b'26American Journal of Transportation ajot.comAIR C ARGOAIR CARGONEWSnewsUPS bets on electric aircraft to get packages to the hinterlandsUnited Parcel Service Inc. is buying 10 smallFebruarys$3.8billionmergerofair-taxi electric-powered aircraft that take off like helicop- startup Archer Aviation with a blank-check com-ters and fly like planes, aiming to reduce its costspanybackedbyinvestmentbankerKenMoelis from contracting with small air freighters to reachand United Airlines Holdings Inc., is a red flag that far-flung areas. the eVTOL market is too frothy, said Aboulafia, an The first delivery of the ALIA-250 from Stoneaerospace consultant for Teal Group.Point Capital-backed Beta Technologies is expectedInvestment pouring into the industry remindsAir France-KLM became the latest to get a 4 billion-euro ($4.7 billion) bailout in 2024, UPS said in a statement, and the courier hashim of the early 2000s, when startups rushed tothat will see the French government reemerge as its biggest shareholder.an option to acquire as many as 150. While the vehi- develop so-called personal jets. That industry dis-cles will be piloted, UPS already envisions dronesolved with the 2008 financial crisis and all theCovid thrusts governments into versions that could fly on their own and would beinvestment turned to dust, Aboulafia said.less costly to operate. Theresnowthesamecombinationoflotscockpit with flag carrier aidFor all the hype surrounding potential passen- of cash looking for a home and a high degree of ger-carrying air taxis, UPSs foray into electric ver- techno-utopia, he said. Decades after being unshack- employee costs.tical takeoff and landing aircraft signals that freightledfromgovernmentcontrol, delivery is likely to be one of the first industriesC oSte StiMateS many of Europes largest airlinesj oBC utSto take advantage of the technology. FedEx Corp.Betas aircraft has four rotors on top and a pro- arebeingforcedbackintotheEuropeangovernmentsare is experimenting with pilotless Cessna 208 cargopeller in the back. The company says it can travelarms of states by the pandemic. being left with significant stakes aircraft and Slovenia-based Pipistrel, which makes250 nautical miles (290 miles, 460 kilometers) on aWithairtravelstillshow- more than two decades after the light propeller planes, expects to start deliveringcharge and can tote as much as 1,400 pounds (635ing no signs of recovery in theregionsairlinesbeganbeing cargo drones in two years. kilograms) of cargo. That will limit the vehiclesregion,thecarriersmayhaveprivatizedBritishAirwaysin Still, there are big hurdles for eVTOLs, evenusesincethetypicalsmallfreighterUPSusesto contend with their saviors as1987 followed by Lufthansa in for freight, including a limited range and heavycan carry about 3,500 pounds and has a range ofpowerful shareholders for some1997and AirFrancein1999. batteries. The business case for the next-generationroughly 1,200 nautical miles. time to come. Air France-KLMThe1990salsosawtheEUs technology is in its early stages, spurring cautionWhileUPSdidntdisclosetheprice,Betasbecame the latest to get a 4 bil- deregulation of the airline indus-among analysts such as Richard Aboulafia. (BETScontinued on page 27) lion-euro($4.7billion)bailouttry,boostinglow-costcarri-that will see the French govern- ersincludingEasyJetPlcand mentreemergeasitsbiggestRyanair Holdings Plc.shareholder with a stake of up toPreparingforthepost-pan-30%. The flag bearer joins Ger- demic era will require airlines to manys Deutsche Lufthansa AG,take a hard look at their cost struc-Alitalia SpA, Swedens SAS ABtures and organization. In Europe, andTAP AirPortugaltoseeawith strong unions at former state-biggerstatepresencefollowingowned carriers, political interfer-aid sought to cope with one of theenceincommercialoperations industrys worst crises. may be tempting for some govern-Airlineshavebeenamongments, especially with issues like thehardesthitbyCovid-19,job cuts, analysts said.whichdecimatedairtravel.Manygovernmentsstill Even before the latest setbacks,take the view that a national car-theInternationalAirTransportrier is part of their overall politi-Association said carriers wouldcal vision, said John Strickland, needasmuchas$80billionwhorunsJLSConsultingin more in government money thisLondon.Itsnotsurprisingto year.TheconcerninEuropeseefurthergovernmentinvest-nowisthatdemandsfromthement in Air France but the key shareholdingstatesmayskewquestion is whether it will lead the industry in ways that wouldtoattemptstoimposepolitical haveanimpactoneverythingdirectiononthegroupsman-from cost cuts to route decisionsagement beyond their commer-The first delivery of the ALIA-250 from Stone Point Capital-backed Beta Technologies is expected in 2024 and ticket prices. cial objectives.WhilebailingoutairlinesInFrance,acountrywith Boeing grounds dozens of 737 Max jetsinthecontextoftheCovid-19alonghistoryofstateinter-crisisiscertainlyalegitimateventioninthecorporateworld emergencymeasure,thesuspi- and a longstanding stake in Air on manufacturing flaw cion is that this might serve as anFrance-KLM,thegovernment excuse to return to state-ownedwas quick to offer up guarantees BoeingCo.groundeddozensof737Maxfrom Southwest, which had publicly flirted with acarriers serving political agendas,that it would ensure the survival jets to repair an electrical flaw that emerged justsmaller single-aisle jet made by Airbus SE. at least for some governments,of the carrier.months after the planes were cleared to return toThe issue appears mostly limited to 737 Maxsaid Sascha Albers, a professor ofAir France is a major and the skies, forcing airlines to cancel flights and lineplanesdeliveredsincetheFAAgroundingwasinternational management at thestrategic company for France, up replacement aircraft. rescinded, according to one analyst. The fix seemsUniversity of Antwerp. FinanceMinisterBrunoLe U.S.carriersincludingSouthwestAirlinesto be well understood and timing would depend onPrior to the Air France-KLMMaire said in a Bloomberg TV Co., American Airlines Group Inc. and United Air- availability of technicians and equipment access,announcement,EuropeanUnioninterview. lines Holdings Inc. parked a combined 67 of theSheila Kahyaoglu, an analyst at Jefferies with a buystateshadchanneledatleast23 workhorse planes, about a third of the Max jets cur- rating on the stock, wrote in a research note to cli- billion euros into airlines throughp uBliCi ntereStrently in service around the world. The manufac- ents. Changing the equipment could take hours orloans,guarantees,capitalinjec- EvenintheNetherlands, turing glitch affects aircraft at 16 airlines, not thedays to fix, a modest disruption. tions and grants. which was more circumspectentire Max fleet, Boeing said in a statement. The newest Max disclosure comes as BoeingAirlinestheworldoverslower to provide loans last year The U.S. Federal Aviation Administration saidcontendswithqualitylapsesandmanufacturinghave received state aid. In June,andnotofferingupadditional the potential lapse could affect the operation of aflaws that have damaged its reputation and affectedCathay Pacific Airways Ltd. soldaidTuesdaythegovernment backup power control unit, adding the agency is inits 787 Dreamliner, KC-46 military aerial tankerpreferred stock and warrants toacknowledged the airline is too contact with the airlines and the manufacturer andand Starliner spacecraft. The aerospace titan alsothe Hong Kong government con- important to the country to fail.will ensure the issue is addressed. has fired and sued a subcontractor on another high- vertible into a stake in the airline.Thenetworkof AF-KLM While the problem isnt related to the flight- profile project: turning two 747 jumbo jets into theSingaporeAirlinesLtd.raisedis important for our economy and control system that was at the center of the Maxsnext Air Force One fleet to haul U.S. presidents. funds in a rights issue backed byboth airlines indirectly facilitate nearly two-year grounding, it takes the luster offThelatestissuewasdiscoveredbyBoeingstate investor Temasek Holdingslotsofemployment,Finance the comeback of Boeings most important product.mechanics on a production airplane during normalPte. In the U.S., the governmentMinister Wopke Hoekstra wrote TheChicago-basedplanemakerhasbeenpick- build activity, according to a message to customershasmadeabout$50billioninonTwitter.Itisinthepublic ing up orders for the Max since U.S. regulatorsthat was reviewed by Bloomberg. Operators wereaidavailableforcarrierssinceinterest of France and the Nether-lifted a grounding mandate in November and thenotified just hours after a separate email touting thethe start of the pandemic in thelands that airlines Air France and company recently secured a bumper commitment(FLAWcontinued on page 27) form of grants and loans to coverKLM get through this crisis.'