United Airlines Holdings (UAL 3.50%) announced its first planned commercial route using "flying cars" made by Archer Aviation (ACHR -2.10%), and Archer investors are getting excited about the potential of the partnership. Shares of Archer traded up as much as 13% on Thursday morning on the update.
Archer is one of several companies developing electric vertical take-off and landing (eVTOL) aircraft, a battery-powered airplane/helicopter hybrid designed to efficiently transport passengers over short distances. The company has partnered with United to commercialize its designs, and earlier this year, United made a $10 million predelivery deposit for 100 Archer aircraft.
On Thursday, United provided a hint about what it intends to do with the Archer aircraft. The airline said it plans to establish connections between Newark Liberty International Airport and the Downtown Manhattan Heliport once deliveries of the Archer eVTOL begins, providing a 10-minute connection between United's massive New York-area hub and the Manhattan business district.
"Once operational, electric air taxis will fundamentally change how United customers experience comfort, convenience, and efficiency during their commutes to the airport," United's Michael Leskinen said in a statement. "Archer's New York-to-Newark route marks another important benchmark toward providing a carbon-neutral and safe commute that drastically reduces the travel time and produces a fraction of the sound emitted by helicopters."
The rollout won't happen overnight. Archer said it expects to roll out the first phase of its network in 2025, meaning it is far too soon to get in line for an air taxi ride. But United's continued support for Archer can be viewed as a positive sign that if aircraft testing and certification go as planned, there will be demand for Archer's services.
Investors will get a better idea of how the development is going on Thursday night, when Archer is expected to announce third-quarter results.
There is still a lot of risk here, as aerospace engineering is a difficult task, and regulators are likely to take a cautious approach when examining an all new type of technology. But for those willing to accept potential turbulence and focus on the long term, Archer has done enough to deserve consideration as a speculative part of a well-diversified portfolio.