Shares of European flying car company Lilium (LILM 4.28%) surged 19.8% through 10:40 a.m. ET on Thursday after revealing it is in talks to form a strategic partnership with airline Lufthansa. Investors are piling into the stock, in part because this is the second straight day of good news out of Lilium.
Just yesterday, the company announced that it has officially begun production of its Lilium Jet, an all-electric vertical take-off and landing (eVTOL) air taxi.
The Lilium Jet news
Let's take these press releases one at a time and see how significant they might be to Lilium's business, beginning with the Lilium Jet.
According to CEO Klaus Roewe, putting out a complete fuselage for building the company's new eVTOL marked "a definitive shift" from design to production for Lilium. The company now plans to build a total of seven aircraft, and it will use these units for flight testing to obtain European Union Aviation Safety Agency (EASA) certification for the aircraft's use.
Translation: Lilium is able to produce aircraft now, but it has not yet received certification.
The Lilium-Lufthansa news
Knowing this helps to put Lilium's news in context. Lufthansa has signed a Memorandum of Understanding (MoU) with Lilium "to explore a strategic partnership on electric Vertical Take-Off and Landing (eVTOL) aircraft operation in Europe."
The companies didn't go into much detail about what such a partnership might involve, although the most logical arrangement would see Lilium provide air taxi service -- or eVTOLs to be used for this purpose, or both -- to Lufthansa. Lufthansa in turn would use these services or vehicles to transport passengers from remoter locations to airports for departure upon its own aircraft. Such an arrangement would be similar to the agreement that U.S. air taxi company Archer Aviation has to perform the same service for United Airlines.
This would make even more sense considering that Lufthansa and United are themselves partners in the "Star Alliance" global aviation partnership.
All that said, probably the most important things for investors to know today are that Lilium's eVTOL aircraft do not yet have certification and that Lufthansa is only exploring a partnership with Lilium -- which, after all, doesn't yet have certified aircraft to contribute to such a partnership.
In short, there's a whole lot of potential for Lilium in all this news, but not yet anything definitive for the business. As such, I have to conclude that the 20% bump in the company's share price is speculative in nature. It's "rational exuberance," to coin a phrase -- but not necessarily justified by the news.
