Bristow locks in Electra plane deliveries with deposit deal

By Tim Hepher

PARIS, Jan 21 (Reuters) - Offshore helicopter operator Bristow Group VTOL.K said on Wednesday it had agreed to pay millions of dollars in milestone payments to Virginia-based Electra in a rare move locking in deliveries of its planned EL9 hybrid-electric passenger plane.

The deal upgrades a tentative order for five of the planes, designed to operate on runways the length of a soccer pitch, and marks a step towards greater financial discipline in the widely heralded but volatile advanced air mobility sector.

Bristow also has options for 45 more of the planes.

Until now, a slew of headline agreements between airlines and designers of flying taxis or larger electric planes have mainly involved modest up-front cash payments and often relied on promises of equity, according to industry analysts.

But Bristow and Electra said in a joint statement they had agreed on "multi-million-dollar" pre-delivery payments and binding contractual terms, subject to certification.

"It is a standard industry deposit for aircraft," David Stepanek, Bristow's chief transformation officer, told Reuters.

"It requires Electra to meet certain performance and time guarantees," he said, adding that Bristow had rejected the idea of equity arrangements or "soft deals" to support developers.

"We wanted an arm's length transaction, a standard 'I'm an operator, you're a (manufacturer). You sell me aircraft'."

The deal comes after Electra said last month it had applied to the Federal Aviation Administration for safety certification.

"This is a real transaction, so it stands on its own," Electra CEO Marc Allen told Reuters.

The company says its aircraft will be capable of operating from exceptionally short runways. It is one of several projects in a niche between the new wave of smaller battery-powered urban air vehicles and larger regional turboprops or small jets.

Analysts caution that new plane developments require hefty investments and engineering resources.

MILITARY MARKET

Bristow plans to use such planes to provide cargo and passenger services feeding into its helicopter operations.

Besides commercial customers like Bristow, Electra is targeting military uses.

Backers include the U.S. Air Force Agility Prime programme, designed to promote novel forms of vertical lift for military purposes. The U.S. government has committed $50 million, and the company says it has raised $150 million in private funds.

Bristow is also in advanced testing of other models including Beta Technologies' BETA.K Alia, an all-electric plane that has also attracted interest from the U.S. Air Force.

It has ordered five of the planes with options for another 50 but has not disclosed the financial structure of the deal.

(Reporting by Tim Hepher; Editing by Hugh Lawson)

((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters Messaging: tim.hepher.thomsonreuters@reuters.net))