Lilium NV (LILM) 2022 Q1 法說會逐字稿

Good afternoon and good morning, everyone. Welcome to Lilium N.V.'s Q1 2022 business update conference call. My name is Geoff Richardson, Chief Financial Officer of Lilium. Before we start, let me get into a couple of housekeeping items. This is a virtual conference call. And for the moment, all participants are in listen-only mode. We'll first give an update on progress since our last call in March. There will be time for questions after the formal presentation. We schedule the call for around 60 minutes, including Q&A time.

Please note that this conference call is being recorded. A recording will be posted on Lilium's Investor Relations page soon after the event. As a reminder, after yesterday's market close, we posted our shareholder letter and a technology video on our website. We invite you to look at them.

Before handing over to our Chairman, Tom Enders, let me just give a reminder that our presentation will include forward-looking statements within the meaning of the United States federal securities laws that are subject to risks, uncertainties, and other factors that could cause Lilium's actual results to differ materially from such statements. Please refer to the cautionary statement in our shareholder letter and the risk factors discussed in our filings with the US Securities and Exchange Commission for more information on these risks.

With us on this call today are our Chairman, Tom Enders; our Co-Founder and Chief Executive Officer, Daniel Wiegand; our Chief Technology Officer, Alastair McIntosh; our Chief Operating Officer and Head of Program, Yves Yemsi. Today, we want to start with an important update as Lilium moves into the next phase. Let me hand it over to you, Tom, our Chairman, for some words.

Thank you very much, Geoff. I am happy to join a lot of you on this call. Ladies and gentlemen, usually chairman or chairpersons don't participate in investor calls. But we announced last week the change of the CEO, and that is not business as usual, and so I was asked to say a few words in regards to the change of CEO at Lilium.

But before I continue with that, some of you might know me as from my previous role at Airbus. And you know that at the time, I had a pretty strong focus on innovation, execution as well, of course. I leave it to others to judge to what extent I was successful or to what extent it was limited success.

But anyway, when Daniel asked me about one and a half years ago whether I wanted to join Lilium in an advisory role, at the time, we had no Board, we were not at NASDAQ, we had an advisory council, I have to say I did not hesitate for long because I had Lilium on my radar screen as Airbus CEO for quite a few years. And I have to say I was absolutely thrilled by the bold vision that Daniel and his co-founders in the company was exposing to build the first fully electric eVTOL aircraft. And it was this vision and this pioneering spirit that really did draw me to Lilium.

As you all know, in those seven years since 2015, Lilium has grown from, yeah, kind of a garage start-up even for Daniel. I don't think you started in a garage to a listed company with an exceptional management team and very unique. And I believe now, we'll hear about that a little later on this call a very robust eVTOL design.

Today, Lilium stands really on the cusp of a, if I may say, new phase. The company's development aircraft has successfully conducted the preliminary design review. That is we believe we have a robust design and can now go into and actually do -- into contracting suppliers.

The testing is progressing very well. Some of you or hopefully all of you have seen the video that was posted yesterday about the recent flights in Spain, the video footage. And so we -- the vision that Daniel and his co-founders set out is fast becoming a reality.

Now let me say -- and all of you would probably know it -- different phases of a life of the company require different skills, different leadership skills. And this is why the Board, at the end of last year, began searching for a new chief executive officer. By the way, very much supported, if I may say, even initiated by Daniel himself. And ladies and gentlemen, we did not just quickly try to find the CEO. We had a very comprehensive, long, worldwide search for the best person to head Lilium in its new phase. And we arrived at Klaus Roewe and announced that he will take on the role as Chief Executive Officer from August 1 onwards. Klaus will be joining Lilium on August 1.

We, that means the Board, and I think also the management -- I'm convinced -- also, the management by now are convinced that Klaus is the right guy to drive Lilium's transition from the -- we can't say start-up anymore. I mean, we have 700 and growing people, small company, but a NASDAQ-listed company already to a VTOL leader, I would think the VTOL -- eVTOL leader worldwide.

We think Klaus is the right guy to do it. Klaus brings an outstanding track record in delivering results and executing on aircraft programs. And that is certainly something I can testify on because I worked with Klaus Roewe for more than 10 years quite closely. In most of these years, he was leading the most important program at Airbus, the A320 family program, and he led that program with huge success.

I know there has been concern. We heard that from after the announcement last week about, what about innovation? Will innovation suffer at Lilium? Well, I'm convinced that innovation will not at all suffer in Lilium. Let me first say Klaus is an excellent manager, executing programs from the engineering phase through production, leading a huge program with huge success. And in the previous three years, he was the Airbus leader of the services. That means the worldwide services, product support, maintenance of the Airbus fleet.

But he was not just a great manager. Throughout his career, he has initiated and implemented great, many innovations. When I think about his introduction of automotive production technologies at Airbus, this was a very novel thing with a lot of resistance at Airbus initially. His strong support, his leadership in transiting to a digitally connected plane at Airbus, his vision to expand the range, the performance of the A321, which is now leader within the Airbus 320 Family.

I could go on for probably at least half an hour to talk about his successes. But I just wanted to highlight is it's not a contradiction if you are a great manager and executor of programs and an innovator. And innovation obviously without execution is meaningless. So the two are not a contradiction. I'm absolutely convinced that Klaus's proven track record in implementing, in initiating, and speeding up innovation will have increasing value for the company and for the customers and investors.

I talked already about Klaus's success in the single-aisle program at Airbus. Let me just say he -- under great pressure because the A320 program was the most important program of the entire Airbus Group. He improved the market share obviously together with the teams, the sales teams, and others.

The aircraft profitability, very important; free cash flow generation, Geoff. I think these are things that are important also for a small company. And in short, under Klaus leadership, the A320 Family became one of the world's most successful ever commercial aircraft programs.

So ladies and gentlemen, I come to a close on Klaus. I'm happy to answer any questions. As I said, I worked with the guy for more than 10 years. But when we did our search process, we didn't just jump to conclusion that Klaus is the right guy. We looked worldwide and arrived at the unanimous decision by the Board to pick Klaus Roewe to lead Airbus going forward. He will drive the program management. He will execute also on our very important -- we'll hear about that a little later, I think, by Yves or by Alastair, certification campaign where we are making good progress, collaborate with our suppliers, Tier 1 suppliers effectively, and certainly deliver value to our customers eventually. And let's not forget, prepare together with Daniel, the expansion of our product portfolio by eventually scaling up the aircraft or scaling up the platform.

So this is why I believe, and as I said, the whole Board believes, we found the right person to lead Lilium into this new phase. And of course, we must not lose the momentum on innovation. That's why I am delighted and we all at the Board are delighted that Daniel was very active, on the one hand, in helping us to find the right CEO to lead the company going forward. And at the same time, stay on our Board and will continue to spearhead our activities on new technologies, products, innovation in his new role as Chief Engineer for Innovation and Future Programs.

I stop here and if I may, Daniel, hand over to you. And I'm sure you can explain a little better of what your important new role at Lilium will be. Daniel?

Thank you, Tom. Lilium was founded with an important mission to revolutionize regional aviation by making it entirely sustainable and more accessible than it is today. Fulfilling this mission requires the brightest minds in aerospace and technology to come together and deliver numerous innovations. Lilium has proven its capacity for radical solutions like no other player in our sector.

We have successfully designed and tested an entirely novel fully electric vertical take-off and landing jet with many underlying innovations in engines, batteries, flight physics, and software control. These innovations are the fundament for any electric jet platform, from electric business jets and regional electric airliners to eVTOL jets and personal electric aircraft. We want to leverage this unique position of Lilium and target scaling our technologies over multiple platforms with larger form factors to serve the entire segment of regional electric aviation.

Lilium will continue to push boundaries with new programs and innovations that will reduce costs for our customers and passengers, and will ultimately lead into fully software-driven and connected autonomous aircraft. Our ambition is to cut trip times to a fraction of what they are today, opening up a new level of connectivity for societies around the planet. I am delighted that we were able to attract Klaus Roewe as our new CEO. This brings us an unparalleled execution capability, as Tom has just laid out, and allows me in my new role to fully focus on the innovative future of the company. It makes Lilium an ideal blend of aerospace know-how and innovation.

Over to you, Geoff.

Thank you, Daniel. We also want to highlight the significant program, aircraft design, certification, and customer traction we've achieved this year. We have conducted a successful preliminary design review, which is a meaningful milestone in aircraft development. It confirms that Lilium Jet can meet the targeted technical and commercial requirements, while meeting the certification standards set by regulators. We are now moving to the industrialization phase of the program.

We have started sharing detailed design data and contracting with additional major Tier 1 aerospace suppliers such as DENSO, Aernnova and Honeywell. The next phase leads us to assembly of our conforming aircraft in 2023 prior to our final flight test campaign. In a critical achievement, our chosen battery cell technology has been secured and the performance needed for our mission profiles has been independently verified. Initial production of these cells has commenced at our partner CUSTOMCELLS. In addition, we are making meaningful progress with EASA, whose approach has been constructive.

In 2020, we achieved the certification basis milestone, CRI A-01, the equivalent of the FAA G-1. In 2022, we aim to conclude the full agreement of the certification program with EASA, which includes means of compliance, the equivalent of the FAA G-2. Flight activity in Spain has significantly increased, and we marked a historic achievement with main wing transition last week. On the heels of our NetJets and 4-passenger club cabin announcements, we are seeing significant interest from the premium segment. This confirms that our spacious cabin and proprietary jet propulsion are uniquely suited for the premium segment.

In summary, all of these achievements combine to confirm that our chosen Lilium Jet design is capable of achieving the required mission profiles and business plan, while meeting certification standards. Before handing it over to my colleagues, Alastair and Yves, who will share more details, let me give you a brief financial update.

Given the macro environment, we continue to maintain and increase our tight budgetary control. The total cash spend of $67 million in Q1 2022 was lower than the previous Q4 2021 spend of $73 million. Our liquidity as of March 31 stood at $331 million. We are closely monitoring the effects of the conflict in Europe, COVID, and general economic factors on our business and planning, but we expect the total cash spend in Q2 2022 to be broadly in line with the Q1 total cash spend.

The planned advance of our development program through the detailed design and industrialization phase is expected to lead to increased spending and supplier contracting for the latter half of 2022, which will result in a moderate rise in total cash spending in Q3 and Q4 2022 as planned. Having said that, we expect the full-year total cash spend to be approximately $265 million.

In June of this year, Lilium established an equity line of credit, an ELOC facility with Tumim Stone Capital. This facility will enable Lilium to sell an aggregate amount of up to $75 million in new Lilium Class A ordinary shares to Tumim. The ELOC allows us to leverage the liquidity in our stock while giving us flexibility around issuance timing to minimize dilution.

With that, I will hand it over to Alastair, who will update you on the aircraft's refined design.

Thank you, Geoff. Good morning and afternoon to everyone. I'm glad to be joining you all today. After a rigorous preliminary design review with involvement of external aerospace experts from our chief engineer to program heads of major aircraft programs, we have converged on an optimum Lilium Jet design. We are confident we have a truly disruptive platform that provides the basis of a product family with a larger addressable market and better customer experience than more traditional designs, and which we believe can be profitably built at scale.

Let me walk you through the design improvements agreed. On landing gear, we've made the decision to add a traditional landing gear, giving pilots a backup option of a short running landing, alongside the standard vertical landing. At any point prior to starting the vertical landing, sufficient energy reserves remain for the aircraft to divert to an alternate landing site and perform a short running landing. The much lower power demand of this running landing allows more battery cell energy to be accessed than would otherwise be possible with the higher powered vertical landing. Integrating forward landing capability therefore gives our customers additional reassurance of safety, flexibility, and operating range.

On our fuselage aerodynamics, to save on weight without compromising on cabin volume and passenger comfort, we have optimized the fuselage shape. By reducing redundant space, we will be able to decrease the overall fuselage length. This reduces material and weight, while still offering outstanding comfort in the premium 4-passenger club cabin or the 6-passenger shuttle configuration and allows for a future cargo variant.

On electric jet engines, with a 10% increase in engine diameter, we were able to reduce the number of engines from 36 to 30, with 9 now on each main wing, and 6 on each of the forward canard wings. This modification will simplify design and reduce weight and cost, while providing even greater flight stability. The modification also enables us to accommodate more acoustic damping in the jet ducts.

Also, we are really pleased with our progress on batteries. After evaluating dozens of candidate cells over several years, we have selected a cell technology from Zenlabs that provides optimal power density, as well as energy density. The cell delivers the power density required for vertical take-off and landing, and the energy density needed for range of regional missions.

Independent testing data confirms this technology is capable of delivering the power and energy necessary for the Lilium Jet to achieve 250 kilometers of physical range and approximately 175 kilometers of projected operating range. We believe this cell design is one of the highest performing cells for practical use in eVTOL aircraft in existence today. And it will be exclusive to Lilium for use in regional commercial eVTOL applications.

I will now pass this over to Yves, who will tell you about the next phase of the program.

Thank you, Alastair. Thanks to all these design changes, which are aimed at type certification and the ability to profitably scale production, we are now moving towards assembly of the first conforming aircraft, which is due to start in 2023. Recognizing the importance of a productive collaboration with our supply chain, we hosted our first Lilium Supplier Day on March 31, 2022, where we had 74 current and prospective suppliers coming to our headquarters in Germany.

Lilium just announced a major collaboration with Honeywell, our avionics partner and investor, together with the automotive giant, DENSO, for the co-development and manufacture at scale of the high-performance electric motor system called e-motor. This agreement leverages the two companies' respective aerospace expertise and automotive volume production competence. The innovative e-motor system, on which the companies have been working for nearly two years, is expected to bring exceptional performance and reliability with zero-operating emissions. Its air-cooled design has the potential to significantly reduce aircraft operating costs. And it also boasts industry leading-power density with the first prototype e-motors designed to extract over 100 kilowatt of power from a system weighing just over 4 kilograms.

We have also now entered into a long-term supply agreement with leading aerostructure supplier, Aernnova, to design, manufacture and provide support for the Lilium Jet's innovative propulsion mounting system, which is the streamlined flap structure for the main wing and canard aerofoils. Built-in lightweight materials such as carbon fiber, composite materials, the system houses both the engine that powers the aircraft and also the vectoring system that enables vertical and horizontal flight.

For battery volume production, CUSTOMCELLS has been selected as our chosen industrial partner to be able to do cells on the basis of the Zenlabs technology. An initial production of our cells started at CUSTOMCELLS in February 2022.

Now an important point to note is as batteries and other technologies improve, we plan to upgrade the Lilium Jet's performance continuously, offering significant range and performance upgrades to our customers over time in line with our vision to scale the aircraft and extend the product family. Lilium also recently signed a collaboration agreement with Livent, one of the largest producers worldwide of lithium products for the battery cell industry. Based upon the agreement, Lilium and Livent will work together on innovative lithium applications for high-performance cells. This collaboration also reflects Lilium's strong positioning with one of the major suppliers of responsibly sourced lithium.

And then with that, it's back to Alistair, who will tell you about the certification progress and our flight testing with Phoenix 2.

Thanks, Yves. Lilium is closely cooperating with its primary airworthiness authority, the European Union Aviation Safety Agency, EASA, to progress towards certification. EASA's approach is proving highly constructive. The EASA certification basis is especially designed for small eVTOL aircraft. Lilium received its EASA certification basis in 2020. That's equivalent of the FAA G-1. Lilium has already come a step closer to its next important EASA milestone, which represents the equivalent of the FAA G-2. We aim to reach this by the end of 2022.

Lilium is pursuing concurrent validation of the aircraft with the FAA under the provisions of the Bilateral Aviation Safety Agreement between the US and the EU. In addition, Lilium successfully completed its second Design Organization Approval audit with EASA. Lilium is seeking now to shift the schedule forwards. The third DOA audit is planned for later this year.

On May 25, Lilium hosted a high-level delegation from EASA at Lilium's facility in Southern Germany to see the progress Lilium is making with certification, organization, under engineering, testing and manufacturing facilities -- which leads me nicely into flight testing. We are delighted to say that we've achieved transition on the main wing. Transition is the important and technically challenging phase behind the vertical lift phase and the highly efficient wing-borne flight phase.

Let's just relish that moment one more time. If we can see the video, please.

(video playing)

So our engineering teams were hugely thrilled to see the demonstrator aircraft's exceptionally smooth and stable behavior on achieving this goal. The successful main wing transition is a massive validation of our flight physics models and our overall technology approach.

We believe this represents the first successful transition of a full-scale electric jet aircraft from hover to wing-borne flight in history. Our Phoenix 2 demonstrator is successfully performing the predefined flight plan in Spain. Having completed the first phase in April this year with flights at up to 50 knots, the aircraft has increased speed to 70 knots and doubled the number of flights per week. The Phoenix 2 flight test campaign delivers important validation of the Lilium Jet design.

At technical level, the results of the demonstrator flights confirm the accuracy of our computational fluid dynamics, and the data we have gained also through our wind tunnel testing. More broadly, these flights demonstrate in a real-world environment the viability, efficiency, and revolutionary potential over architecture.

With that, I will now hand you back to Daniel, who will now summarize and give a short outlook.

Thanks, Alastair. As described by my colleagues, Lilium has made significant progress this year in advancing the aircraft development as planned. We've successfully conducted our PDR, and we are now moving to the industrialization with our supply chain partners together. As an outcome, we have demonstrated that our unique Lilium Jet architecture is on track to achieve the targeted performance for our launch customers, while meeting the agreed certification standards of our authorities.

Our technology has also been validated by functional testing and most recently by the historic transition flight that we just saw in the video. Importantly, we have independently validated that our high-performance battery cell technology achieves the energy and power requirements of our target mission. Lilium has filed over 70 patents, and recently, 37 of them were published by the European Patent Office.

Innovation will continue to be a central focus for Lilium and for myself personally. My passion as an aerospace engineer is to keep Lilium on the cutting edge of technology, and my new role will give me the space to do that.

So what is next? Going forward, we will introduce our new CEO, Klaus Roewe to all of you, our stakeholders, investors and analysts. Now that COVID is hopefully behind us, we would like to invite you to visit our Munich headquarter and our Flight Test Center that you just saw in the video in Spain. Please get in touch if this is of interest.

Later this fall, we will be hosting a live Capital Markets Day. And we will now be sharing detailed design data with our suppliers as part of the industrialization phase of the program. And as mentioned earlier, our aim is to agree the full certification program with EASA by the end of this year. This is the equivalent of an FAA G-2. We'll continue flight testing as ever and we'll be conducting high speed flights above 100 knots in the coming weeks and months. Lastly, we would welcome you to join us at Farnborough International Airshow in July where we will be meeting with the industry.

And now let me hand you over again to Geoff, and he will open the floor to your questions.

Thank you, Daniel. So now we have some time to take your questions. Please introduce yourself with your name and company.

(Operator Instructions) We will now begin the Q&A session.

Colin Rusch, Oppenheimer.

Thank you so much, guys. Can you talk a little bit about the impact of the wing transition with your partners? Has the dynamic changed with those folks and their willingness to partner or invest in incremental resources as they've seen the validation of the technology in that way?

Yves manages many of our suppliers. So, Yves, maybe you could take that one?

Yeah, thank you. And I think many of our partners were already quite faithful that we would be achieving that. They know the skills of our engineers, so we haven't seen a step change right now. I think what matters more for our partners is that as we have conducted the Preliminary Design Review, we are now sharing more and working more within this detailed design phase. So that is very important. And we see the work we shared with all our, again, potential prospective suppliers when we pull them together here in Munich in March to our Lilium Supplier Day that was specifically to share that momentum and the next phase.

Okay, that's helpful. And then with the engine development program, there's been a lot of discussion around materials in batteries. But I'm curious about how much innovation on the engine you guys are looking at and security supplier on some of the critical elements. Are those engines that you guys are working on right now and how important the partnerships are in procuring those materials and design?

I'll stay on this one, if you may. We are aware of the shortages of materials that are 15 different elements and the potential risk around batteries. So we've been securing with our contracts, of course, with our battery manufacturing. We have been securing our volumes throughout 2026, but we are also looking beyond our Tier 1 and seeing what is the supply condition there. And so that was one of the driver behind us closing an agreement with Livent and collaboration agreement with Livent. Livent is a very big supplier of lithium, and we know that lithium is a product which a lot of people consider at risk in terms of supply assurance.

And also partnering with Honeywell and DENSO, you can imagine that these companies have the size and the leverage which is beyond the one that Lilium have in the market. So that gives us some fairly good confidence that we are able to weather the supply chain disruptions.

Okay, I'll take the rest offline. Thanks so much, guys.

Alex Potter, Piper Sandler.

Perfect. Thanks very much. So one question I had was on the battery cell chemistry. Obviously you're focusing a lot on energy density. It's important for range. And there is power density, which is important for the take-off and the landing. I guess I'm interested in how you're getting comfort around cycle life and the longevity of the cells themselves, particularly in real-world applications where you have some external factors, say, vibration or other things that might be difficult to simulate in a laboratory environment. So I'm interested in how you're getting comfort around particularly those cell longevity and cycle life topic.

Do you want me to take that one, Alastair? I can go ahead and please continue.

Yeah, please.

I think one of the important aspects is that we were sharing with our cells technology our potential suppliers the very clear set of requirements, which included not only the energy density and the power density, but some of the qualifiers for us were cycle life and also the speed of charging. So that was one of the criteria for us that came into play when we selected the Zenlabs technology. We will continue to work with Zenlabs to continue to improve that, but the first indication in terms of aging are very satisfactory.

And to your point, we have different ways to test aging, and you can do the 1C -- 1C charge-discharge rate, which is usual when people published data, most notably for the automotive industry. The testing activities that we are performing now are really matching closer our flight profiles. So we want to get more clarity, and we see some good indications so far.

Okay, great. Thanks very much. And also one other sort of maybe technical question, you had mentioned this short running landing functionality, which you added. I'm interested in knowing if that was something that you had planned on adding all along or was this something that you added based on feedback either from regulators or from prospective partners? Maybe it was something that you added because energy density maybe wasn't what you thought it would be for the battery. Just any other sort of rationale behind why you added that functionality would be interesting.

Shall I take that one? Yeah, relatively, I mean, it's something that's always been a potential. I think as you get more and more into the detailed design and you understand the implications of designing an aircraft for that capability, it doesn't -- you don't have to deviate very far from where we previously were. So it just gives us more flexibility.

Now what it brings obviously, we do get access to more energy within the cell as a direct result of that because when you're performing such a maneuver, it's relatively low in terms of, say, energy demand. So you can take advantage of that. Certainly, you've got to ensure, no matter which situation you are in, your line with sufficient reserves. So it gives you more comfort, it gives you more capability, it gives you more opportunity.

Also, clearly you've got to plan that into your flight planning as well. So we've had a good look through all that. So it's kind of just going through the process and understanding what the capability could be, and then how we want to lock it into the design. And as we've optimized around the frames and structure, we actually saw that there is a relatively minor offset on any weight and such things. So it just seems like a win-win as it gives us more flexibility and ultimately will give us more range.

Okay, perfect. And then last one for me. Just noticed there wasn't any commentary in the letter on any developments you may be having with regard to infrastructure, site selection, construction. Anything related to, I guess, the infrastructure in your initial launch regions would be helpful as well. Thanks, guys.

Yeah, I'll take that. We're progressing quite well in Florida as we've announced. I think we had previously announced a deal with Ferrovial on the infrastructure. And I think in the last call, we announced that West Palm Beach International was the first vertiport to receive a permit. They continue to work on the infrastructure on our behalf, and they're continuing permitting. We're also looking at infrastructure sites in Europe and other regions. So I think we'll have more of that to discuss shortly, Alex, but it's progressing. No major new announcements because we have our partners secured, and they're just kind of cranking away at permitting and site selection right now.

Okay, perfect. Thanks, Geoff.

Adam Forsyth, Longspur Research.

Hi there. And just looking at the video, it looked to be like there was some vectoring going on during what looked like the cruise phase of the flight. And I just wonder, is that correct or maybe it was just my bad eyesight looking at the video?

I'll take that one, guys. Yeah, Adam, it's -- no, that is normal. That's supposed to be anticipated. You'll always get perturbations in the air around. And indeed, the flight control was designed in a way to cater for that, which means that you'll have a stable flight experience if you're sitting in the cabin. But clearly, if you put the spotlight on, you'll see some minor movements. Not the similar actually to a traditional fixed wing aircraft where you saw flexing of the wing tips if you're sitting in the fuselage looking at similar sort of thing where the aircraft itself adjusts to what's going on around it.

That's the beauty of the flight test program, where we get the opportunity to see how it behaves. And clearly, going through transition, the biggest -- the hardest technical phase that we have in the flight cycle to see how well the aircrafts actually behaved at that point is tremendous. And yeah, it's really good, handling really well. You can see the banked turns accelerating, climbing, descents. So we can't -- at this stage, we cannot be happier with what we're seeing from the flight test.

Great, great. Good. And then I don't have to visit the optician, that's good. And just on the Livent deal, are you going to seek any similar deals on sustainable sourcing of battery materials other than lithium? And related to that, does the silicon anode -- does your silicon anode technology retain significant graphite content?

Well, I think I'm not going to go into the specifics of the silicon anode and the graphite content that we have pretty commercially disclosed. But I can tell you that we continue to work with the supply chain. There is a lot of evolution, as I've mentioned. So we have dedicated teams working at different technologies. We are very confident that today, Zenlabs technology is a really massive achievement and really sets us apart. But we will continue. Our teams are continuing to look into the new technologies. We all know that people are talking about lithium metal are solid state. So we keep an eye on these ones very actively. And as we have explained, we would want our platform to be able to evolve this time as we can integrate new battery technologies, of course, subject to rigorous qualification and certification work. So more to come.

Great, got it. Great, thanks very much.

Yeah.

David Zazula, Barclays.

Hey, thanks for taking my question. I guess first, circling back to the battery, the battery range you guys are quoting is a little different than what you had been quoting, call it, six, nine months ago. Just can you maybe talk a little bit about the drivers behind this change and whether you feel like this current iteration of the technology is going to allow you to really leverage the advantages of the (inaudible) design?

Should I take that one?

Sure.

So I think we've been targeting the physical capability of the aircraft, the 155 miles or 250 kilometers. And the test results that we've currently seen get us to that point on pure physical. When we then have to take into account the usable, what we have to apply then is our best understanding of certification requirements for reserves and such like. So you have to dial that back such that you're always landing with sufficient reserve on touch. So you have this difference then between your physical range and your usable range. And that's why you see some differences in the numbers.

Now it has to be said, this is the best of our understanding at this point in time. Clearly, we work very, very closely with EASA. And this is an area, in particular, where some of the rulemaking is still being defined in the detailed level. So at random, it means compliance. I can't complain. I think we are working really well with them. But I would anticipate later this year, we will get further clarity from the EASA team about exactly what requirements will be for holding of reserves. But from the test results that we've seen so far from Zenlabs via Energy Assurance, we could not be happier. It's quite good.

And then on the addition of the forward landing gear, is the initial concept that you would only be landing within a certain range of a runway or equivalent that would allow you to use that landing gear? Or do you feel like you're still not as restricted in your landing area?

Well, you will have to provision your alternate place of landing. And just to put it in the calibration, I think, a little bit, but probably we're still going to do the finishing of the absolute numbers, but we're probably in the region of something like 150-meter, 450-foot runway length in the drive. And when we've done the assessments of our planned pairing on the routes, it becomes clear, this is very much doable. And again, as we extend the range, then we'll be making sure that as that goes forward, the flight planning takes this into consideration.

Awesome. And I don't know if Thomas is still on the call. But if he is, is he able to discuss the specific qualities that the Board was looking for in a new CEO and how he was able to meet those qualities?

Yeah. Happy to speak to it again. As I said, we did a worldwide search with a renowned firm. And what we're looking for is somebody with extensive experience obviously in execution, extensive experience in engineering, particularly program management, manufacturing as we heard a couple of times today. The next phase, we will be moving after the flight testing into the industrialization. That experience will be particularly valuable.

And if possible, I mean, if you look at the whole lifecycle and somebody who understands the aftermarket, who understands the services needs of our customers, and at the same time, it's somebody who has been working on innovation, has been introducing innovation, be it, as I said, in the production process or in moving to a more digital world in aerospace. I'd like to say that sometimes, it seems some people think that innovation and aerospace are polar opposites. Nothing could be further from reality because for most of the last seven, eight decades, the aerospace industry has been one of the most innovative industries in the world.

If you look today, on the one hand, aviation moved towards electrical aircraft, hydrogen projects, et cetera, if you look at space, which has been an explosion of innovation in the last 5 to 10 years. Think about SpaceX, but lots of other start-ups as well. So this is not polar opposites. Innovation and aerospace go together. And to find somebody who has great experience and execution, and at the same time, has introduced various innovations for all these active management careers, that's the kind of person we were looking for. Of course, somebody with great people leadership skills as well. And I have to say Klaus Roewe ticked all the boxes. So he was by far the best candidate that we could find after an extensive search.

Thanks very much. Appreciate it.

Thank you. There are no more questions from the analysts. Please continue.

Okay. With that, we have a number of questions that were sent in by Lilium shareholders through our retail platform. We think it's really important that we spend a bit of time on these calls, answering those. The following question got a lot of votes. What is the status of the US expansion in Palm Beach, Florida?

Lilium is really excited about Florida. We selected it on a number of criteria, has a long history of aerospace innovation, very welcoming and favorable political environment and has great weather. But also from a business perspective, has a lot of tourists, a lot of congestion, and in certain areas, lack of infrastructure. We've previously announced three partners for Florida: Ferrovial and Tavistock on the infrastructure, and NetJets will be doing the flight operations on our behalf. I think in the upcoming quarter, we'll spend more time and give people a deeper dive on our business in Florida. So Florida is progressing quite well, very excited about it.

Here's another question. I think, Alastair, this one is for you. What impact do you expect from the changed FAA certification approach?

Yeah. So it's a really -- it's a great question, actually. So I think firstly, you should be clear. We still actually await further clarification of the detail that has to come forward. What does this actually mean from the FAA?

Now EASA is our lead agency for certification, and we've been making great progress with them for a number of years now, regular engagements way back in 2016. So we've been working very, very closely. And EASA has taken a different approach from the FAA in as much as the certification requirements: SC-VTOL, and for the propulsion system, SC E-19 or EHPS. They're specifically designed for small eVTOL aircraft. That's what we've fundamentally been working with.

Now the FAA's approach has been more taking existing, in particular, Part 23 regulations, and considering each design on its merit and coming up with special conditions in an appropriate manner. So what we appear to be seeing, and then again, this is purely -- we need to see if this comes out in fruition. But what we seem to be seeing is potentially a shift away from the FAA's original approach, relying on existing regulation and law. And they may be moving to something more specific and well defined for the sector, which is akin then to what EASA have already been doing.

From an industry perspective, if it tends to go that way, actually, harmonization is a really good thing. For some, it may be a little painful at this point in time, but actually it will be genuinely good for the industry. So if it goes that way, I would welcome it. I would also say that our jet -- from what we can see so far, at least, certainly with EASA and the dialogue that we've been having with the FAA, we can feel well positioned should that be the outcome.

All right. Daniel, I think this one is for you. Will you start posting your progress on YouTube and other social media?

Thanks, Geoff. Yes, with the new phase that we are entering, we'll probably dial up even more the communication and share more activities. So I think we can -- I'd like to encourage investors to frequently visit our website and subscribe to our newsletters. We have recently already gotten into a cadence of weekly publishing flight test videos, more tech logs, and we will certainly continue doing so and dial this up, anything from progress and flight testing, but also commercial agreements, supplier partnerships, and LinkedIn posts, et cetera. So stay tuned.

Thanks, Daniel. Last question. What sort of digital services will Lilium provide? I'll take that one. So first of all, we see digital services being quite important for our customers and for us having significant revenue and margin potential. As you may recall, we announced a partnership with Palantir, which has been going quite well. And those guys are really black belts in this area, as well as being black belts in aerospace. So we're integrating their full suite on the value chain, including around engineering, supply chain, manufacturing, aircraft operations. Important specific examples include battery monitoring, predictive maintenance, and other services.

So we continue to be very excited about the value that Palantir brings to us, both in the engineering development program and the future customer suite. So they've been a great partner and this is a really unique add to our offerings.

With that, I think that is our last question. So we've come to end of our Q1 2022 business update. Thank you once again for joining us. We look forward to speaking with you again soon. Special thanks to our Chairman, Tom Enders, for joining us today. It's much appreciated. And I'm sure everyone appreciated hearing the thought process that came with the selection of Klaus. Cheers, everyone.