MUNICH - Lilium N.V. (NASDAQ: LILM), the electric aircraft manufacturer known for its Lilium Jet, is set to apply for self-administration proceedings for its principal German subsidiaries following a setback in securing government-backed loan guarantees. The company announced this strategic move after the German parliament's Budget Committee did not approve a loan guarantee, which was a prerequisite for a private fundraising round.
The failure to secure a €100 million loan guarantee from the German government has left Lilium without the necessary support to unlock additional private capital that was conditionally pledged. Moreover, discussions with the Bavarian government to back a €50 million loan did not reach a favorable conclusion. Lilium's CEO, Klaus Roewe, expressed disappointment at the outcome, which has occurred despite international competitors receiving financial support from their respective governments.
This development has compelled Lilium to file for self-administration, a legal process in Germany designed to allow companies to restructure while management retains control. The process is supervised by a custodian and is often a precursor to attracting new investments or selling company assets.
The insolvency proceedings are now a top priority for Lilium, with the aim to preserve the business and continue operations. The company plans to notify customers, employees, and suppliers promptly about the next steps. The Lilium Jet's first flight was planned for early 2025, with the company expecting to start deliveries in 2026 based on current orders and agreements.
Lilium has been in advanced discussions for a French government guarantee of a €219 million loan to finance a battery factory and an assembly line in France. However, with the recent developments in Germany, the focus has shifted to managing the insolvency process.
The company, which has been a proponent of electric flying as a means to decarbonize aviation, is now looking at self-administration as a chance for a fresh start. Directly affected by the filing are Lilium GmbH and Lilium eAircraft GmbH, with plans for affected stakeholders to be shared in the coming days.
The information in this article is based on a press release statement from Lilium N.V.
In other recent news, Lilium N.V., an electric aircraft manufacturer, has faced significant financial challenges. Cantor Fitzgerald and Canaccord Genuity have downgraded the company's stock following the German government's rejection of a €50 million guarantee, which was part of a planned €100 million convertible loan. Lilium had been relying on this funding for near-term operations and to attract additional capital. Despite ongoing discussions with the State of Bavaria for at least a €50 million funding guarantee, the company's financial outlook remains uncertain.
Lilium has managed to raise approximately $32 million from private capital and expects roughly $55 million from a strategic investor. However, analysts believe that Lilium's cash runway would only last until the second or third quarter of 2025. The company reported approximately €118.2 million in cash, cash equivalents, and financial assets for the second quarter of 2024, compared to €102 million in the first quarter.
In terms of operations, Lilium has made strides with its Lilium Jet. The company debuted its aircraft in Houston, with customer deliveries expected to start in 2026 and the first piloted flight planned for early 2025. Lilium has also appointed Philippe Balducchi, current CFO of KNDS, as a non-executive member of its Board of Directors. Additionally, the company has partnered with the General Authority of Civil Aviation of Saudi Arabia to integrate electric Vertical Take-Off and Landing aircraft into Saudi Arabia's transportation and airspace systems by 2026.
InvestingPro Insights
As Lilium N.V. (NASDAQ: LILM) navigates through its financial challenges, InvestingPro data provides additional context to the company's current situation. The company's market capitalization stands at a modest $129.98 million, reflecting the market's cautious stance on its prospects.
InvestingPro Tips highlight that Lilium is "quickly burning through cash" and "suffers from weak gross profit margins," which aligns with the company's urgent need for government-backed loan guarantees and private funding. These financial pressures are further underscored by the fact that Lilium's "short-term obligations exceed liquid assets," a concerning position for a company entering self-administration proceedings.
The company's stock performance has been notably weak, with InvestingPro data showing a -26.3% price return over the past month and a -39.57% return over the last three months. This downward trend is consistent with the company's recent setbacks in securing crucial funding.
Analysts' expectations, as noted in the InvestingPro Tips, suggest that the company is not anticipated to be profitable this year, which is reflected in the negative P/E ratio of -3.57 for the last twelve months as of Q2 2024. The operating income for the same period stands at -$352.22 million, highlighting the significant financial challenges Lilium faces as it strives to bring its electric aircraft to market.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Lilium, providing a deeper understanding of the company's financial health and market position.
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