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Speaker 1: Since founding Archer Aviation in twenty eighteen, Adam Goldstein has

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Speaker 1: been constructing a very real business based on a very

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Speaker 1: vivid vision.

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Speaker 2: Imagine you have a flight to thirty minutes and you're

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Speaker 2: just leaving your house. You can now pop into a

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Speaker 2: vehicle that can fly you to the airport in five minutes.

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Speaker 2: We're building the future of aerospace, the future of aerial

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Speaker 2: ride sharing. That's what electric vertical takeoff and landing aircraft

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Speaker 2: can do.

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Speaker 1: Electric vertical takeoff and landing EVY tolls for short vis

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Speaker 1: are aircraft designed to carry passengers short distances at high speeds,

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Speaker 1: running on batteries the recharge within minutes. It sounds like

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Speaker 1: science fiction. We're talking about an air taxi or a

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Speaker 1: flying taxi or aerial ride sharing, which is hard to

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Speaker 1: fathom for a lot of people anywhere in the world.

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Speaker 2: Electric air taxis were really introduced to the world by

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Speaker 2: being called flying cars, very similar to cars, like a

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Speaker 2: car with a wing. But the concept of calling these

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Speaker 2: products flying cars really creates this sense that these products

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Speaker 2: are many many years off, when the reality is the

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Speaker 2: products are very close to coming to market.

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Speaker 1: How close you will.

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Speaker 2: See these products come to market by the year twenty

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Speaker 2: twenty five.

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Speaker 1: Twenty twenty five is when the Federal Aviation Administration is

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Speaker 1: laid out a plan for ev tolls to begin limited

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Speaker 1: commercial operations. Getting to market will take vision, technical acumen,

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Speaker 1: not least shrewd allocation of resources. For this. Gold Steam

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Speaker 1: relies on CFO Mark Mesler.

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Speaker 3: Our timeline to complete the twenty twenty four annual operating plan.

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Speaker 3: We compliment each other. I'm used to supporting like the visionary,

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Speaker 3: passionate founder who's out there selling the dream.

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Speaker 1: And that's a classic Citlicon Valley story.

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Speaker 3: That's right, that's right, And I'm a rational, left brain

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Speaker 3: CFO who I can tell the story, but I have

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Speaker 3: to tell it in a way that investors will understand,

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Speaker 3: and it's very pragmatic and it's very databased.

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Speaker 2: I would say Mark has been really phenomenal in helping

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Speaker 2: us manage our process and really manage it with speed.

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Speaker 3: George just turning.

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Speaker 2: Mark and I partner really to try to keep the

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Speaker 2: company moving on this path, to really make sure we

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Speaker 2: hit our timelines, stay on budget, and ultimately have enough

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Speaker 2: capital to get to the finish line.

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Speaker 1: The launch of ev Toolls in twenty twenty five would

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Speaker 1: also be the starting line for an urban and ability

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Speaker 1: industry that many believe has the potential to be transformative.

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Speaker 4: The opportunity here is to really take the pain points

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Speaker 4: and hassle out of travel. These excitement cautious optimism. Let's

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Speaker 4: say it is excitement that you're going to create some

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Speaker 4: new forms of travel that should enhance you overall travel landscape.

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Speaker 4: And we're closer to this being realized than we've ever been.

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Speaker 5: Some of the early cities like Los Angeles really and

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Speaker 5: New York and others started paying attention about I would

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Speaker 5: say twenty eight team really saw interest in the industry

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Speaker 5: then of what might happen with this technology coming As

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Speaker 5: the industry has advanced, there's more viable entrance to the market.

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Speaker 5: Now we're seeing other cities really try and figure out

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Speaker 5: where this technology fits in their urban landscapes.

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Speaker 1: Adam Goldstein, Mark Messler and the team at Archer are

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Speaker 1: on a path that's never been trodden. They believe it's

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Speaker 1: a path to success.

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Speaker 2: The product that Archer's building has the potential to change

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Speaker 2: the world, and I feel incredibly lucky for the opportunity

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Speaker 2: to build that we're building.

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Speaker 3: So we view finance and I view finance as a

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Speaker 3: key business partner to all the operating functions within the company.

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Speaker 3: We want to be a part of the decision support

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Speaker 3: mechanisms that help them make decisions daily. We also want

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Speaker 3: to be able to put process in place to facilitate

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Speaker 3: those decisions, such as it's non random outcomes. I'm a

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Speaker 3: big proponent of process. I'm a big proponent of creating

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Speaker 3: predictability in the business. There's things you can control and

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Speaker 3: there's things you can't control. And it's I can control

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Speaker 3: my R and D spend. I can control the processes

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Speaker 3: through which we're putting up our manufacturing plant. There's other

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Speaker 3: things I can control. So I have to be thinking

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Speaker 3: about what's around the corner. What is that potential bump

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Speaker 3: in the road that I'm gonna have to deal with.

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Speaker 1: In October twenty twenty three, Archer's Midnight aircraft made its

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Speaker 1: first flight at the company's testing facility in California, one

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Speaker 1: more milestone on the journey to FAA certification. Archer is

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Speaker 1: one of several eve Told companies aiming to come to

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Speaker 1: market in twenty twenty five. It's chosen a very particular

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Speaker 1: route to get that.

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Speaker 2: We are not trying to build the highest flying, farthest flying,

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Speaker 2: fastest flying vehicle. We will build the internal powertrain, which

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Speaker 2: for electric aviation hasn't existed before on certified products. But

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Speaker 2: Archer picked a specific business model and then picked an

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Speaker 2: approach that could be the fastest, most efficient path to market. So,

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Speaker 2: for example, we'll work with a company like Honeywell or

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Speaker 2: Saffron or Garment that have parts that are already certified

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Speaker 2: on planes today going through a certification process with a regulator.

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Speaker 2: When you start with parts or similar parts that are

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Speaker 2: used on existing planes, all of a sudden, there's a

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Speaker 2: lot of built in knowledge and trust with those parts.

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Speaker 2: So Mark and I will work together to take the

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Speaker 2: supply base, combine that together with some of the internal

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Speaker 2: core IP that we build to make sure we can

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Speaker 2: build this product.

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Speaker 1: Partnerships are foundational to Archer's commercialization strategy.

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Speaker 2: On the operating side, we partner with the United Airlines.

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Speaker 2: United has helped us not only in just design of

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Speaker 2: the aircraft, but also ways to really set up the

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Speaker 2: operations of the aircraft.

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Speaker 1: Archer and United planned to launch the company's first commercial

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Speaker 1: air taxi route between New accare Port and Lower Manhattan.

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Speaker 3: United is an investor but they're a very good operating partner.

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Speaker 3: They're also a customer. They gave us a an up

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Speaker 3: to a billion dollar contract for two hundred aircraft with

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Speaker 3: an option for another one hundred.

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Speaker 2: On the OEM side, we partnered with Stallantis, one of

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Speaker 2: the world's best and largest auto manufacturers.

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Speaker 3: Stillanti is also very strong investor, and we think about

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Speaker 3: unlocking scale in this business. Stallantis is helping us think

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Speaker 3: about that as well.

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Speaker 1: For ARJA, the twenty twenty four will be about scaling

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Speaker 1: up and accelerating execution in every area.

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Speaker 3: We're going through the certification process, we're building out our factory,

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Speaker 3: the manufacturing vector, we're working on commercial opportunities, and we're

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Speaker 3: also continuing to advance the text. Really a lot manufacturing

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Speaker 3: is where a lot of our capital is going as well.

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Speaker 2: In Covington, Georgia, we are building one of the largest

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Speaker 2: aerospace manufacturing facilities really in the world. The first phase

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Speaker 2: of this project can build up the six hundred and

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Speaker 2: fifty planes per year and within the second phase around

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Speaker 2: two thousand planes per year. We need an area that's

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Speaker 2: very favorable towards new technologies, and Georgia really put together

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Speaker 2: a very compelling pitch to entice Archer to come.

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Speaker 3: It's in a great location outside of Atlantis. We have

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Speaker 3: access to a really good labor pool there, we have

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Speaker 3: access to universities there.

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Speaker 2: The goals to get the Georgia factory online by middle

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Speaker 2: of next year.

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Speaker 1: Increased production capacity will help Archer develop its relationship with

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Speaker 1: another customer slash partner, the US Air Force.

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Speaker 2: The military has taken a really unique approach to electric

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Speaker 2: air taxis. So the way that the Department Offense has

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Speaker 2: really partnered with the industry has been defined what they

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Speaker 2: call non kinetic solutions to use these vehicles for good.

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Speaker 2: So you can think about things like rescue vehicles, and

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Speaker 2: so we start to find different use cases like that

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Speaker 2: in the military that can help us generate revenue and

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Speaker 2: really help the industry get going.

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Speaker 3: It's a channel for us to develop the tech. It's

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Speaker 3: a channel for us to get InCor funding for those programs.

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Speaker 3: And I think it's a it's a call option in

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Speaker 3: that if you get to the end of the program

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Speaker 3: and that becomes a generational type program for the DoD.

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Speaker 3: It's a call option a lot on a large potential

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Speaker 3: order and program for the company.

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Speaker 1: If it comes on offer, you take it.

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Speaker 4: Yep.

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Speaker 1: Archers laid plenty of groundwork for future revenue, but for now,

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Speaker 1: Mark Messler's most pressing challenge as CFO is conserving capital.

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Speaker 3: You have to have the short term discipline to sort

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Speaker 3: of circle the wagons around cash. I mean, cash is oxygen.

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Speaker 3: I know where every ounce of cash is going. But

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Speaker 3: we also have to be nimble around that as well,

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Speaker 3: because things change by the day.

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Speaker 1: Archer went public in twenty twenty one in a reverse

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Speaker 1: merger with a spac Ken Moelis's at Las Crest Investments.

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Speaker 1: Through August twenty twenty three, the company raised over a

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Speaker 1: billion dollars from investors including Stillantis, Boeing, United Airlines, and

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Speaker 1: Caffee Woods Are Investment Management. Does that ARC investment open

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Speaker 1: doors for you to bring in different kinds of institutional

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Speaker 1: money going forward?

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Speaker 4: It does.

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Speaker 3: I mean, I think there's a lot of credibility that

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Speaker 3: comes in with an investor like ARC. As I think

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Speaker 3: about my top targeted list of investors over the next

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Speaker 3: two to three years, an investment like that gives us

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Speaker 3: some credibility and gives us a little bit of a

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Speaker 3: little bit of staying powers. I go in and talk

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Speaker 3: to other investors.

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Speaker 1: With the spac pipe now closed, Archers facing a new

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Speaker 1: phase of raising capital.

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Speaker 3: I know the folks who aren't willing to invest right

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Speaker 3: now may have large pockets of investment in the future.

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Speaker 3: So I want to be in front of them. I

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Speaker 3: wanting to show them progress. I want to create credibility

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Speaker 3: with them that we are marching towards our goals of commercialization.

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Speaker 3: They may not be a buyer at this point, but

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Speaker 3: I do want to spend a lot of time in

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Speaker 3: front of that other set that is a buyer at

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Speaker 3: this point. They're interested. They want to be an early

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Speaker 3: adopter of the stock. They're interested in the story.

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Speaker 1: Archers stock performance this year suggests there's strong interest in

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Speaker 1: the story, especially if it plays out as planned with

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Speaker 1: FAA certification and commercialization by twenty twenty five. What happens

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Speaker 1: if the FAA delays and you are not certified in

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Speaker 1: twenty twenty five, So.

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Speaker 3: I would start thinking about cash cash preservation at that point.

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Speaker 3: We've got the capital to weather a delay, but it

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Speaker 3: just depends on how long that delay is.

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Speaker 2: Of course, there's always a potential for it to take

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Speaker 2: longer than expected. But the good news is there are

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Speaker 2: other applications like the military that can provide diverse revenue streams.

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Speaker 2: I'm confident that the FAA will move along spidious process

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Speaker 2: with Archer and with the industry to allow us to

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Speaker 2: get to market on timeframe that makes sense.

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Speaker 1: Mark Mesler joined Archer Aviation as CFO in early twenty

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Speaker 1: twenty two, bringing more than twenty five years of experience

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Speaker 1: in the hardware, sustainability and aerospace sectors that included more

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Speaker 1: than a decade at Silicon Valley technology company Bloom Energy.

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Speaker 3: I started a Bloom. It was a pre revenue company.

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Speaker 3: We scale them to an IPO in July of twenty eighteen,

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Speaker 3: and operately when I left it was a probably billion

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Speaker 3: dollar runnery company. A lot of the engineering milestones and

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Speaker 3: that introduction of a hardware product we went through at Bloom,

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Speaker 3: A lot of the financing mechanisms that we use to

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Speaker 3: deploy our energy servers of Bloom I think have a

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Speaker 3: real application here in the aviation space as well in

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Speaker 3: the wing.

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Speaker 1: I visited Archer's flight testing facility in Salinas, California with

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Speaker 1: Mesler and Chief Commercial Officer Nikhil Goyle. Goyle co founded

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Speaker 1: Elevate Uber's air taxi division and co offered the twenty

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Speaker 1: sixteen white paper that laid out the vision for a

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Speaker 1: commercial air taxi industry. He explained how advances in technology

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Speaker 1: that brought that vision to the brink of reality.

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Speaker 6: Instead of using fuel and one large rotor like a helicopter,

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Speaker 6: you can use batteries to power a dozen rotors. So

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Speaker 6: on the Archer Night aircraft you see twelve rotors, six

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Speaker 6: in the back, six in the front. All twelve of

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Speaker 6: those let you take off vertically, just like a helicopter.

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Speaker 6: But then these six on the front here, they tilt forward.

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Speaker 6: And what that does is it lets you power forward

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Speaker 6: flight like an airplane in tandem with the wing that's

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Speaker 6: on our Archer aircraft.

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Speaker 3: We made the decision early on that we were only

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Speaker 3: going to invest internally on key differentiating technologies, and clearly

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Speaker 3: the powertrain is the key differentiating technology Yousour investment is

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Speaker 3: a recurring investment with respect to the powertrain team, the

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Speaker 3: battery team which is part of it, the engine team,

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Speaker 3: electric engine team which is part of it. And we

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Speaker 3: also have a lot of non recurring costs with the

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Speaker 3: other with the other components because we're not developing those internally,

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Speaker 3: we're using the existing aerospace defense supplier base for most

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Speaker 3: of the other components.

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Speaker 1: The Midnight testing aircraft was built at Archers manufacturing facility

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Speaker 1: in San Jose, around the corner from its corporate headquarters.

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Speaker 3: We bifurcated the production system such as San Jose is

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Speaker 3: really a test lab in a low rate introductory production plant,

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Speaker 3: so we'll build our first minimum six aircraft out of there.

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Speaker 3: We're currently building Covington, Georgia all the way up to

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Speaker 3: Phase two. We'll get us to twenty three hundred aircraft

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Speaker 3: per year as well.

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Speaker 1: Why spend the money on both? Why bifer kate as

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Speaker 1: you put it.

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Speaker 3: Well, it's optionality for us because we're going to see

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Speaker 3: what the market bears out. Nikhil and his team will

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Speaker 3: be out developing the market, so I have a call

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Speaker 3: option on that Phase two Phase one I can ramp

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Speaker 3: up to as the market supports.

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Speaker 1: At the core of Midnight's commercial appeal is the passenger experience.

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Speaker 1: Is designed to seat a pilot and four travelers plus luggage.

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Speaker 1: The test aircraft isn't fully fitted out for passengers, but

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Speaker 1: it's easy to imagine what the ride would feel like.

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Speaker 1: All right, this is it, This is inside Midnight Welcome.

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Speaker 1: The design is four passenger seats front row, back row,

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Speaker 1: and one pilot. How after all this time did you

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Speaker 1: arrive at that configuration four passengers, one pilot.

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Speaker 6: Our goal is to be the Uber of the air.

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Speaker 6: When I was at Uber, we took all the data

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Speaker 6: of Uber trips going back and forth all over the world,

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Speaker 6: and what we figured out was that four passengers was

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Speaker 6: the optimal configuration to do one thing, which is lower

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Speaker 6: the cost per passenger for these trips. So four passengers,

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Speaker 6: just like a sedan, you can split that cost amongst

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Speaker 6: four passengers and make that equivalent to what you might

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Speaker 6: spend on an Uber or attack.

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Speaker 4: Right.

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Speaker 3: And there's a lot more to it from a financial

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Speaker 3: standpoint than just the passengers. That's one fact. We also

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Speaker 3: look at capacity on the route, so we understand what

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Speaker 3: the cost of the aircraft is. We understand what the

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Speaker 3: cost of the pilot is. We understand what the cost

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Speaker 3: of the repair and maintenance of this is, we understand

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Speaker 3: battery cost. All of that feeds into our unit level

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Speaker 3: economic model, and it does show that pricing at ride

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Speaker 3: sharing prices allows us to make an economic profit on the.

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Speaker 1: Back At Archer headquarters, I actually got to fly midnight, Okay,

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Speaker 1: not for real virtually in the company's E simulator. Training

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Speaker 1: pilots is another hurdle. The EVE tool industry will have

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Speaker 1: to clear how much burden are you going to take

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Speaker 1: in the training process? You know, why does that fall

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Speaker 1: to Archer? And if it does, what does it look

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Speaker 1: like for you guys?

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Speaker 3: I think initially we are going to be training our

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Speaker 3: own pilots. This is our own technology. I think eventually,

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Speaker 3: as we look to scale, and we're always talking about

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Speaker 3: unlocking scale, we could look to partners to help us

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Speaker 3: do some of the training. Early on, pilot training will

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Speaker 3: be a critical part of our of our own operations.

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Speaker 2: The simulators really help you get a sense for how

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Speaker 2: easy the vehicles are to fly. In fact, what we

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Speaker 2: found is people with less flying experience are actually better

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Speaker 2: at flying these planes because you don't have to unlearn

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Speaker 2: as much.

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Speaker 1: Does that include me?

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Speaker 6: That includes you?

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Speaker 2: So within five minutes you were able to take off,

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Speaker 2: fly around the island of Manhattan and land successfully. And

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Speaker 2: that's your first time you've ever been in a simulator,

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Speaker 2: and that's pretty incredible.

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Speaker 1: The Eve toll industry is poised for takeoff in twenty

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Speaker 1: twenty five. That's when the FAA has said it plans

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Speaker 1: to authorize limited operation of electric air taxis utilizing existing

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Speaker 1: routes and infrastructure, while Archer Aviation puts is midnight aircraft

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Speaker 1: through testing for certification. It's also mapping out the launch

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Speaker 1: of its commercial business.

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Speaker 2: Twenty twenty five is going to start with a few

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Speaker 2: aircraft and a few cities. So the first places that

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Speaker 2: we're looking to fly are what we call our trunk routes,

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Speaker 2: which are city centers to airports. There's already existing operators

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Speaker 2: that fly those routes. So there's an existing heliport on

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Speaker 2: the Manhattan side, and there's an existing heliport on the

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Speaker 2: airport side, So imagine then all you have to do

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Speaker 2: is swap the equipment and add charging.

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Speaker 1: And if all goes according to plan, twenty twenty eight

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Speaker 1: will be the year the industry scales up.

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Speaker 2: Billy Norman, the former administrator, put out what he called

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Speaker 2: Innovate twenty twenty eight, which was the use of mass

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Speaker 2: amounts of air taxis at the LA Olympics in twenty

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Speaker 2: twenty eight. We're not talking ten planes, We're talking potentially

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Speaker 2: hundreds of planes. So the whole industry is getting ready.

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Speaker 1: Billy Nolan, who spearheaded the FAA report is now helping

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Speaker 1: guide Archer's progress to market. Is the company's chief safety officer.

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Speaker 7: We will be you know, entry into service in twenty

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Speaker 7: twenty five, and then you start to think about some

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Speaker 7: sort of scale by the time you get to twenty

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Speaker 7: twenty eight. We use an LA Olympics as a forcing function.

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Speaker 7: You start to move into a mature industry as you

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Speaker 7: get to twenty thirty and you've got like full maturation

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Speaker 7: by the time you're in twenty thirty three to twenty

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Speaker 7: thirty five, and then this will only continue to grow.

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Speaker 3: We've got a contract with United that is more of

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Speaker 3: like an OEM type relationship. We also are going to

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Speaker 3: be building our network to operate these as well, because

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Speaker 3: we think the long term value is that customer experience

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Speaker 3: and that Archer brand, and we want people to Archer everywhere.

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Speaker 3: That is how we're going to market and that's how

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Speaker 3: we generate revenue.

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Speaker 6: We're thinking about things like what cities are going to

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Speaker 6: deploy in, how do we work with the municipal authorities

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Speaker 6: to get permission and sort of support to go deploy

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Speaker 6: in those cities. How do we think about things like

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Speaker 6: infrastructure and creating a really magical consumer experience.

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Speaker 7: This is not about empty promises. It's about delivering on

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Speaker 7: a vision, and it's about executing into that vision and

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Speaker 7: then bringing something to market that is truly transformational, and

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Speaker 7: we will get there.

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Speaker 1: Archer's vision for its business is global. In October twenty

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Speaker 1: twenty three, the company signed a memorandum of understanding with

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Speaker 1: the Abu Dhabi Investment Office to launch air taxi service

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Speaker 1: in the UAE as early as twenty twenty six.

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Speaker 2: The UAE has been one of the leading countries to

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Speaker 2: say we want to bring air taxis to market. The

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Speaker 2: country wants new mobility solutions, new technology solutions.

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Speaker 6: It's one of the fastest growing regions in the world,

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Speaker 6: and you've got millions of people moving to city and

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Speaker 6: a lot of congestion that we can help solve. You

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Speaker 6: We've gotten top level support from the SHAKE, We've gotten

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Speaker 6: top level support from the GCA, which is the regulatory body,

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Speaker 6: as well as the government of Bobbi Dabby.

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Speaker 5: I think we may very well see some of those

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Speaker 5: global deployments first before we see really large scale deployments

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Speaker 5: in the United States.

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Speaker 4: I do think you're going to see a very global

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Speaker 4: footprint and it also will be partly driven by how

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Speaker 4: quickly the regulatory agencies move. There's a lot of different

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Speaker 4: areas that need to kind of come together to make

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Speaker 4: this work. And in some jurisdictions, for various reasons, it

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Speaker 4: might be easier to launch operations than in others. So

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Speaker 4: I think this is going to be a very global approach.

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Speaker 2: I feel very confident that the industry will bring aircraft

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Speaker 2: to market in a very reasonable timeframe, and by the

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Speaker 2: twenty thirties, you will see these aircraft widely used around

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Speaker 2: the world and people start to understand the real potential

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Speaker 2: what the industry can be.

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Speaker 1: CFO mart Mesla will play a central when helping Archer

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Speaker 1: fulfill its potential and deliver on its promise. I asked

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Speaker 1: him what he sees when he looks ahead. The year

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Speaker 1: is twenty twenty eight, you are still Archer, CFO. What

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Speaker 1: does your job look like then different to today.

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Speaker 3: Well, at that point, I'll be running a multi billion

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Speaker 3: dollar organization. I've created, along with the executive team at Archer,

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Speaker 3: a once in a generation type company that is moving people,

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Speaker 3: you know, throughout the world in urban environments, and we're

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Speaker 3: still looking to grow and build outside of the geographies

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Speaker 3: that we're there. I mean, that's really the goal for

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Speaker 3: twenty twenty eight.

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Speaker 1: What's the one challenge that you're you're worried about most

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Speaker 1: that you think you're going to have to confront.

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Speaker 3: It's probably not one thing. It's the unknown. I can

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Speaker 3: control everything in our budget, I can control our business model.

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Speaker 3: There's always something that is around the corner, so we

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Speaker 3: have to have our radar on and I have to

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Speaker 3: have the right processes in place to deal with that unknown.

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Speaker 3: For me in the past, that's the one thing that

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Speaker 3: we can't control, and that's the one thing that worries

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Speaker 3: me because I just don't know what it is yet.

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Speaker 1: The world of the CFO is changing. The days of

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Speaker 1: spreadsheets and accounting only is no more. How are the

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Speaker 1: skill sets of the CFO going to change? To your

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Speaker 1: mind in the next five or even ten years.

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Speaker 3: I think the cfo's role is one that is a

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Speaker 3: portfolio of skill sets, because you have to be able

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Speaker 3: to talk to investors, you have to understand hardcore gap accounting,

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Speaker 3: you have to be able to create predictability in the

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Speaker 3: business model, and honestly, I think probably one of the

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Speaker 3: primary roles of the CFO is to drive that business

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Speaker 3: model and create accountability across the executive team to achieve

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Speaker 3: those outcomes. You can't just sit behind a green eye

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Speaker 3: shade and roll up numbers, and you can't just be

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Speaker 3: out talking to investors. You have to be an operator.

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Speaker 3: And I think, especially when you're pairing with sort of

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Speaker 3: a visionary founder who maybe hasn't done this before, you're

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Speaker 3: the person who's going to be driving that operational accountability

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Speaker 3: in the delivery of the business model.

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Speaker 1: If one of your best friends phones you and says, Mark,

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Speaker 1: I just took a job as a CFO, what's the

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Speaker 1: advice that you would give them.

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Speaker 3: I would say, beef up and become very good at planning,

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Speaker 3: because planning is going to get you the output you want.

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Speaker 3: Planning is going to help you know where your cash

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Speaker 3: is going to go, and it's also going to involve

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Speaker 3: other members of the executive team, and the inputs from

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Speaker 3: them will create some accountability around what they're delivering as well.

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Speaker 3: So it's not your financial plan, it's the company's financial plan.

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Speaker 1: I met Ludlow, this is Bloomberg