely, and even new investors, which would not be possible as a division of Embraer,” he said.

With 17 announced partnerships and 1,735 aircraft in its order backlog, valued at $5.2 billion, Eve keeps plans to certify its eVTOL in 2025 and put it into commercial operation in 2026. The gross margin of the operation is expected to be around 25% and the EBITDA margin between 15% and 20%.

Four companies that are developing flying cars are already listed on the NYSE. But Eve’s management believes that its project is differentiated, given the size of the current order portfolio, the diversity of clients and the aeronautical knowledge of the partners, especially Embraer.

According to the executives, Eve also offers greater certification capacity, in the wake of Embraer’s accumulated experience with regulatory bodies and the close relationship between the National Civil Aviation Agency (Anac) and the FAA, the U.S. authority. According to Mr. Stein, the plan is to certify eVTOL first at Anac and then seek FAA validation. “Brazil has the potential to be one of the pioneers,” he said.

For Embraer’s Vice-President of People, ESG and Communication, Carlos Alberto Griner, electric propulsion corresponds to one of the main solutions for reducing the environmental impact of aviation — particularly in regional aviation, a market in which the Brazilian company stands out globally. “These changes will start with regional aviation. And Eve will revolutionize the market,” he says.

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