By Abhijith Ganapavaram
(Reuters) -German air-taxi maker Lilium said on Monday it would file for insolvency “soon”, after efforts to solve its cash-crisis failed to yield results.
The move highlights the difficulties faced by startup aviation firms in an industry that is capital intensive and has high entry barriers.
It also comes as air-taxi makers navigate challenges in developing batteries powerful enough for their aircraft and convincing the public of their safety, even as they deal with an evolving regulatory environment.
Lilium was one of the few electric vertical take-off and landing (eVTOL) makers that debuted on stock exchanges in the U.S. earlier this decade following multi-billion dollar mergers with blank-check firms.
EVTOLs are seeking to revolutionize urban travel by developing battery-powered aircraft that can take off and land vertically.
U.S.-listed shares Lilium, which received a delisting notice from Nasdaq last week, were down 8.8% in morning trading.
Founded in 2015, Lilium sought to target the regional transport market with a 250 kilometer-range (155 miles) jet that can carry up to six passengers, unlike many rivals, which are mainly looking at shorter trips between cities and suburbs.
However, the company ran into hurdles raising cash as it was developing aircraft that are yet to receive approval to carry passengers.
Last month, two of its subsidiaries in Germany decided to file for insolvency following unsuccessful talks with state and federal governments to raise more money to keep them afloat.
At that time, Lilium had said it was reviewing whether there were grounds for its own insolvency as well.
“Financing and other strategic alternative options have been pursued without success and it has become apparent that funding for the company is not feasible,” Lilium said in a securities filing on Monday.
(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Shilpi Majumdar)
