The German government has denied air taxi developer Lilium a €50 million ($54 million) state loan guarantee, casting the company’s future into jeopardy.
The Munich-based company on 17 October informed the US Securities and Exchange Commission of the possibility its short-term financing plans could fall through.
“Lilium… received indication that the budget committee of the parliament of the Federal Republic of Germany will not approve a €50 million guarantee of a contemplated €100 million convertible loan for Lilium,” the company says. “Lilium is continuing discussions with the Free State of Bavaria with respect to a guarantee of at least €50 million.”
The company did not immediately respond to a request for further comment or information.
Lilium has so far garnered $1.5 billion in investments, and was counting on the loan, which would have been paired with a loan from the state of Bavaria, where the company is located. The one cannot be granted without the other.
German politicians have been sceptical of the feasibility of urban air mobility projects like Lilium and competitor Volocopter, denying the latter a similar state loan guarantee earlier this year.
In a Linkedin post this week, Lilium chief executive Klaus Roewe said that the ”fully repayable” loan would be a “very moderate investment” in a promising future.
“It’s not about saving a company in crisis with subsidies,” he writes. “Our private investors - mostly from the USA and China - have already financed Lilium with $1.5 billion. They would like to continue investing. But they also want a signal that there is no disadvantage in investing in a German company.”
“There has never been a successful aircraft programme in the world that was not supported by the government,” he says. “The initial investments are simply too high to be financed purely by the private sector.”
And he warns that should the German government send the wrong signals to the market, innovative companies and their investors would look elsewhere for support.
“Our investors have some alternatives. The USA, China, Great Britain and France have long since given significant support to Lilium’s competitors and continue to do so. If the funding situation in Germany deviates too much, Germany will not be competitive as an investment location.” Her notes that US competitor Joby Aviation has so far cashed in “more than $600 million” in US government aid.
Chief engineer for innovation and company co-founder Daniel Wiegand said earlier in the week, ”If we get a no…we will not be able to keep the company in its current form in Germany…It’s about Germany’s technological leadership in electric flight. That would benefit everyone.”
Following Volocopter’s denied loan in April, that company’s chief executive Dirk Hoke also said the country has “very limited mechanisms to support start-ups in the late stages of financing”, and said if that does not change, start-ups may search for greener pastures.
Bavarian state minister for sciences Markus Blume called the federal government’s denial of the credit “shameful”.
German media have reported that Lilium had some prominent backers, including German chancellor Olaf Scholz. At this year’s ILA trade show in Berlin, Scholz gave Lilium his public show of support by spending time with Roewe at Lilium’s booth.
That said, it is still burning cash as it marches toward certification. Operating losses for the six months ended 30 June rose to €186 million, largely driven by research and development spending that grew to €130 million from €84 million.
And while it continues to speak with investors about further financing, the company has to save where it can.
”Given the urgency to extend its runway, Lilium will likely decrease any spend unrelated to first crewed flight (targeting early-2025),” says Raymond James analyst Savanthi Syth. ”Savings opportunities include preparation for late certification process steps or for operations/aircraft delivery.”
Certification and service entry for the Lilium Jet are expected in 2026. The initial conforming test aircraft – to be used for ground testing – was powered on for the first time, the company said on 1 October.
