Can Archer Aviation's Air Taxi Make It to the First Flight?

Archer Aviation (NYSE: ACHR) is in a race. In fact, right now, it has a lot of races going on. One of the most important is taking place on the balance sheet. The big question is whether or not it can get its first air taxi service up and running before the cash runs out.

Here's a look at the likelihood of the upstart aircraft maker winning this race and what it could mean for investors.

What does Archer Aviation do?

Archer makes a small electric vertical takeoff and landing (eVTOL) aircraft that it calls Midnight. The airplane is only intended to fly short distances, and it can only carry a small number of passengers. The main purpose of the eVTOL is to act as an air taxi, something that seems a bit out of a science fiction movie but is likely very near to being real.

Image source: Getty Images.

That's because the company has actually produced Midnight aircraft. And they are being tested for approval from the Federal Aviation Administration (FAA). No, you won't see an air taxi flying above New York City anytime soon, but the technology to make that happen really does exist. And, as of the first quarter of 2025, Archer estimates that it is around 15% complete with a key FAA approval process.

The big goal behind the company's production plans in 2025, which include making up to 10 eVTOLs, is to further the approval process. And there's another goal for 2025: to carry the first commercial customers, which won't happen in the United States.

The race is on in Abu Dhabi

Because of strict U.S. regulations, the company is targeting the Midnight's first commercial use for another country, in Abu Dhabi, the capital of the United Arab Emirates, where it is working with a partner to set up an air taxi service. The goal is to carry its first commercial customers in 2025. That could slip to early 2026, which would be understandable given that this is the first time it is starting an air taxi service anywhere.

The big problem is that Archer Aviation doesn't earn any income. In fact, its earnings statement starts with operating expenses. This highlights the fact that the company is a money-losing start-up. And that means that the balance sheet is more important than the income statement, since the company is burning through cash right now.

At the end of the first quarter, it had roughly $1 billion in cash, up from $835 million at the end of 2024 thanks to the sale of stock. This diluted current shareholders, but it provided the company with the capital it needs to keep moving forward toward its goals. That's a trade-off that investors often have to accept with start-ups.

The next notable information comes from the cash flow statement, where cash used in operating activities in the first quarter totaled just under $100 million. If that's the rough burn rate, and Archer Aviation can fly its first commercial customers in Abu Dhabi in late 2025 or early 2026, the company has ample resources to reach this important goal. In fact, at that rate, it has about 10 quarters, or two and a half years, before the cash runs dry.

Archer Aviation is learning as it goes

The Abu Dhabi project is important for multiple reasons. It is providing proof of the air taxi concept, and the lessons that Archer uses will help set up the next service in another country. It already has a deal lined up with an Ethiopian company.

Proving the model in other countries will likely help to speed up adoption in the U.S. market, once FAA approval is earned. In other words, if Archer Aviation gets to the finish line in Abu Dhabi before it runs out of cash, which seems highly likely, it will be that much easier to do the same with the other races it has to run.

And, just as important, it will probably be easier to raise more capital, too, to fuel its business for the really big FAA approval race that's ongoing in the United States.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.