Company’s Subsidiaries On Verge Of Insolvency Despite Order Book

In a move that seemed to come out of left field, German startup air taxi manufacturer Lilium announced it is on the verge of insolvency and has ceased operations.

On October 24, 2024, Lilium N.V. submitted a Form 6-K filing to the U.S. Securities and Exchange Commission stating that the managing directors of its two operating subsidiaries, Lilium GmbH and Lilium eAircraft GmbH, determined that they are overindebted and will be unable to pay existing liabilities within the next few days.

Lilium said it had been notified that the Parliament of the Federal Republic of Germany would not approve a €50 million guarantee of a €100 million convertible loan from the government-controlled economic development bank KfW.

The Munich-based company has also been in talks with the German Free State of Bavaria for a separate loan of €50 million but have not reached an agreement in principle.

Lilium has an order book for more than 100 of its Lilium Jets, including an order of 100 units worth €1 bilion by Saudi Arabia. Several units were also sold to Volare in the UK, and had been in discussions with a Texas-based brokerage company to bring the Lilium Jet as the first-ever air taxis sold in the U.S. However, a fire occurred in its first prototype during maintenance work in 2020 and although that model was to be retired, the company paused testing on the second, newer model to determine what caused the accident.

Shares of Lilium on the Nasdaq exchange on October 25 have plunged to a 52-week low of $0.13, representing a loss of about 70%. The filing of insolvency by the subsidiaries could result in a suspension of its shares or delisting of Lilium from the Nasdaq Global Select Market.

Lilium will file for insolvency under German law in the next few days, which will likely result in the loss of its subsidiaries through acquisition by other electric air taxi makers such as Joby or Archer.

FMI:  lilium.com/