The aircraft developer Lilium may face challenges in securing essential funding. On Thursday, the Germany-based company revealed troubling news that its request for a loan guarantee from the German federal government was denied. This announcement led to a significant sell-off of Lilium’s stock, resulting in a decline of over 21% by the close of the U.S. trading session.
The news was disclosed through a regulatory filing with the U.S. Securities and Exchange Commission (SEC), where Lilium stated it had received information indicating that the German parliament’s budget committee would not approve the guarantee. This guarantee was intended to cover 50 million euros ($54 million) of a 100 million-euro ($109 million) convertible bond issue. The convertible bonds were to be issued by KfW, a bank owned by the German state that focuses on investment and development.
Despite this setback, Lilium mentioned in their filing that negotiations with Bavaria, a major German land (province), are ongoing to secure at least 50 million euros as a guarantee for the bond issue. Lilium is working toward the commercialization of its Lilium Jet, an electric vertical takeoff and landing (eVTOL) aircraft designed to function as a taxi for both passengers and cargo. Earlier in October, the company reported successfully completing the first systems power-on of the aircraft during live testing. This milestone confirmed that the aircraft is being constructed in accordance with Lilium’s platform design and that the flight systems are operating correctly.
The future viability of Lilium’s aircraft remains uncertain. It could either become a significant advancement in mobility or remain an unfulfilled concept without widespread adoption. Therefore, Lilium presents a speculative investment opportunity. Continued financial difficulties could deter many potential investors.
