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Good morning. My name is Warren, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertical Aerospace's Q1 2026 business and strategy update call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jillian Levine, IR Lead at Vertical Aerospace. You may begin your conference.

Good morning. I am delighted to welcome you to Vertical Aerospace's first quarter 2026 business and strategy update call. Before we get started, I would like to remind you that during today's call, we'll be making forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially. Any forward-looking statements we make are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. We've posted an accompanying slide deck to our investor relations website at investors.vertical-aerospace.com, which contains detailed information on forward-looking statements. For a more complete discussion about these risks and uncertainties, we have filed our financial results for the quarter ended March 31st, 2026 with the SEC earlier today. Please now let me hand over to our Chairman, Dómhnal Slattery.

Good morning, and thank you all for joining us. Since you last heard from us in March, Vertical Aerospace has achieved the most significant milestone in our history, the successful two-way piloted transition of our prototype aircraft, placing us in a very limited group globally to demonstrate this capability. Transition flight from vertical lift to wing-borne flight and back is the fundamental technical barrier in eVTOLs. Successfully completing it validates our design, materially de-risks the certification pathway, and marks the shift from development to real-world execution. Moments like this are rare. They are the inflection points where ambition becomes reality. This achievement is a direct result of outstanding execution across our engineering, flight test, and operations teams. Their precision and discipline made this possible. Today, we'll cover the transition flight, our next major milestone, critical design review, and finally conclude with our outlook and financing update. Before handing over to our Chief Test Pilot, Simon Davies, who was at the controls for this flight, I'd like to briefly frame for you what transition actually means in practice.

TL go for deployment. FT go for deployment.

In November 2024, we took the tethers off. We started with a low hover. By May 2025, we made our first wing-borne flight, so flying like a conventional aircraft. By November, we began bridging the gap between the two, what we call transition.

The full transition.

There's a vertical rise, then one simple command forwards. Props tilt 90 degrees. The speed builds 40 knots and climbing. By 80 knots, the wings carry us, and the rear props stow. The forward props turn to thrust, and we slip into flight as something completely new. That's the magic. It's an airplane that can take off and land vertically without needing a runway. Put simply, this is what makes electric air taxis possible. It's hard to describe the feeling. The aircraft's totally different, there's still that sense of familiarity. It's a completely new sensation of flight. Touchdown 3, 2, 1. Wheels down. It's taken thousands of hours to reach this point. Hundreds of people have been pushed beyond their comfort zone. There's a world-class team solving problems that haven't been solved before, and you can feel it in the aircraft every second of it.

Thanks, Dómhnal. It's a privilege to speak about what was, for all of us, a really landmark flight. From the cockpit, this flight was exactly what you hope for as a test pilot. It was predictable, stable, and consistent with all our simulations. The aircraft lifted vertically with really strong control authority, and as we initiated forward acceleration, the transition to wing borne lift was smooth and controlled. What stood out most was how closely the real-world performance matched our modeling and simulator work. That alignment is critical. It validates not just the aircraft design, but the integrity of the development framework behind it. Handling qualities remained really solid through the transition envelope. Control inputs were responsive, stability margins were robust, and the aircraft behaved like a mature platform. Consistent, repeatable rather than exploratory. We have now completed full-scale piloted transition and expanded the flight envelope accordingly, one of the most important technical hurdles in eVTOL. Our final prototype, aircraft 3, is preparing for flight, and our focus is firmly towards certification of Valo. Alongside continued flight testing, we have a number of demonstration flights planned, including at Skyports Vertiport at Bicester Motion. Last year at the Royal International Air Tattoo, the world's largest military air show, the response we had exceeded all expectations. From industry stakeholders to first-time observers, we had tens of thousands of people excited by electric aviation. We expect an even greater showing at the Farnborough International Airshow later this year and look forward to seeing many of you there. I'll now hand over to David King, our Chief Engineer, to talk through the progress on the critical design review for Valo.

Thank you, Simon. Completion of full transition was the end of the beginning, marking the completion of our technology development and demonstration phase, and importantly, the final validation of the core technical elements underpinning the VX4 design. As we've said before, demonstrating eVTOL flight is not the challenge. Demonstrating it to airliner safety standards is. Through our prototype aircraft, we have now completed that harder step. Our prototype was designed from the outset to replicate the key features of the certification aircraft, and now we have exercised it across its full flight envelope under a broad set of certification-relevant conditions. This milestone unlocks the final phase of VX4 design, building on substantial progress across all major systems and propelling VX4 design toward a critical design review, or CDR, which we are targeting in the middle of this year.

CDR establishes the certifiable design baseline and initiates the build and test of certification-conforming aircraft. It represents the point at which the aircraft's design is considered sufficiently mature, validated to progress into building aircraft to be used for certification testing. It is one of the most rigorous phases in aerospace development and is underpinned by the analytical methods and validation data generated through the prototype program. Our certification program is not just a technical hurdle, it is a process that requires consistency, transparency, and rigor throughout. Another key focus of CDR is alignment across the full certification ecosystem, suppliers, customers, and certification authorities. We have worked closely with all stakeholders to ensure the VX4 design incorporates learnings from the prototype technology demonstration program, aligns with market requirements, and meets commercial aviation standards. CDR is therefore not just a technical milestone, it is where the aircraft design is fully optimized across customer needs, safety requirements, and supply chain readiness. As we've highlighted previously, we benefit from working with the U.K. Civil Aviation Authority, providing clarity on the certification framework and enabling early engagement with certification processes. Through our prototype program, we've effectively dry run key certification activities, embedding them into our development approach from an early stage, which then directly feeds into our certification design. This results in a well-defined and de-risked path to certification, reducing the risk of timing or cost surprises as we progress toward production. The transition flight Si described was a world first for an electric tiltrotor within a Design Organisation Approval framework, validating not just the aircraft, but the certification process itself. With that, I'll pass it over to Stuart.

Thank you, David. This quarter has been transformative, not only from an engineering standpoint, but also as it relates to capital raising. We recently secured a comprehensive financing package of up to $850 million, significantly strengthening our balance sheet and providing access to a flexible suite of capital. This positions us to deliver on our technical and operational milestones, progress towards certification, and scale our manufacturing facilities. Importantly, it reflects strong investor confidence in both our technology and our long-term strategy. As you may recall. In March, we raised GBP 50 million of new equity. We have subsequently drawn down GBP 30 million from the new facility. Our financial strategy remains disciplined and focused on investments that directly support certification, production readiness, and scalability. As you can see on screen, Q1 net cash used in operating activities was GBP 47 million. Cash and cash equivalents at quarter end were GBP 96 million. Our short-term liquidity includes cash on hand and approximately GBP 30 million of anticipated near-term receipts from tax reliefs and grants. The board and management are actively reviewing options to maximize the runway from our available capital and carefully managing overall program spend. As you know, we have a world-class team who are already managing and executing the program rigorously at a much lower cost than our peer group.

Our near-term liquidity, together with anticipated draws under the facilities, forms the basis of a spending plan that provides at least 12 months runway. This prudent approach, coupled with transition taking a few months longer than planned, mean that certification by the end of 2028 is under additional risk. However, as the company's capital position improves, we will reevaluate and seek opportunities to accelerate the timeline. Looking ahead, our near-term priorities remain clear. Complete CDR, deliver a strong presence at Farnborough International Airshow, and expand our manufacturing footprint all remain on track. We are now in a phase where execution is paramount. The milestones ahead are challenging but clearly defined, and we now have both the technical validation and financial resources to deliver against them. To close, this marks a turning point for Vertical Aerospace. We are no longer proving that the technology can work.

We are demonstrating that it does and that we can bring it to market. Thank you for your continued support. I'll now hand back to Dómhnal.

In recent weeks, we have delivered significant progress. I am immensely proud of this team and what we are building. We are now moving from prototype to production with the same execution discipline that has brought us to this point. We look forward to seeing many of you at the Farnborough Airshow, and thank you for joining the call today.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Austin Moeller with Canaccord Genuity. Your line is open. Please go ahead.

Hi. Good morning. Have you had any new conversations with strategics since completing full transition? Have strategics indicated that they would like to see critical design review on Valo as a decision point?

Thanks, Austin. It's Dómhnal. I'll take that. We have continuous conversations with strategics, and I touched on this over the course of our last earnings call and the one prior. They continue engaged, fully engaged, and obviously the de-risk component of the transition has deepened those conversations, and they continue. Obviously the milestone of CDR is the next focus point because as David alluded to in his comments, it is the pivot point when we lock down the aircraft. Those conversations continue, and we'll continue to develop them over the course of the year.

Okay. Do you have any updates on hybrid powertrain selection with an engine OEM or any updates on that?

Austin, good morning. Thanks for the question. No updates on that. We'll make an announcement when we've made that, but the hybrid remains on track. We'll be flying Third prototype as a full electric imminently. We'll then install the hybrid later this year and be flying it then. When we make a production decision on the supplier, we'll make sure we announce it. Thanks, Austin.

Great. Thank you.

Your next question comes from the line of Chris Pierce with Needham. Your line is open. Please go ahead.

Hey, good morning. I guess I'd love to hear one just quick housekeeping question. You mentioned in the call, you know, I think you guys had talked about late 2020, you know, certification. Should we think about slippage there as matching the slippage on terms of, you know, just a matter of months because if that was a slippage in terms of getting to transition, or is it something a little more than that we should think about? I just wanna kinda make sure I fully understand that.

Hi, Chris. Thanks for the question. Look, we've built a reputation for a couple of things. I think one being transparency and honesty, the other being delivery and hitting all our milestones. From when we launched Flight Path 2030 at the end of 2024, we've now hit every single thing we said we would do. You know, we're the only company in this sector that is doing what we say we will do. Transition was slightly late. In the context of the overall program, it's a very small delay, kind of 3 months. There's no question it kind of nudges up the risk a little bit on certification in 2028. However, 2028 remains the target. It's absolutely doable. We are striving to do that, but we also have a reputation for full transparency and honesty.

You know, we are a tiny business relative to our peers. We've delivered more than anyone else, spending between 25% and 30% of what they do. We are incredibly efficient. There's no question when you have a little bit of a delay on the transition, we don't have a double team that we're working on the Valo. It just nudges the risk up a little bit. We just wanted to signal that to the market because it builds on those two things we've got a strong reputation for. Hopefully, Chris, that gives you a bit of color commentary around it.

Perfect. Thank you. Going back to ask this question on a strategic partner. I know that, you know, hindsight's always 20/20, but I think that, you know, you guys would agree that you had wished you sort of did something in the capital markets late last year when you had the original sort of announcement that transition was imminent. Is it a situation where, again, would you be welcoming a strategic partner at these prices, or you sort of would prefer I mean, obviously, you'd prefer lower dilution, but I guess should we think of the current share price as something that would be a hindrance to you guys taking on a strategic partner, or that's not in the conversation at all, and we could see something imminent even at these prices?

Chris, it's Dómhnal. We look at everything through the prism of what is the right and best answer for our shareholders, what creates stability, and what will create the most value for the business. Obviously, we would prefer if our share price was higher. We think it's untethered from the facts. We've said that repeatedly. We'll continue to review it month by month as to when it is the right moment to pull the trigger on a financing. As Stuart touched on, we have the backstop of the various facilities now in place, that does not limit our options. In fact, it just provides a baseline. We're very alive to dilution risk, and we wanna minimize that, and we'll do it at the right time. We think the stock is very significant upside from where it is today.

It's trading at levels that are not supported by, in our view, the reality of the situation. On the strategics, it's also important, Chris, to do a step back. We have a portfolio of strategic relationships, top of that list actually is one of the largest aerospace players in the global market in Honeywell. I do wanna call out Honeywell here specifically, because without their support, contribution, and a team embedded with our team here in the U.K., we would not have completed transition. Their expertise, their decades of experience, frankly, is far more strategic than some of our competitors' automotive strategic players. It's not a, it's not an excuse in any way, but we've got some deep strategic connective tissue already at Vertical that's paying real dividends.

Okay. Thank you, and good luck.

Your next question comes from the line of Andres Sheppard with Cantor Fitzgerald. Your line is open. Please go ahead.

Hey, guys. This is Anandha for Andres. Congrats on the quarter. Congrats on the transition flight, and thanks for taking our questions. I guess maybe to start, on the financing package, on the $850 million, and given the expected net cash outflows of $180 million-$200 million over the next 12 months, I was wondering if you could break down how much of the remaining capacity is committed versus still expected, and what levers do you anticipate to pull to finance within the next 12 months? Thank you.

Sure. Where we sit here today, as you said, we're gonna spend around $180 million-$200 million over the next 12 months. We're sat on just under $100 million. We've got about $30 million coming in. That gives you about $120 million. From that, you can kind of work back into the facilities that we'll draw down over the next 12 months, well within the capacity of those facilities. We're in great shape. We're in great shape. I think very importantly, as Dómhal said, the financing package that we put in place doesn't preclude us doing anything else at all. As we continue discussions with strategic partners, that is all on the table for us. There is nothing to preclude us taking financing from any other source that we choose to.

The important point I'd emphasize on this is, we've got over 12 months runway as we sit here today. I think that's extremely important for the market to understand. The way I look at it is there is an absolutely unwarranted bear case against us that is just no longer valid. This is why we put the financing package in place. We have absolutely got access, guaranteed access to funding to take us through to certification. We have the clearest route to certification with the best product in the market, with a staggering opportunity, as Dómhnal said, for upside potential. We are in a great place as we sit here today. We just need the market to really latch onto that and see that that bear case has been killed.

Gotcha. Thanks for all the color, Stuart. Maybe as a quick follow-up, I was wondering if you could talk us through what the specific flight roadmap is for Valo. You know, when do you expect to ramp up flights, and when are you targeting piloted transition flight for the Valo after you've transitioned your prototype recently? Thank you.

Yeah, sure. The Valo, we've always said that the end of this year will be really ramping up into the production of it. The first aircraft will be built in Q1 next year, and it'll be flying immediately after that. We then build out a series of these and drive it through to certification in 2028. Nothing has changed on any of that. The great thing there is once we've built the first Valo, because we've done all of this work, as David said, on our prototype aircraft, we can effectively immediately go to transition and just flying and proving this aircraft is ready for certification. It's a very quick acceleration through from the build of the first aircraft through to certification. Again, I hope that that kind of brings it to life for you.

Gotcha. Thanks again for all the color and congrats on the progress. I'll pass it on.

Thank you.

Your next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. Please go ahead.

Hey, this is Laura for Edison. Thanks for taking our question, and congrats on all the progress. Could you give more color on how like representative is this prototype test campaign of the full-scale certification testing after you get the CDR? Cause like, where should we expect the certification testing to be more rigorous or like meaningfully different?

Yeah. That's a super question, and I would like to bring David in to talk to the specifics and Si, subsequent to that to talk about it from the pilot's perspective. David, over to you.

Thank you, Dómhnal, and good morning, everybody. That is a great question. You know, as we stated that this milestone of the full transition is the end of the beginning. It's the final box to check to validate the technologies. When we say technologies and the validation, what we mean are the key technical elements. The Second prototype, the full-scale piloted prototype was designed from the outset to incorporate the same key technical elements that are incorporated into Valo. That allows us to validate not just the aircraft itself, but the models that are used to design the aircraft. As an example, as Second prototype is designed and operated at basically the same power specs and the same flight envelope specs.

It has the same eight propellers with the same disc areas, same mounting configuration with four in the forward, four in the aft, all mounted to pylons which are hung underneath the wings. We have the same Honeywell flight control system, the same Honeywell avionics system. We have the same battery system architecture with eight batteries and eight independent high voltage systems. All of that technology is validated. VALO is essentially what we call the shrink wrapping of the design. We take these learnings from the prototype, and we do another round of optimization, and that optimization is done cross-functionally.

That's why this CDR milestone is so important because it's the opportunity for us to take a step back and say, "Okay, have we done the full optimization?" We look at it from different perspectives, and then we slap the table and turn loose the production. As Stuart said, and as D￳mhnal said, you know, this is the end of the beginning, but also the beginning of the end because it starts the production. It releases the engineering to build the certification aircraft, which then certifies the type design that is production.

Thank you. Maybe, Si, you might wanna add some color on that, please.

Yeah, certainly. That's a great answer from David. From my perspective, I think we're focusing on really three key things. The first and most important is carrying forward all the things we've learned from the prototype, all the expansion and flight test campaign into the Valo product. Making sure we capture all the learning to improve Valo and building on David, as David said, the architectural similarities. The second important thing is making sure we've got an aircraft that is great to operate, that our operators are gonna love, that our pilots can find easy to use. It's gonna be safe in operation.

The third thing is to focus again on the customer experience, the experience that our customers passengers are gonna have as passengers in the Valo, making sure it's a nice seamless experience that everybody's gonna enjoy and that we have the product of choice in the market. We're in a really good place to do all three of those things in a really informed way now.

Thank you, Si.

Great. Appreciate the color. I also want to follow-up on the supplier side, 'cause as you move towards like the aircraft building, like how are the conversations with the suppliers? Are you securing more components and materials or like are you seeing any potential like bottlenecks on that side?

Hi, Laura. Yeah, thanks for the question. The relationships with the supplier are fantastic. As Dómhnal said, we don't get the credit. Our tier one suppliers are long-term, deeply embedded strategic partners with us. As Dómhnal mentioned, Honeywell. Honeywell, we've got a billion-dollar contract with them to supply key critical bits of the aircraft. Avionics, flight controls, inceptors, and they work hand in glove. In fact, they were co-located over here in Bristol with us as we went through the transition flying. Those conversations are going extremely well. That goes down through other key suppliers such as Aciturri, building our airframe, our pylons, our wings, et cetera.

What we're seeing, actually, having shown the Valo and shown it is the aircraft that redefines the sector from a customer and a user experience, people are really, really keen to work with us to bring this product to life.

Okay. Got it. Thanks for all the information.

Yeah. Thanks, Laura.

Your next question comes from the line of Bryce Sandberg with William Blair. Your line is open. Please go ahead.

Hey, good afternoon, everyone, and congrats on achieving the full piloted transition flight test. Can you talk about any recent customer engagement and feedback following both the completion of the transition test as well as the showcase of the Valo design earlier this year?

Sure, Bryce. Happy to do it. We believe that our order book is of the highest quality globally by operator. We've some of the major airlines of the world on the program, including American Airlines. I'm delighted to say that the feedback from American specifically has been very strong. Stephen Johnson, who's Vice Chairman, Head of Strategy for American, attended our event in Miami, spent a couple of hours with us in the aircraft sitting in the cockpit, and was genuinely blown away, if you like, with the size, shape, and scale of the aircraft. He'd seen the rendering, but when he physically saw the aircraft, he could see it in operation with American livery. Michael Cervenka, our Chief Commercial Officer, is actually in Brazil today, visiting with Gol, who is going to be our largest operator in South America. São Paulo is one of the largest cities in the world and has more helipads per capita than any city. Their reaction has been extremely powerful. I was in Japan three weeks ago. Our two customers there, Japan Airlines and Marubeni, are very excited and cannot wait to have the aircraft in flight in Japan. I think given the reality of this aircraft, what it's capable of doing, its comfort level, the baggage, the segregation and safety of the pilot, this aircraft is definitively the best eVTOL in the global market.

Great. Thanks for that, Dómhnal. Just one on the hybrid side. Similarly, are you know, hearing anything from potential defense customers just in terms of, you know, the fit of the aircraft for potential defense applications?

Hi. Thanks, thanks, Bryce. The hybrid remains at the forefront of our development for this year. As I said earlier, we'll be retrofitting it to Third prototype and flying it towards the end of the year. That is a huge opportunity in defense. We have a lot of incoming. We had a U.K. 3-star general with us for a repeat visit. We know the military love this platform. It is something new, unique, and they really wanna work with us on it. We're also working with a number of potential defense primes to make sure we can bring this to market as fast as possible. As soon as we've got some news on that, we'll make sure we announce it.

Great. Thanks, Stuart. Appreciate the call.

Yeah. Thanks, Bryce.

Your next question comes from the line of Savanthi Syth with Raymond James. Your line is open. Please go ahead.

Hey, good afternoon. I was wondering just, you note that after CDR, you're building the first kind of pre-production aircraft. I wasn't sure. Is that the aircraft that you're gonna use for certification flying, or is there kind of a intermediate step before that? Just curious on, you know, how many aircraft you kind of plan on building in 2027.

Yeah. Sure, Savi. Let's bring David in to bring that to life, the numbers of aircraft we're gonna build when the certification program journey. Dave?

Yeah, good morning, thank you for the question, Savi. That's a great question. Our plan is to build seven, what we call PP aircraft, pre-production aircraft. They are going to be built to the type design that we're releasing now. What we expect is during this test program, and out of these seven aircraft, two of them are going to be used primarily as structural test articles, where we do ground static load testing and ground fatigue testing. The other five is flight articles. We expect to have, as we talked about early, a fast and efficient envelope expansion test program because the technology has been extensively validated on the prototype, and now we have high-fidelity models that gives us the confidence that we can progress through the full envelope expansion, you know, in a month instead of over a year. Then we will move into certification type testing.

In the certification program, we do the test first as the applicant, then we bring in the authority. We will have a little of delegation we expect too, through the privileges that we're earning by working with the CAA. What's expected, which is normal in a certification program, is that each of the seven aircraft will evolve to a certain extent. For example, there will be subsequent software builds that will get loaded. There will be an evolution of certification tests that are done on some prototypes. The function and reliability test, which is done right at the end, is typically done on the last flying aircraft or PP6. We will be doing certification testing all the way throughout the test program of the seven aircraft.

Thanks, David.

Thanks, David. That's very helpful color. If I might just follow up on the net cash outflow forecast. You know, it's roughly down about kind of $5 million or GBP 5 million from the March outlook, which was already down from maybe like $40 million or GBP 30 million from your November outlook. I know one of your peers have gone through kind of a similar exercise, and just was curious where you're finding opportunities to kind of improve the spend outlook, especially as you're gonna pace towards certification and hybrid vehicle testing kind of picks up here.

Savi, thanks for the question. As you know, we're already doing this development program for about 25% of what anyone else in the industry is doing, so we just review every dollar we spend all the time to make sure we don't waste a single thing. We continue to do that, every quarter we get a chance to update you, the market, on whatever we found. There's no one specific thing. This is just continued very tight cost control management across the board within the operation.

I mean, Savi, the way I the way to think about it is we spend in a year what one of our U.S. competitors spends in a quarter, and we have achieved full positive trans-transition with an aircraft that's 70% larger under regulatory oversight. They're facts. We are, and we've stated this for many quarters, we believe we're the best steward of investor capital. The reason we're good at it is because we've never had a lot of capital. We've had to exist with a cash base that's just been tighter than our peers. We have inherent advantages being based in the United Kingdom and the nature of our strategic relationships with the likes of Aciturri, Honeywell, and so on and so forth. This model is playing out every quarter. We're just very efficient with cash.

Makes sense. Thank you.

Thanks, Savi.

Thanks, Savi.

There are no further questions at this time. I will now turn the call back to the chair, Dómhnal Slattery, for closing remarks.

Thank you very much. Thanks to everybody, as always, for joining. We actually had a record number of people on the call today, so I'm absolutely thrilled. Obviously, a few weeks ago, personally was the highlight of my 36-year career in aerospace. I just couldn't be more proud of the whole team, Stuart, David, Si, and the engineering. It's just been amazing. We've got a lot to do. We're very ambitious about the future. We want to deliver value for our shareholders, and we're looking at everything through our shareholders' perspective to create value for you. With that, thank you very much, and we look forward to talking to you in a quarter's time.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vertical Aerospace Full Year 2025 Business and Strategy Update Call. [Operator Instructions] I would now like to turn the call over to Samuel Emden, Head of Investor Affairs. Please go ahead.

Good morning. I'm delighted to welcome you to Vertical Aerospace's Full Year Business and Strategy Update Call. Before we get started, I'd like to remind you that during today's call, we'll be making forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially. Any forward-looking statements we make are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. We've posted an accompanying slide deck to our Investor Relations website at investor.vertical-aerospace.com, which contains detailed information on forward-looking statements. For a more complete discussion about these risks and uncertainties, we have filed our 2025 annual report with the SEC earlier today. Please now let me hand over to our Chairman, Domhnal Slattery.

Good morning, and thank you, Samuel, and thank you all for joining us this morning. So over the past several weeks, we've had the privilege of hosting a series of Valo showcase events here in the U.K. and London, New York, Miami and most recently in Atlanta. These events brought together our airline partners, our investors, regulators, our suppliers and the broader advanced air mobility ecosystem. And what has stood out most was the energy and the enthusiasm around the opportunity ahead. And before getting in today's earnings call, we wanted to give you a taste of it. [Presentation]

So at each step, the message was consistent. The market is ready for safe, quiet, zero emissions urban air mobility. And the response to our aircraft, Valo has just been extraordinary. This is a product that is redefining the eVTOL market globally. Now before we dive into the detailed content of today's call, let me take a step back just to address some key top-of-mind issues. First, on our flight test progress. I'm delighted that our Chief Engineer, David King, will go into this in further detail later. But to sum it up, we are in the final innings of completing full pilot transition under the regulatory oversight of the CAA. We are close to being complete with the 5 profiles and expect to have this finalized soon. On capital, as Stuart will speak to later in this call, cash is critical through certification. And despite annual spend being a fraction of our peers, we will need to continue to raise capital. We are exploring all of the options that are available to us right now across the capital markets, strategics and with government support. And we will execute that when it is the right moment for the business. Stuart will take you through the detail of that later. Today, our call will be broken into 4 sections to address some of the key issues and questions we hear from our stakeholders. First, we'll talk you through the aircraft. We'll talk you through Valo, the size, the modularity and safety that makes Valo the industry Valo the industry-leading electric eVTOL. Following that, our Chief Engineer, David King, will walk you through our pilot transition flight test progress, and he will provide a detailed breakdown of where we are today and the remaining elements to be completed. Then our CEO, Stuart Simpson, will do a deep dive on our battery technology. And we believe this technology underpins both Valo and our hybrid aircraft and gives Vertical Aerospace a differentiated power platform. Finally, we will discuss our current financial snapshot and our plans for capital raising. So first, Valo. The excitement around Valo is not just about the promise of the category, it's about the product itself. Unquestionably, Valo is the highest quality eVTOL aircraft in development globally today. It combines the safety architecture of a modern commercial aircraft with the performance and efficiency required for real-world commercial airline operations. Our design philosophy has always been clear: build an aircraft that meets the standards of the best airlines in the world today. We have developed Valo together and working in collaboration with our customers for well over 5 years. And that is why it has some key differentiators other eVTOLs in the market simply do not have and cannot have because of their designs. Why Valo has a seat next to the pilot for training, separation between the pilot and the passengers and why we have, without doubt, the roomiest cabin and the largest luggage bay. And critically, the aircraft sizing to accommodate 4, then 5 and then 6 passengers. This is the first truly upgradable aircraft, improving economics for our operators. With our largest cabin and the modular architecture, Valo is without doubt the perfect fit for multiple applications across the emergency, medical services, cargo and beyond. And we plan to be the leader in the hybrid electric defense space. And we look forward to deepening our discussions already underway with militaries around the world but particularly here in Europe in the run-up to the Farnborough Air Show later this year in July. As we've spoken about several times, we are deliberately a pure-play OEM, relying and collaborating on Tier 1 aerospace partnerships who allocate the best talent in the world, the absolute best resources and IP to the development and the certification of our aircraft. And we have now contracted the vast majority of those partners. And we look forward to bringing the final partners on board later this year as we progress towards critical design review this summer. And with that, I'm delighted to hand over to David King, our Chief Engineer. David?

Good morning, all, and thank you, Domhnal. Let's talk about flight testing. We've been flight testing a full-scale piloted prototype of Valo for 20 months now. In November, we began piloted transition. The phase where the aircraft moves between hovering over a spot as needed for vertical takeoff and landing and wing-borne flight, Valo's cruise condition. This flight testing is progressing steadily under disciplined U.K. CAA oversight. And here's a short video to give you a flavor. [Presentation]

We are nearing completion of the transition flight test phase, and the data we are collecting each flight is directly informing certification of our final commercial design. By doing the disciplined engineering and regulatory work upfront in close collaboration with the CAA, we reduced certification risk and avoid redesign later. As Simon Davis, our Chief Test Pilot, explained in the video, we've approached full transition incrementally from both ends, validating performance and building an evidence base before moving to the next test point. We've accelerated from a hopper, tilting the propellers forward from vertical orientation of 90 degrees. We've decelerated from wing-borne flight, tilting the propellers from horizontal. We are methodically and incrementally closing the gap, studying the wealth of valuable data at each step while working side-by-side with our certification authority. For example, we recently took advantage of a break in the U.K. weather to complete a piloted profile with a conventional runway takeoff, a deceleration from wing-borne cruise condition, a controlled deployment of the stowed rear props, 40 degrees of upward prop tilt while slowing down towards thrustborn and then accelerating back to wingborne and restowing the rear crops before landing. This test demonstrated smooth transitions with optimized software with the propellers deploying and reparking exactly as designed. By working closely with the CAA upfront, we now have a clear, well-defined, tried and tested path to certification. The standards, the criteria and the means of compliance are published, approved and have been dry run on the prototype program. This upfront work puts us on track to certify Valo to globally portable airliner safety standards. Then after certification comes entry into service. So I want to briefly touch on initiatives to accelerate deployment of an eVTOL operational ecosystem across the globe, including the eVTOL, Integration Pilot Program known as eIPP, recently announced in the United States. We applaud the eIPP program as a means to accelerate the introduction of eVTOL into United States National Airspace. As a non-U.S. eVTOL manufacturer, we were not eligible to participate directly in the United States eIPP program. However, we are participating in similarly focused European initiatives to advance the introduction of eVTOL in Europe. In the U.K. and in the European Union, flight demonstrations are planned and supported by government-backed programs, including the U.K. government's Future Flight Challenge and in due course, SESAR in Europe. These are taxpayer-supported initiatives designed to develop infrastructure, air traffic management technologies and operational procedures for optimized eVTOL operations. These programs will also build public and stakeholder confidence through structured and visible demonstrations. In the U.K., we've been a long-standing participant in the Future Flight Challenge, a GBP 150 million government-backed program focused on demonstrating operational readiness and accelerating safe integration of eVTOL technologies. Through this program, we're supporting funded flight demonstrations, including upcoming flights at Skyports Vista VertiPort and related work to demonstrate the feasibility of eVTOL operations between Oxford and Cambridge. By combining learnings from eIPP in the United States and similar European initiatives, we expect to see accelerated deployment of a safe and effective eVTOL ecosystem across the globe. At Vertical, we are laser-focused on executing to our clear pathway from prototype to preproduction to certification and then to full-scale production. Our final prototype aircraft # 3 has completed its commissioning tests and last week was the first time we had both of our prototype aircraft running at the same time. By the middle of this year, we will complete critical design review for Valo, the gate which freezes design and enables full throttle on building 7 preproduction aircraft to be conformed to type design and used for certification credit. And now I'll hand the microphone to our CEO, Stuart Simpson.

Thanks, David. It's great to hear about Valo and our testing progress. We heard Domhnal speak earlier on what makes Valo a differentiated eVTOL aircraft. But let me touch on Vertical's true secret sauce, which is our battery technology. While our core strategy is to operate as an OEM, utilizing partnerships across Tier 1 aerospace suppliers to minimize certification risk, the battery system is our core in-house technology and a key value driver for the business. We source cells and then manufacture the batteries at our world-class facilities. As cell technology evolves, our battery packs will provide increased payload and range to our customers. Vertical's proprietary battery system will support both the electric Valo eVTOL and our hybrid aircraft. The testing we have done to date confirms our current batteries capabilities to deliver power such that at launch, the Valo will be able to provide lift for 1 pilot, 4 passengers and 70 pounds of luggage per person. We are already testing the next generation of batteries that will further improve payload range, ensuring this aircraft will only get better over time. And as announced last week, our battery pilot production line is now operational. In fact, I had the pleasure of undertaking many of the process steps yesterday. In addition, we are expanding our battery manufacturing capability and capacity through the development of a new 30,000 square feet vertical energy center adjacent to our existing facilities. This new facility will open later this year. And in July, just before the Farnborough Air Show, we will be hosting an Investor Day at the Vertical Energy Center to allow our shareholders, prospective investors and analysts to see the progress we are making. More details to come, and we look forward to seeing many of you there. Here is where the true value proposition comes in, our Battery-as-a-Service business line. We expect batteries to be replaced approximately one time per year over the circa 20-year operational life of the aircraft. What this means is a long-term, predictable, high-margin revenue stream. As we have said before, we anticipate margin for this to be circa 40% Note that our published Flight Path 2030 figures don't include wide-ranging second life opportunities for our batteries. Given European aerospace standards, once the battery degrades below a particular level, circa 93%, the battery will be removed from the Valo but will be perfect for other applications. Our lightweight and high-power batteries have multiple second life opportunities, including CTOL aircraft, surface transport, marine and storage. This drives significant additional revenue and margin opportunities for Vertical. We have had multiple inbound requests from third parties wishing to understand our technology and see if and how it is for sale above and beyond us using it in the Valo and our hybrid aircraft. As mentioned in our prior earnings calls, we have shifted from dream to reality. And as David mentioned, laser-focused on execution. As seen in 2025, we completed almost 100% of our stated milestones, the final one being transition, which will be closed out imminently. We have made a tremendous start to 2026 across product, customers and ecosystem. We kicked off the Valo roadshow in key U.S. hubs, signed a critical supplier partnership with Evolito for the development and supply of EPUs for the Valo and made strides on further integration and partnerships in artificial intelligence. We launched new customer partnerships with the Kingdom of Saudi Arabia, Heli Air Monaco, JetSetGo and launched customer networks in and around London, New York, Miami and Atlanta. Now looking ahead to the balance of 2026. We categorized our operational goals into 3 buckets: aircraft, industrialization and commercialization. I'd just like to draw your attention to a couple of things. First, we'll be flying at Farnborough Air Show, and we look forward to seeing many of you there. Second, this year, we will open 2 new manufacturing facilities. Third, we will complete the CDR for Valo, locking in the final 25% of suppliers. And finally, we will begin assembly of the first preproduction Valo. This next slide shows that through fiscal year 2025, our spend was in line with our guidance of $110 million to $125 million. As stated, this is a fraction of what our main competitors spent but our progress, particularly in full-scale piloted and regulated test flight remains industry-leading. Our cash and cash equivalent position was $93 million as at the 31st of December 2025. As of today, our short-term liquidity is estimated at approximately $85 million, comprising cash on hand and anticipated near-term receipts. Our ATM facility, which was put in place in September 2025, has a remaining capacity of approximately $78 million. Over the next 12 months, we anticipate spending circa $190 million to $200 million as we ramp up our manufacturing footprint and move into the assembly of the first Valo. With that, I'll hand back to Domhnal for closing remarks.

Thank you, Stuart, and thank you, David. We would like everyone on this call to walk away with just 3 key messages. First, our approach to flight testing is intentional, it's disciplined and certification focused. We are deliberately expanding the flight test envelope systematically to extract maximum value to derisk the ultimate Valo certification program. Secondly, we have optionality when it comes to capital raising, and we will execute when it is the right time for the business and our shareholders. And three, as Stuart illuminated, our battery technology is a key differentiator in our business model. With its high power and lightweight, use cases support our eVTOL and hybrid aircraft, along with multiple other applications in adjacent industries that we intend to pursue. So with that, we will hand over to Samuel to open up the line for questions. Thank you, Samuel.

Yes, we asked our social media community for some questions. I'm just going to kick off the Q&A with one of them. So the question was, with EU delegation and British government representation at the Valo event in London, is there a credible likelihood of meaningful state financial support from the U.K.

Stuart, maybe you could take that one, please.

Thank you. It's a good question. We have had tremendous support from the U.K. government. If you look at it over the prior years, this is up to around $100 million, and it shows the U.K.'s commitment to aerospace. And it's why we're based here in the U.K. in the heart of the European aerospace industry. Now the government knows we've had approaches from several other European countries as we move from the R&D phase to the industrialization phase of doing a business. We have had incoming requests for us to relocate to several European countries in many U.S. states. However, we remain committed to being anchored in the U.K. and are working closely with government to find a way to make sure that happens.

Great. Thank you. And over to you, operator.

[Operator Instructions] Your first question comes from Edison Yu with Deutsche Bank.

First, I just want to check in on your comment you said about the pilot to full transition. You said it's very, very soon. Are there any regulatory hurdles that you're waiting for? I know weather has been an issue at times. Perhaps just elaborate on what's left to do.

Yes. Thanks, Edison. This is David. Thanks so much for the question. The short answer is the S curve. So if you were to -- and this is normal for envelope expansion. If you were to plot up test pass on the Y-axis versus time on the X-axis, this type of testing, you typically see a curve that looks like an S-leaning to the right in that it's the last few tests that have this tail end with this low slope, and that's where we are right now. So over the last couple of months, we did have a difficult winter, as you said, Records were broke in Bristol. I think there were 22 straight days without any sun and 45 straight days with rain. So we did have some weather difficulties. But with the spring time now, we're starting to see the forecast starting on Thursday to start to get a little bit better. So yes, we just have these last few tests to pass. And as we go through it, what we have done, and we tried to highlight this in the messaging is that we are doing these tests side-by side with the certification authority, the U.K. CAA. We are using our approved design organization, our DOA procedures, which are the same procedures we're going to use for certification to conduct the flight testing. So just to give you an example, as we conduct a test, we take the thousands of data points and then we compare it against our predictions that come from physics-based models. Where we see a slight deviation, we flagged that and we said, hey, we need to understand what that is before we move on. And when we have to go update and tweak our performance predictions in our models, then we go back to our airworthiness data package and update the appropriate sections to ensure that we still comply with the full airworthiness with this modification to the models before we move on to the next point. So it's using a certification process on the prototype, which is dry-running it to reduce the risk of certification later.

Understood. Appreciate the color. Separate topic on the strategic but from my understanding, there's been discussions going on. Any update on when we could maybe get something? And is the -- should we think about the full transition that I just asked about as a precursor for some type of strategic to come in?

Edison, it's Domhnal. So the conversations that we are having with strategics are ongoing, and they've been ongoing now for a number of months. I'll refer back to our last earnings call. I think it's clear that the successful transition is a catalyst to moving to deepening those conversations into something tangible occurring, okay? So the focus right now from the entire organization is to complete that transition successfully and as quickly as possible from where we stand today. And the reality is it's taken us longer than we anticipated. On our last earnings call, I specifically said it's weeks, not months. Well, actually, as I was thinking about it this morning, it's months, not weeks. But we are very, very close at this juncture.

Understood. And just lastly for me, on the hybrid military side, I know you sort of alluded to some things earlier. Is that something that could happen as we get closer to Farnborough where you maybe announce some efforts or some programs? That's obviously a very hot topic or hot area given what's going on in the world. So curious your thoughts there.

Yes. So maybe I'll bring in David just to give you some flavor from VERTICON, and we can supplement that. David?

Yes, yes. Thanks. Just to give you the perspective that I heard from the Vertical lift community at the Vertical Aviation International Trade Show in Atlanta 1.5 weeks ago, where people looked at the Valo and the differentiators resonated and one of those was the size of the aircraft and the ability to upgrade it to a hybrid configuration without changing the airframe, essentially just taking the spacious baggage bay and inserting a turbo generator system, and we are demonstrating that on our prototype aircraft #3. So the feedback that I heard was with the size of Valo and the versatility, what we were forecasting for the defense market we're not forecasting high enough is what I was hearing from the people. And as you mentioned, with the geopolitical situation as it is today, there are different opportunities. One that was talked about was distributed contested logistics where they said, if you look at the defense opportunities that are coming, they're based on vertical takeoff and landing in a configuration that can be turned into an autonomous platform quickly. And that's part of the value proposition of Valo and the Honeywell flight control system is it's one small step from fully autonomous and then to be able to have the room and the payload and the capacity in the baggage bay for the logistics to be able to turn it into that mission and open up a large set of demand.

And maybe just to supplement that, Edison, we believe we are the only eVTOL manufacturer in the world that can basically create a hybrid from the current airframe, as David touched on. But from a time frame perspective, we'll have that aircraft certified in 2029. Our competitors are multiple years behind in that regard. Now in terms of commercializing that and actually generating sales, we're now dedicating a significant amount of internal resources to defense sales. And I hope during the course of this year, maybe as soon as the Farnborough Air Show, we'll be able to share some progress in that regard. But unquestionably, we've got the best product. We now need to make sure we can sell it.

Your next question comes from Amit Dayal with H.C. Wainwright.

So with respect to the timing for the fully -- the piloted transition flight, should we expect timing on that to be sort of mid-2026 or maybe later in the second half of 2026?

Thank you for the question. As David alluded to, we're really down to the very last little bit of this. Now we don't want to commit to a timing because, as David said, each time we put the aircraft in the air, we learn a little bit more. But with the weather improving, we actually flew yesterday, which was fantastic. We got some more learnings, nothing hindered us. We have literally a handful of flights to do to accomplish full transition as we sit here today. Now the timing of that very difficult to commit to because, as David said, we have the weather to contend with. We have new learnings. So it's something we anticipate over the coming weeks, I would say. Hopefully, that gives you a bit of color commentary.

No, that's understandable. Just wanted to see if there was sort of a concrete time line to that but I can take that offline. The other question was the battery efforts, the $190 million to $200 million spend for the next 12 months, does that include your battery needs as well?

Yes, absolutely. The $190 million to $200 million is a rolling 12 months from end of March. It covers everything we need to do to remain on track with FlightPath 2030, delivering our new battery facility and new aircraft manufacturing facility, the conversion of Aircraft 3 into a hybrid and the build of the first Valo. So that financial number I mentioned covers all of the things we said we'd be doing in '26.

Got it. And then just last one, the strategic investor you are sort of quoting and the other financial options that you are sort of looking at, how urgent are these needs given where the balance sheet is? Or are you comfortable at least for the remainder of 2026 to execute according to plan?

We're pretty comfortable as we sit here today. We've got line of sight to circa $150 million, $160 million as we sit here today. We're in constant discussions amongst a range of options for financing, and we'll execute as and when the time is right for the company. So we don't feel under pressure to do it. We'll do it as and when it's right for the company and the current shareholders.

Your next question comes from Louie DiPalma with William Blair.

Stuart, Domhnal, and David congrats on the development of Valo and the demonstrations in London, New York City and Miami. For my first question, I was wondering, following these demonstrations and your test thus far, how do you feel that your Valo aircraft stacks up with peers in the market? Is the main difference between vertical and peers the balance sheet right now?

Yes. Louie, great to hear from you. So I mean, we fundamentally believe, I mean, fundamentally that we've got the best product in terms of the size, shape and scale and its capabilities. We've believed that for a very long time. We've now shown the physical embodiment of that to our stakeholders, particularly in the United States over the last couple of months. So people have sat in the aircraft. People have seen the quantum of baggage that the aircraft actually takes. They've seen the cockpit and the segregation, which provides a very safe environment for the pilot. And so people are now getting really convinced that Valo as designed is the category killer in this space. It is not a minimum viable product that we believe some of our other competitors are developing. So our balance sheet, we think we've got the best product. We also think we've got the best supply chain collaboration globally, particularly with some of the major partners we have like Honeywell, Aciturri. But finally, we've got the best customer base. And at the end of the day, it's the customer base determines the success or failure of an aircraft. And if you look at our customers, they're globally diversified, Tier 1 airlines, many of them, and all of them are fully engaged in the constant development of the aircraft. And today, we're actually speaking from our battery facility here in the U.K., where I've just been brought through some of the unique proprietary battery systems that we've developed. We've basically collaborated on almost everything else with the aircraft because we think almost everything else is going to get commoditized. The battery, as Stuart said, is the special sauce. And our team is the best in the world in the development of our battery technology. So it's no surprise that we're convinced that we've got the best product but all of our stakeholders are telling us that now.

Your next question comes from Austin Moeller with Canaccord Genuity.

So just my first question here. Can you talk a little bit about the R&D and CapEx plans over the next 12 months that fits into the $195 million in cash you expect to burn? Like how many aircraft do you expect to build as part of that?

Austin, thanks for the question. Thanks for the continued support. The $190 million to $200 million is a rolling 12 months from the end of March. As I mentioned earlier, it covers everything we have laid out in FlightPath 2030 and today that we are going to achieve over the coming 12 months. So that is the public flight displays of the current prototype. It is the conversion of one of those into a hybrid. It is the expansion of the battery center where we are today, as Domhnal mentioned, it's the build of our aircraft manufacturing facility. And really importantly, it is the start of the build of the first Valo. So everything we said we'd be doing over this 12 months, that is funded within that $190 million to $200 million.

Okay. And then is there an active program of record or the equivalent in the U.K. Ministry of Defense right now to procure a hybrid eVTOL aircraft? And are there other similar programs in the works with some of the allied NATO militaries?

So we've had multiple conversations across many different defense customers and defense partners in Europe and the U.S. There is no official program of record that we're attached to. However, we're in deep discussions with the U.K. government about this hybrid product. As David alluded to from his feedback from VERTICON, we are totally unique in this space in that we will be certifying a hybrid product in 2029 in an airframe that is sized and capable and perfectly usable by the military now. We do not have to go and redesign and defer this. So that is generating significant interest across the whole world for our product. We anticipate being able to close out something in that space over the coming months, the rest of this year because we definitively have the best product for the military. As Domhnal said, it's been widely recognized now we've showcased Valo, and that reads right across into the hybrid space as well. And David also touched importantly on autonomy. We are perfectly placed to jump quickly into autonomy because of our deep strategic partnership with Honeywell. So we are the first choice for military.

Okay. And just my last question. Have you narrowed down any of the -- on the market or available hybrid powertrains to like 1 or 2 options yet?

We have. Actually, we've got a short list. I don't think we've announced who we are going with yet but we've had wide-ranging discussions. And interestingly, everyone wants to work with us because they've seen we have an airframe that is going to be highly, highly successful. So we have had inbounds for us for people that are absolutely desperate to be our partners on this because we are leading the way in the military and dual use space.

Yes. And in that regard, Austin, we have European and U.S. alternatives from Tier 1 suppliers who are -- have gone from being, I would say, mildly interested in Vertical and our hybrid to being intensely focused because they can see the applicability. And to David's point, they also can see the absolute scale of the market opportunity, which I believe right now, we are currently underestimating. And we're going to have to take a good look at the scale of that defense opportunity globally, not just in Europe, but globally to ensure that our internal forecasts are really accurately reflecting the depth of that market opportunity, which is getting literally deeper by the month and quarter, given the scale of the budgets particularly in Europe that the European governments are allocating to defense.

Your next question comes from Chris Pierce with Needham.

I was hoping to go a little bit deeper on the transition delays. Maybe delays harsh word. But either way, I'd just love to hear sort of if we think about a pie or 100%, however you want to bucket it, like what's within your control and what's been that you haven't been able to control from November until now. And in the U.S., we have like flight aware, we can sort of track and see flights that people are kind of flying, have there been weeks where you haven't been able to fly and that significantly pushed things out? Or I guess, kind of just let us know sort of what's -- kind of what's been going on in Cotswold?

Let me just -- I'll give you a little bit of color commentary, then I'll hand to David. You said were the weeks, we couldn't fly. I mean there were months, we couldn't -- it rained for 46 days in a row, as David said. We need a permit to fly every time we put the aircraft in the air, and we can't do it when it's raining. So there were 46 days in a row we could not fly just to orientate you. It isn't all in our control. Now David, if you want to give maybe a little bit more technical color.

Well, certainly around the pie chart, David, I mean, how close are we? I mean, if you were to give a sense in a pie chart basis.

Yes. And so in terms of the number of tests that we have to do, it's less than 10% in a pie chart. It's in the tail end of the S-curve. So we're on that tail end of the S-curve. And as Stuart said, if you were then to create another pie chart that said, okay, what were the sources of not flying when you initially planned to fly, the biggest one was weather. And it was a really rough January and February. But on top of that, we also are doing envelope expansion testing. And as we do envelope expansion testing, each test point brings a database of data that gets compared with our predictions. So the wind conditions, we have a tight tolerance as well because we don't want to have that noise associated with the atmospheric disturbance. So in terms of the weather, the clouds, the wind conditions, that was the first one. And then the second one was as we conduct the test, and as we find that we have to make some adjustments to our predictive models to update our database, then we update the database and go through our full design organization procedures to get that new airworthiness document approved side-by-side with the CAA before we go to the next test.

And maybe, Chris, just to bring that a little bit more to life because the environment that we're here in Europe is different to the United States. We are testing under a regulatory oversight. In the United States, it's an experimental -- the regulatory oversight effectively means that every time we fly, we have to receive a permit to fly, which means we sit with the CAA, we walk them through the learnings from the previous flight, any observations, any amendments, any changes. And that process is because it's the safest in the world, it is sequential. And unfortunately, it's slow. But slow is good because it means it's intentional and it ensures that we're flying in the safest manner possible. We all wish this was faster, but we're very comfortable about where we stand. And to David's pie chart picture there, we're into the last 10%.

Can you sort of help us with how slow is slow on those 2 sort of buckets that you just talked about, you fly, you compare the data, you have to tweak versus what you saw versus what you expected and then you need to take that to the CAA and then get approval to fly the next time. Are we talking days, weeks? Like what is the time frame between when you fly and when you're ready to fly the next time? And what's in your control and out of your control as far as that goes as well?

Yes. It depends on the issue. We've had some issues that we get resolved in days. We've had a couple of issues over the last few months. They've taken several weeks actually. The good news in that scenario is we weren't able to fly anyway because of the weather. That's just the nature of the regulatory framework that we find ourselves in. It is the nature of 10 to the minus 9. But when we get through it, we will have the safest, commercially safest aircraft in the world. So the pain will be worth the gain.

Chris, just to give a final little comment on that. When we've taken learnings and made little tweaks, the joy of this is this aircraft we're flying now directly reads over to the Valo. So if you look at a top-down view of the Valo and the prototype, the rotors are the same size, the wing is of the same size and shape, the rears are almost exactly the same. So a lot of this stuff where we've had a few days delay or weeks delay, for example, this is stuff that we don't have to revisit because it goes directly into the Valo design. So we may have lost a little bit of time here, but we've actually derisked certification. This is one of the key things you've got to remember here. This derisks certification. Every single time we go back to CAA, we sit with them, with their experts, with our experts, we agree a way forward, and that is baked in knowledge learning and technical results and technical solutions that will be baked into the Valo. So it actually accelerates the whole program, which is why [ we are ] extremely confident.

Okay. I appreciate the details. And then just one other one. You guided to a 12-month cash burn of $200 million or $195 million. Is there any reason to think the next 12 months prior to that will be meaningfully different from that? As you ramp, like if I'm looking at Slide 17, you've got the 7 certification aircraft you're going to build. Like as we think about burn going forward before you have entry into service and revenue, how should we think about burn beyond the next 12 months, just...

Yes. We've actually put that out, I think FlightPath 2030. We've talked about the cash certification. It might be a little bit up on the $200 million, but it's in that ballpark. That's the way to think about it.

Your next question comes from David Zazula with Barclays.

First question is with respect to the selection of Evolito the EPU supplier. How has that been received by CAA and EASA? And I guess, do you perceive any risk with respect to certification with them relative to kind of the prior established Tier 1 supplier you had on the EPU side?

So actually, we didn't have an established Tier 1 supplier for certification. We're very proud to have been working with MAGicALL on that. But Evolito, we believe from a certification perspective, they're already up and running. They already have a DOA in place. They're working on a POA. They're highly, highly respected and it's proven, proven technology. So this is something from a certification perspective and support from regulatory bodies, we're very positive about. And David, if there's anything you want to add?

No. I mean it's a great question. And there are a couple of attributes of Evolito that are really a good fit for Valo. The first is, as Stuart said, is they have excellent certification processes in place, and they've really leaned forward on that. And they're not too far away, right? They're near Vista. And as we mentioned earlier, that Vista near Oxford is in the Oxford Cambridge Arc, which is one of the prime use cases for eVTOL in the United Kingdom. And so being here in the United Kingdom, it gives us advantage to work together on the U.K. CAA certification, and we have very complementary certification processes in place.

Super helpful. I mean maybe can you frame how do you think they'll fit into the broader supplier strategy? How you think the supplier coordination is going to go? And I guess, broadly, how the suppliers will support your ability to ramp up production over the next couple of years?

David, thanks. We have been working with most of our supply chain for many, many years. They're deeply embedded in our process. Our whole Flightpath 2030 and certification date of 2028 has been done hand-in-hand with our supply chain. So they are there, ready, willing, committed. And as David alluded to, our CDR, a critical design review, where we'll have done the full design envelope of every single component. We're around 75% to 80% through that. Every single complex, long-term, difficult high-value component we've done. So EPUs, batteries, avionics, flight control systems, the airframe is locked in already, and they are there, ready and willing to make a certification aircraft in 2028.

And there are no further questions at this time. I'll now turn the call back over to CEO, Stuart Simpson, for closing remarks.

I'd just like to thank everyone for listening into this call and all of the analysts for the questions. Really, really appreciate it. We are on the cusp of great things at Vertical. David and Domhnal said, we genuinely believe we have the industry-defining aircraft. The feedback we've had from everyone in this space has been outstanding, way above and beyond what we were expecting. We are going to bring the Valo to life. We will start building it at the end of this year, we'll be flying early next year. It's going to be an amazing 12 months. So thank you very much.

This concludes today's conference. Thank you for participating. You may now disconnect.

Good morning. My name is Dan, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertical Aerospace 2025 Third Quarter Earnings Call. [Operator Instructions] Now let's turn the call over to Gillian Levine, IR Lead at Vertical Aerospace. You may begin your conference.

Good morning all. I'm delighted to welcome you to Vertical Aerospace's Third Quarter Business and Strategy Update Call. Before we get started, I would like to remind you that during today's call, we'll be making forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially. Any forward-looking statements we make are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. We posted an accompanying slide deck to our Investor Relations website at investors.verticalaerospace.com, which contain detailed information on forward-looking statements. For a more complete discussion about these risks and uncertainties, we have filed our 2025 third quarter financial statements with the SEC earlier today. Please now let me hand it over to our Chairman, Domhnal Slattery.

Good morning, and thank you all for joining the Vertical Aerospace third quarter business update call. Before we get started, though, I wanted to share with you a never before seen image of our new certification aircraft design and doesn't it look cool. We look forward to formally unveiling the full-scale aircraft on December 10 in London. And please reach out directly to our IR team if you would like to join us on what will be a very special occasion. I'm delighted to lead the call today with our Chief Executive, Stuart Simpson. My name is Domhnal Slattery, and I am the Chair of Vertical Aerospace. I've worked in the global aerospace industry now for nearly 4 decades and along the way, founded 2 of the top 3 aircraft lessors in the world today, including Avolon. During the call today, I want to share with you why we believe Vertical Aerospace is a leader in the eVTOL sector. We want to update you on our progress and importantly, outline the top priorities going forward for myself and the management team. On Slide 4, you will see we have 6 items to cover today. If Stuart and I do our job, you should walk away from this call with clarity on several key areas, and in particular, around our flight test progress and aircraft design. And we will also spend time on framing the valuation gap that exists between ourselves and our competitors. Turning to Slide 5. We've spoken extensively about the fourth and the final stage of our flight test program, the piloted transition flight and why this maneuver is so critical. So rather than just tell you, we'd like to show you what this entails. So let's take a look at this video. [Video Presentation] So what you saw there is the demonstration of end-to-end piloted transition and transition price is the critical derisking step for the VX4 developments and our certification program, it represents the most material milestone in our history. And importantly, this is a key point, all under the oversight of the U.K. CAA our home regulators. But the video showed this final phase, transition is actually the culmination of a 5-stage test flight campaign, which I'm glad to say will begin later this week, subject to receiving final permits to fly from the U.K. CAA. And we expect these stages to be completed across 11 test flights in total. Once all 5 stages are completed, Vertical will be the first eVTOL OEM of our aircraft size to have completed this step under U.K. CAA regulatory oversight. This is an industry first, and it is materially ahead of all of our competitors bar one. Turning to Slide 7. Vertical's approach has always been start slow to finish fast. From day 1, we have maintained a transparent, measurable and clear work scope. We are the only team in the industry with extensive aerospace certification experience. Our senior team has certified over 30 aircraft or propulsion systems, bringing decades of invaluable learning and experience. As you may know, we have flown under a permit to fly oversight by the U.K. CAA. It's important to understand this because it requires rigorous oversight, ongoing demonstration of compliance, routine inspections and joint accountability with our regulator. This approach fundamentally differentiates us from peers who currently operate under an experimental air ordinance approval with limited direct oversight by the FAA. This stringent oversight means that we have front-loaded our certification process with over [3,500] hours of CAA export review. One prerequisite for type certification in the U.K. and Europe is being awarded design organization approval, which we received in 2023. This approval affirms the regulators' confidence in our engineering, our design and our development processes. And our successful 2025 audit confirms the CAA's continued confidence in our operations. This level of regulatory engagement in turn allows for high confidence in our 2028 certification time line and importantly, the expected cost to achieve that certification. Now turning to Slide 8. At our Capital Markets Day last September, we highlighted that once an aircraft reaches certification, there are really only 2 metrics that become paramount, aircraft comfort and reliability and the profitability of our customers, the operators. We are confident in our certification plan. But when looking beyond certification, it is evident that our aircraft offers the most versatile eVTOL in the market. So today, I want to focus on our unique passenger comfort and operator profitability. These are the factors that will ultimately drive multi-decade commercial success. The reality is all of our competitors are physically constrained by the size of their aircraft and this provides Vertical with a unique competitive advantage. Turning to Slides 9 and 10. I'm truly delighted to share for the very first time the internal renders of our certification aircraft. As you will see on these slides, our cabin space is the biggest and the most spacious in the industry. We have over 70% increased passenger cabin volumes versus our competitors. Our aircraft was designed from day 1 with passenger and pilot comfort in mind. As you will see, the aircraft is divided into 3 distinct compartments: the passenger cabin, the pilot cockpit and the luggage hold. And you will see each one has a separate entry and exit, ensuring safety and comfort. We have a cockpit that is 50% larger than our competitors. And our luggage compartment is 200% larger than certain of our competitors. This allows us to check in 70 pounds of baggage -- personal baggage for each passenger. This makes our aircraft ideal for airport to central business direct transfer. Simply put, when you step back, no other eVTOL matches this combination of comfort, space and practicality, not one. On Slide 11, you will also see that the VX4 is unique in its ability to scale from 4 to 6 passengers. This flexibility was designed also from day 1, and it sets our aircraft apart in the market as no other competitor can scale to 6 passengers. This will make the VX4 the preferred aircraft for operators globally. Now turning to Slide 12. What I just described qualitatively puts it into clear metrics financially. Serving 6 passengers rather than 4 allows our operators to increase revenue by 50% and more than double annual operating profit potential. Scaling the 6 passengers reduces the cost per seat mile by 30% and obviously significantly improves margins with the potential for gross margins to range between 56% at an assumed 75% load factor. The reality is these unit economics are transformative for our operators, and they underpin our strong industry-leading order book. The step back here and the key message is actually pretty simple. Post certification, what matters is safety, which obviously we deliver to the highest standards and passenger comfort and operator economics, which the VX4 uniquely provides. I'll now hand over to our CEO, Stuart Simpson, who will provide more detail on our cost of certification and some of the key cost components. Stuart?

Thank you, Domhnal. 6 years ago, we made a strategic choice to focus on being a pure-play OEM and to largely avoid vertical integration. We source our parts from Tier 1 aerospace manufacturers globally, each one with decades of certification history. We are the only OEM with proven Tier 1 aerospace suppliers on safety critical systems, including flight control computers. This model is efficient, cost effective and positions Vertical as the best steward of capital. Turning to Slide 14. Our cost to certification is guided by confidence in the U.K. CAA process and time line. The key components are: first, $550 million of people and operating expenses. This is where the benefit of our OEM model really comes through, allowing a lean and cost-effective model. Additionally, being based in the U.K., we have significantly lower cost than U.S.-based competitors. Second, $225 million of nonrecurring costs, largely fixed through contracts with Tier 1 suppliers, 75% quoted or contracted and 25% estimated. As a reminder, these are onetime upfront costs to our partner suppliers that cover the initial design and development of key parts of the VX4, along with tooling costs to build our certification and production aircraft. These suppliers are leaders in their respective categories and understand certification, and we get to benefit from leveraging their engineers and [indiscernible]. Finally, $75 million of CapEx to cover investment in our initial production facilities at Cotswold Capital and an expansion of our Vertical Energy Center where we assemble batteries. As we raised at our Capital Markets Day in September, it is in our DNA to bring clarity to an opaque industry. We are the only OEM in the space with published financial and operating metrics through 2035. This speaks volumes to our business strategy and path to certification. Slide 15 shows that through Q3 2025, our spend was in line with expectations, and we maintain our full year guidance of USD 110 million to USD 125 million. This is 75% below our main competitors. Our tax position is $123.4 million as of the end of the third quarter. As of today, our cash position is $117 million. Our ATM facility put in place in September '25 contributed $7.2 million in the third quarter and $16.4 million year-to-date. Over the next 12 months, we anticipate spending $235 million. We will provide more granular 2026 spend forecast at our full year earnings call. Moving to Slide 16. Vertical clearly executes on its own operational milestones for 2025, including our piloted wing-borne test flights, flying real-world use cases, earning further DOA privileges from the CAA and initiation of our production steps are completed. From the 2 items outstanding, first, piloted transition has been discussed earlier today and will be completed within weeks. Second, the build of our third prototype is progressing well and again, will be completed in weeks, likely at the beginning of December and flying shortly thereafter. In 2026, this third aircraft is what will be retrofitted with the hybrid powertrain to begin hybrid flight test. Moving to Slide 17, you will see our high-level certification time line. The first point to note is that we have already completed the preliminary design review or PDR with 75% of our components already locked in for the certification aircraft. The next step is CDR expected in mid-2026. This will lock in the final 25% of the components for the final aircraft design and the supply chain, allowing us to move towards certification and then mass manufacture. After we complete CDR, nothing on the aircraft will change. We will not be tweaking landing gear or propellers. This is the final aircraft and enables us to begin delivering the 7 certification aircraft that we will test through to 2028 certification. Of course, this CDR is a significant milestone for the company, but also for our suppliers and customers as well. I'll now hand back to Dom.

Thank you so much, Stuart. So let's turn to Slide 18. Now the first thing you will note on this slide is a lot of red access. And I'm often asked, why does Vertical trade at such a discount to its peers? The gap is simply cycling. Vertical's market cap is 3% of company A and 6% of company B. In our opinion, this gap is entirely unwarranted. So let me try and frame this for you from our perspective. On almost every valuation metric that matters, be it technology, capital efficiency, real tangible certification progress or customers, practical outperforms -- if you look at the key value drivers down the left-hand side of this page, it's obvious that Vertical has achieved or exceeded on all of these metrics, yet our valuation remains detached from reality. However, we believe upcoming milestones, including piloted transition will act as a significant catalyst to our share price. So turning to Slide 19. In our year-end and Q4 update, we will lay out a very clear set of objectives for 2026. However, as a step back, I see 2 key priorities for me as Chair. The first is to conclude a partnership and investment with a global strategic player and secondly, working with the team to significantly grow our order book. If you turn to Slide 20. Here, you can see the scale and depth and quality of our customer base. We have one of the industry's largest order books, globally diversified. Importantly, we are the only eVTOL OEM that has a Tier 1 global lessor on its program. This is a unique competitive advantage, giving us access to Avolon's global distribution capability. Our relationship with Bristow, the preeminent helicopter operator globally is also strategically compelling as it's the industry's only ready-to-fly partnership enabled by their global AOCs. Now our order book has been effectively closed for 2 years, but we will be reopening it selectively, targeting high-value geographies and end markets. And it will not surprise you that a key focus for me and the team will be to secure the first sale of our hybrid aircraft, which begins testing, as Stuart said, in 2026. Now finally, turning to Slide 21. Now that we are within weeks to completing a successful piloted transition, we and the Board now believe this is the moment to close an investment with a strategic industrial partner to tangibly support our ramp from certification to commercialization. Our ideal partner is a global player in aerospace, automotive or the defense sectors. Unquestionably, there is significant strategic investor interest in the sector. And Beta's successful IPO this morning is a clear demonstration of this. And let me, on behalf of the team, congratulate Kyle Clark and his team on their success. Vertical are in active dialogue led by me with several potential partners globally. And I am confident that we will conclude a transaction shortly. If we are successful, this partnership will be transformational, both for the business and our share price. Finally, turning to Slide 22. We hope that this call has given you clarity on our progress towards piloted transition, the industry-leading aspects of our aircraft and why we believe Vertical Aerospace is the absolute best steward of your valuable capital. With that, I'm going to hand back to the operator, and we will open the call to questions.

[Operator Instructions] Your first question comes from the line of Austin Moeller from Canaccord Genuity.

So my first question, where are we at on Aircraft 3 production and the development of the hybrid powertrain for early '26 flight testing?

Austin, thank you for the question. Aircraft 3 production is exactly in line with plan. And as I said earlier, will be completed in the first couple of weeks of December. So we're really pleased, we are exactly on plan with that. In terms of the hybrid, again, we're exactly in line with our plan for that. Everything is coming together for the aircraft to be flying in the middle of next year. So really pleased with everything that the team has been doing, and we're on track on both of those.

Yes. And Austin, let me add to that as well. And I think this is important for people to understand. A lot of our competitors are talking about hybrid. But the reality is none of them have an airframe currently that works for a hybrid. Vertical is the only OEM that has an airframe that can take a gas combustion engine immediately without any amendments or adjustments to the airframe. That's the most important. So we are a major first mover in the flight test campaign, which will start, as Stuart said, middle of next year.

Okay. And then just you talked about the hybrid powertrain aircraft and potentially getting an order there soon or announcing an order there soon. If we think about the defense market, when might the U.K. MOD or NATO MODs be interested in procuring aircraft for troop transport? It seems like there's a lot of opportunity there to sell this to European allies given the 5% spending commitment and the low acoustics and thermals of the aircraft.

Yes. I think you're spot on, Austin. So the step back here is that the defense budgets in Europe are going to be at 8-decade highs, okay? We, as you can well imagine, are in direct dialogue with every major government in Europe about this aircraft and the interest in the airplane is exceptional. Given some of the touch points we have from our Board colleagues, particularly Lord Andrew, former Head of MI5, you can well imagine that we've got great access, particularly in the U.K. MOD. So we'll be working super hard going into 2026 to secure the first order, and I'm confident that we'll achieve that.

Our next question comes from the line of Andres Sheppard from Cantor.

Congratulations on the quarter. I was wondering if you can maybe talk a little bit about your manufacturing strategy. Will you be pursuing kind of a large OEM agreement partnership there to kind of help as you begin to ramp up the kind of the high-scale manufacturing process? Or kind of what's the strategy there?

Yes. It's a good question, Andrew, right? And one we've thought about extensively over the years. So you can apply different approaches to this. You can do the sort of let's build the big huge factories, let's spend a lot of money doing that and hopefully, we can fill them at some point in the future or you can take a more prudent, more risk-adjusted approach, which is what we've done, okay? So you should expect to see our manufacturing cadence as follows. Phase 1 in the U.K. as we've outlined, and Stuart can give some color on that. Phase 2 is the turbocharge phase. And as I mentioned in my remarks, one of the key criteria for selecting an industrial partner with us is their ability to turbocharge our production capacity for this aircraft. What does that mean? What that means in practical terms is by the middle of the next decade, we will have 3 manufacturing facilities, one in the United States covering North and South America, which will be a major market, one in Europe and one in Asia. And I suspect by the middle of next year, we'll be coming back to the market with probably quite significantly ramped up production forecast for this aircraft, given the demand that I am seeing globally. I mean I spend my time talking to airline CEOs globally who are waiting to order our aircraft, but they want the aircraft earlier. And right now, we are production constrained under our current forecast. So clearly, the objective is to build more airplanes faster and more efficiently. Stuart, do you want to touch on the immediate plans because it's important.

Yes, of course. Andres, thanks for the question. As I mentioned at the Capital Market Day and just touched on here, $75 million we'll be spending gets our initial capacity up and running that takes us through 2030. That is expanding our footprint at the Cotswold Airport, where we'll be assembling the aircraft and expanding our facility at the Vertical Energy Center where we'll be assembling batteries. Hand-in-hand with that, we're in deep discussions with the U.K. government about where we locate the major U.K. facilities, the battery giga factory and a production facility for the aircraft of several hundred aircraft a year. Then exactly as Domhnal says, we will be ramping that across the U.S. facility and into Asia.

We'll make a decision on the European location during the first quarter of next year. And whilst Stuart touched on it being in the U.K., it's highly likely to be in the U.K., but I wouldn't say we've made that decision yet. What we're seeing is pretty significant inbound from other European countries who are keen for us to base there, unquestionably, high-quality jobs and a lot of them. But from the market's perspective, that decision will be made during Q1 next year.

Wonderful. Appreciate all that color. And maybe just a quick follow-up. I think a lot of your peers are pursuing the Middle East as a viable market, some of them even potentially targeting commercialization there over the next 6 months. It doesn't seem like Vertical is emphasizing or prioritized in this region. So curious to get your thoughts there. Is this another potential geography to pursue? Is this an opportunity perhaps in the more nearer term? Or is the goal to kind of stay focused on Europe and the U.K. and ramp up from there?

Okay. Well, let me help break this down into its components because it is a really important point. First of all, GCC or the Middle East is broadly defined, is an extremely important marketplace. And for those of you that follow us closely, you will see that we had a very significant day in Saudi Arabia a couple of weeks ago, and Stuart Simpson was there with the U.K. government as part of the FII. So unquestioned, the Middle East is really important. But here's where it's not important and what I would call strategic tourism around certification searches. We do not believe there is any real validity in an eVTOL OEM seeking out some fanciful early-stage certification in the Middle East. It's not real, it's not tangible, and it's not portable globally. That's the reality, and that is based on my 4 decades of experience in this industry. Now you will have noted this morning that suddenly the authorities in the Middle East or there's at least news reports saying, oh, sorry, we don't expect to give "certification" until late '26. And you just referenced there that our competitors are talking about commercial operations as soon as the end of this year. It isn't happening. It is fanciful and it is not certification.

Our next question comes from the line of Edison Yu from Deutsche Bank.

Congrats on all this progress. So first question about -- we saw the press release about funding both from U.K. Department of Transport under this OxCam AAM Corridor initiative. So could you clarify like what portion of the award is like directly attributable to Vertical and any technical milestones met before you can access that fund?

All right. Thank you, Laura. So I think what you're alluding to is the British government's desire to promote both Oxford and Cambridge Universities, which are 2 of the world's leading academic and research institutes, which both are producing incredible output of new businesses. And the opportunity to link those through a corridor of innovation and development is a fantastic -- fantastic initiative, of which we're very, very proud to be part of. Our aircraft will be able to fly between those 2, providing an utterly unique capability. Now in terms of accessing funding, it's gone into one big bucket, and we'll be making our pitch to make sure we can do the demonstrations of that capability over the coming 12 months. But it's a phenomenal, phenomenal step for the U.K. to be able to leverage those 2 institutions and grow them aggressively over the coming years, and we will be part of enabling that. So hopefully, that gives you a bit of color commentary, Laura.

Okay. Got you. Also for the $700 million [indiscernible] towards certification. So should we assume more spending on top of that for the hybrid powertrain -- or like would that be a material amount or like most cost for the hybrid already behind?

Well, let's break that into 2 components, Laura, right? And Stuart will answer the components of 700. As I touched on, and I think it's really important for the market to understand this, there is a massive future and a massive opportunity on the hybrid side. There's also a massive cost for our competitors to build a hybrid. We don't have to incur that material cost because our aircraft is capable of taking that gas turbine without any major changes to the airframe. So we'll be first to the market with our flight testing in the middle of next year, as Stuart touched on. And as a consequence of that, we'll be the first to the market to sell a hybrid. With respect to the incremental cost with the 700, Stuart, you might want to touch on that?

So Laura, the $700 million includes everything we need to get the hybrid program up running and flying over the next 12 months. On the back of which, as Domhnal said, we are highly likely to get a sale. Now that sale will then be able to fund the balance of the program. Now interestingly, as Domhnal said, our airframe fits this hybrid powertrain. So the cost to actually take it from concept through to certification are relatively low. So that's the way to think about it. We've got everything we need for the next 12 to 15 months.

And maybe to add to that a step back, we think about total cost of certification. By the time our aircraft is certified in the second half of 2028, our estimate is that we will have invested USD 1.1 billion to achieve that milestone. Our best guess is that our U.S. competitors will have spent a minimum of $2.5 billion by that time, and they still won't have achieved the certification of a hybrid aircraft. So there's a start reality there on investor capital allocation and getting a return on that invested capital over time. And I think the market should focus in on the efficiency of how we deal with our capital.

Our next question comes from the line of Chris Pierce from Needham.

I just have one question. You talked about front-loaded certification given the regulations needed to get in the air and then building your certification plans by the mid-2026. I think I have that right. So can you just kind of sketch through like what will we hear from you guys or what happens over the next 2 years until certification in 2028? Is that just consistent flying and feedback? Or is there -- like is there a chance for that to be pulled forward? I'm just kind of thinking about where you guys are at and then your comments on front loaded. I just love to hear you expand on that.

Yes. So there's no pulling forward, right? There's no fanciful time lines on certification. It will take what it will take. And we're highly confident in getting that achieved, as we said, at the second half of 2028. In our year-end earnings call, we will present to the market a forensic breakdown by quarter, starting in quarter 1, 2026 through to conclusion in second half '28, exactly what you should expect us to be doing each quarter as we go along the certification journey. The front-loading piece is really important for people to understand. And why it's important is as follows: in the U.K. and in Europe, the process is front-loaded in terms of the amount of interaction, the amount of oversight we have in the process with the regulator when the aircraft is still at early stage prototype development. So we get a lot of input, a lot of guidance, a lot of derisking from a safety regulatory perspective. And if you look at the Slide 7, which was originally presented at our Capital Markets Day by Patrick Kai, the former Head of EASA, who sits on our Board. What I tried to represent to you is a lot of the risk is taken out earlier in the program, unlike the United States, which is actually diametrically opposite. I mean we are the only aircraft manufacturer that has a means of compliance. What that means in simple terms is we know exactly what we have to do and when we have to do it to get the aircraft certified. So key messages are we will get there on time. There will be no pull forward. This will take until the second half of 2028 to get it done. No fanciful ambitions or throw away spend comments that we can get there earlier.

Okay. So just to clarify, there will be a schedule that because of what EASA has in place with CAA, investors will be able to see what you need to do, when you will do it, what boxes will be, et cetera...

To a reasonable level of detail so that we can measure ourselves against performance and that you can measure us. Stuart?

Yes. And just giving you the high points on that, Chris, we do CDR the middle of next year that locks in 100% of the aircraft design and the supply chain. The engineers effectively put the pencil down at that point. That is our final aircraft, no change. And importantly, we've already locked down 75% of the final aircraft. We already know the design of it. We're showing that on the 10th of December. The CDR just locks in the supply chain. The design is there. The next aircraft we build, and we've already initiated production by ordering the long -- very long lead time items is a certification aircraft. It will be completed in Q1 '27 and flying. After that, we build 6 others and they constantly fly hand-in-hand with oversight from the regulator. So that is the process. And as Domhnal said, has no fanciful forward. This is a clear, transparent process, and we will be certifying in 2028.

Our next question comes from the line of Savi Syth, Raymond James.

Just could you talk a little bit kind of given your differentiation of the bigger cabin, could you talk a little bit about the choices you've made versus kind of your competitors that enable that bigger cabin?

Well, the first and I think the most important, before we ever designed anything, and that's taking us back really 5 years ago, we spent a great deal of time, and I was intimately involved in this exercise, speaking with our customers or potential customers globally, what was the best product market fit -- and there were a few key learnings and some obvious learnings. One was that the range wasn't going to be super important for the -- at least the initial phase of business, i.e., from central business district -- airport to central business district globally. And if you look at the 50 mega cities of the world where these aircraft will be flying, the average range from aircraft -- sorry, airport into town is about 50 kilometers, plus or minus. So range wasn't going to be a differentiator. Size of cabin was the absolute most important thing. And as a consequence of that, also the ability to check in luggage. And so that gave us a real engineering challenge 5 years ago. How do you design an aircraft of that size with the energy density you need for the batteries at a price point to the operator that can make sense. So that was the conundrum we were dealing with 5 years ago. We have definitely resolved it. So it was a customer-led design engineering process. And if you talk to the Airbuses and the Boeings of the world, they will tell you that it is the right and best way to design an aircraft. And the reality is, today, that airplane physically exists. If you come to London on the 10th of December, you will be able to sit in that cabin. It is comfortable, it's scalable. And if you compare and contrast our cabin to some of our competitors, it is demonstrably bigger.

Helpful. And then just on the battery side, I don't know if you can kind of speak to this. I'm kind of curious, I know you're several generations ahead of what is being fed in Aircraft 2 and Aircraft 3. I wonder if you can kind of talk about how much more development there is prior to kind of CDR and what the kind of the improved capability might be versus kind of what you're flying today.

Yes. Thanks, Savi. Thanks for the questions. You're absolutely right. The batteries that we have on Aircraft 2 that is flying, we are a couple of generations ahead as we look to the certification aircraft. And if I take you back to what I've said previously about our PDR, we have locked in the battery capability in that. We actually have a choice of a couple of cell suppliers because we have such a deep understanding. We've done over 5 million hours of testing on our batteries. So we have a great insight on to that. I don't think there's much more I can add on that at the minute, but we have great confidence line of sight through the PDR, through the supply chain to a battery cell and the battery pack that we build around that cell that is certifiable and gives us the payload and the range that we will be putting into the market and meet way over 90% of the customer launch routes. It's a phenomenal engineering achievement, as Domhnal said. It delivers exactly what our customers need in terms of cabin capacity and luggage capacity.

Our final question comes from the line of Amit Dayal, H.C. Wainwright.

Also great to see the new design guys, definitely a big differentiator for you. Domhnal, you commented on concluding a strategic partnership potentially in the very near term. I mean, can we assume this includes some level of investment? And can that investment carry you through 2027 or 2026 at least?

I can't comment on the specifics on it, but I think it would be reasonable to assume that any conclusion of the transactional strategic will carry with it an investment quantum that would reassure the market, let me put it that way.

Okay. Understood. Also just sticking on that topic, as defense needs [indiscernible] the European market, the U.K. market, et cetera, is there a path for nondilutive funding through [Technical Difficulty] from development purpose. Any clarity on that would probably be helpful for investors?

Yes, Amit, thank you. You're absolutely on point. There is opportunities for nondilutive funding for the development of hybrid aircraft. That's exactly how the defense market works as you get into negotiations with the government. So yes, there are plenty of opportunities for that. And as Domhnal said, we're having a lot of incoming and a lot of very good discussions across the European defense industry.

Okay. And then on the defense side again, have any specifics emerged in terms of the aircraft capabilities, et cetera, that those essential customers may be looking for?

I think if you take a step back and look at the aircraft, it provides several things that the defense industry is extremely excited about. So first of all, you have silent takeoff and landing, which, as you can imagine, is extremely important. It also has a very low noise signature, so you can't hear the aircraft when it's coming in to land or taking off. And then once it's altitude, you can fire the gas turbine to travel up to 1,000 kilometers. That combination of low noise signature, low thermal signature and near silence is transformative in the military. So this is what underpins the incoming that we're getting. And really, the use cases are endless from logistics through to deployment, et cetera. So yes, we feel we have got the strongest product in the sector. We will be flying it next year, and we will be selling it next year.

I will now turn the call back over to the Chairman of Vertical Aerospace, Domhnal Slattery for closing remarks.

Okay. Thank you, operator, and thanks, everybody, for joining us this morning and the thoughtful questions. If I were to ask you to take one slide away as you think about our remarks today, Section 5, Slide 18. It's the only slide that matters. Have to think about that, think about the relative performance of this business relative to our competitors. Now I want to re-extend an invitation to come to London Canary Wharf to see our physical aircraft. And I'm an aerospace geek. I've been in the business 4 decades. I have seen this physical aircraft that we will be unveiling. It is simply -- the coolest thing imaginable. So if you want to see the future of flight and you want to see the Vertical VX4, it will blow your mind. So get your tickets, get on to the IR team and come to London on the 10th of December. We will also be bringing that aircraft to the United States immediately in Q1 2026. So thank you all. We look forward to our...

Good morning. My name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vertical Aerospace's 2025 First Half Year Earnings Call. [Operator Instructions]. Now I'd like to turn the call over to Gillian Levine, IR Lead at Vertical Aerospace. You may now begin your conference.

Hello, everyone, and good morning. I'm delighted to welcome you to our H1 update call today. Before we get started, I would like to remind you that during today's call, we'll be making forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Any forward-looking statements we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. We posted an accompanying slide deck to our Investor Relations web section of our website at investors.verticalaerospace.com, which contains information and cautionary warnings on forward-looking statements. For a more complete discussion about these risks and uncertainties, we have filed our 2025 first half year financial statements with the SEC this morning. Please now let me hand it over to our CEO, Stuart Simpson.

Good morning, everyone, and thank you for joining us today for Vertical Aerospace's 2025 Half Year Results. I will give you an update on our progress over the past 6 months, and I'm joined by our Chief Commercial and Strategy Officer, Michael Cervenka, to talk through one of our key partnerships. But before we get started, I wanted to share something special with you. [Presentation]

As this video shows, this is just another day for flight testing. 2025 has been a pivotal year for Vertical so far, and I'm pleased to say we are tracking strongly against our strategic objectives. Looking at the 2025 targets we set last November, we have successfully achieved or remain on track to deliver on each of these key milestones. We have flown through public airspace operating in full-scale piloted wing-borne flights, the first of its kind to take place in Europe. Most recently, we've demonstrated a real-world use case with full-scale piloted airport-to-airport flight, one of the world's first for eVTOLs and at the world's largest military air show. Once we complete our wing-borne flight test, we are on track to achieve the final flight phase, piloted transition before year-end. And we are on track to finalize the assembly of our third and final VX4 prototype and fly it before the end of the year, therefore, doubling our flight test capacity. Thereafter, we intend to be flying this final prototype e hybrid-electric in 2026. Both these piloted transition and hybrid flights in the coming quarters will demonstrate our capability as an exceptional aerospace company with the knowledge of how to certify. So far this year, we have initiated production of our preproduction aircraft with long-range parts purchasing, continuing strong momentum with key partners such as Honeywell and, as of yesterday, Aciturri Aerostructures, of which I will explain more shortly. We have expanded our partnership with Bristow to accelerate global eVTOL adoption through a ready-to-fly model that reduces barriers to entry, which Michael will touch on later. We're on track to secure expanded design organization approval from the U.K. CAA, including flight privileges that will let us issue our own permits to fly, removing the oversight needed for each flight phase so far, and which will be a huge vote of confidence from our regulator in Vertical growing as a mature aerospace company. And finally, we have strengthened our operating model and shifted our approach to focus on execution, including by significantly enhancing both the management team and our Board. I will touch on each of these milestones today, but I want to start by spending a bit more time on what I believe is one of our strongest differentiators, our battery. Our leading battery underpins both our eVTOL and hybrid aircraft and its performance is central to VX4's success. This year, we are delighted that we completed crucial full-scale build and test on concept battery design, 15.2 meter or 54 battery pack drop test comparable to fuel tank testing in traditional rotorcraft. Also, a full-scale thermal runaway propagation test was conducted on a VX4 subpack, indicating that safe flight and landing is achievable even in the event of battery fire. This sets us up well to deliver our battery against our means of compliance with EASA's SC VTOL. We are continuing to refine our battery to ensure it is as light but powerful as possible, and we are getting ready to produce this certification-ready battery. Our battery not only differentiates our aircraft, but as we mentioned, when we launched Flightpath 2030, it also unlocks a unique business opportunity for Vertical in the medium and long term. The VX4 will only be able to be powered by Vertical's proprietary batteries. This means our customers must return to us for annual or more frequent battery replacements, depending on how they use their aircraft. This razor/razor-blade model results in a long-term, high margin, towards 40% and above recurring revenue opportunity for Vertical, and we expect will ultimately result in a 50-50 long-term revenue mix between aircraft and battery sales. Our pilot line is being built at the Vertical Energy Center, but ultimately, we will be building a gigafactory to accommodate the volume of batteries we'll need to build. We are deep in discussions with various potential sites, and we plan to announce this in the next 12 months. We are exploring other applications for our leading battery technology, and we hope to have an announcement of this again in the next 6 to 9 months. However, our primary focus is delivering on our pilot battery line and choosing a location for our gigafactory. We look forward to keeping the market updated on our battery development and the destination of our major facilities. Turning to our key milestones this year. One of our most impressive achievements to date has been our flying full-scale piloted wing- borne this year. We have to submit upwards of 20,000 documents to receive our permit to fly from the U.K. Civil Aviation Authority to begin this flight phase, as it was our first time conducting piloted flights through public airspace. Unlike other jurisdictions, our flight test and our flight test center in the Cotswold is above urban life, people, schools and homes. The CAA to approve our flight test is to accept, alongside the company, the joint liability for the VX4 prototype aircraft. The level of regulatory scrutiny for just our prototype aircraft is incredibly high as compared to other markets, which significantly benefits us in the medium term and derisks our pathway to certification. We've dedicated years and countless hours walking CAA through VX4, its design, its engineering, its capabilities. This means when we progress through to our preproduction aircraft in 2026, our regulator is already intimately aware of our aircraft and how it works. The CAA has already engaged in a mini certification of our prototype aircraft for flight tests, which will be concluded by us targeting piloted transition by the end of the year. This all underpins the CAA's knowledge of how to certify our aircraft. In recent months, we have been conducting additional wing-borne flight tests so as to incorporate real-world learnings into our preproduction aircraft. We are also seeing the benefits of our AI strategy being brought to bear, for instance, with our flight test data and our ability to analyze terabytes of data in a more efficient way. I'm excited to say that over the past 6 months, we've been joined by Paul Stone. Paul brings over 20 years' experience as a test pilot, including 20 years in the Royal Navy, and he's flown over 200 different aircraft. Paul also flew VX4 during July. This has also meant we have had days where for the first time, we have multiple piloted test flights on the same day with different pilots, considerably accelerating our learning. Building on the success of our flight test progress to date, we felt confident in our aircraft to conduct the world's first eVTOL airport- to-airport flight. Thousands of people witnessed the VX4 fly from Cotswold Airport to the Royal International Air Tattoo, the world's largest military airshow at RAF Fairford, a Royal Air Force Base also used by the U.S. Air Force. Airport-to-airport flights will be a key use case for eVTOLs, and it was extraordinary to see people's reaction to VX4 close up. At the airshow, VX4 was an esteemed company with aircraft from over 20 European, Middle Eastern and North American militaries and around 0.25 million people came to the Air Tattoo to watch the VX4 among the B-52s, Typhoons and F-35s. Feedback was overwhelmingly positive from regulators, military partners and the public, as through our inaugural demonstration flight, they were able to fully understand the future of air mobility. The market opportunity in defense is significant, and the European defense tech market is growing, powered by the acceleration in European defense spending. NATO members are increasing defense spending from approximately 2% to 5% of GDP or an increase from $300 billion to approximately $1 trillion over the next 7 to 10 years. And Vertical is the only European eVTOL contender uniquely positioned to capture this opportunity. During the airshow, all eyes were on the VX4's defense applications and particularly our mature hybrid program, which is in its second-generation powertrain. We have developed and successfully tested the control algorithms between our batteries, power generation system and EPUs. We are now focused on building out the team. Eric Samson, who has been a member of the Vertical leadership team for a number of years and has exceptional experience, particularly from Gulfstream from 5 separate engineering and certification programs, including the G650, has been appointed VP Program Hybrid. As we have stated, we are targeting our piloted hybrid flight tests in 2026. I'd like to remind you that our aircraft does not require any material changes to accommodate our hybrid powertrain. We will use the same VX4 eVTOL aircraft, remove half the batteries and accommodate a gas turbine, extending the range up to 1,000 miles or 1,600 kilometers and payload up to 1,200 kilos or over 3,600 pounds. We have the foresight to design our aircraft for versatility, allowing us to adapt our existing aircraft rather than design a new one. This was due to design decisions made years ago to ensure our airframe cabin capacity was industry-leading. Uniquely, for this type of aircraft in the sector, VX4 is flexible enough to accommodate 4 business passengers or 6 passengers in economy-style seating, each in standard helicopter size seats. And we expect to have leading luggage capacity with 1 check-in bag, 1 carry-on bag and 1 rucksack, up to 70 pounds per person, all with the same airframe and with a bulwark between passengers and the pilot, creating additional levels of safety and security for passengers. We're able to deliver the best-in-class eVTOL aircraft due to the strength of our global Tier 1 aerospace supply chain. We are committing now to long lead procurement with our key suppliers, locking in both security and competitive pricing for critical components. Yesterday, we announced our long-term partnership with Aciturri Aerostructures to supply the airframe for the VX4 eVTOL and hybrid aircraft, including the wing, empennage, pylons and fuselage of both the preproduction and certified VX4 that will enter into service. Aciturri brings nearly 50 years of experience in commercial aircraft programs, including the design and manufacturing of major airframe components for Airbus, Boeing and Embraer, including the A320, 737 and Embraer KC-390 as well as experience of developing airframes for eVTOLs, including E. We are now looking forward to combining the expertise of our engineering team with Aciturri's proven track record in high-quality aerospace manufacturing. This builds on our expanded partnership with Honeywell, which we announced earlier this year, which covers flight control and aircraft management systems for our production aircraft through to 2035. Through our expanded collaboration, Honeywell will work with Vertical to certify some of the critical systems on the VX4, including its Anthem flight deck. We expect further news on our airframe, composites and other key areas of the VX4 to be announced in the coming weeks and months as we continue to solidify our supply chain. By committing now to supplying the VX4 preproduction and entry into service aircraft, our partners are demonstrating deep alignment with our long-term production and certification road maps. These partners understand the scale of what we're building, and they're investing alongside us. Just to remind you, all of this underpins the assembly of our first preproduction aircraft in December 2026. I'd now like to hand over to our Chief Commercial Officer, Michael Cervenka, to go into more detail about our recent partnership with Bristow.

Thanks, Stuart. Our partners support Vertical every step of the way. Vertical is developing, building and selling the leading eVTOL in the sector, and we are backed by the industry's leading preorder book of blue-chip names such as American Airlines, Avalon and Japan Airlines. This quarter, we deepened our commercial relationship with Bristow, by revenue, the world's largest helicopter operator. I've had the privilege of working closely with Bristow over many years, and I am continually impressed by the expertise, pragmatism and thoughtful vision and leadership of Dave Stepanek and his team. Bristow has over 75 years unrivaled experience in vertical lift, leading the way with an absolute focus on safety. It has been the first of type operator for many brand-new helicopters and operates in 18 countries across 6 continents with all the prerequisite air operator certificates, Part 145 and 147 maintenance and maintenance training approvals. Bristow already has over 900 pilots and a similar number of engineers. Not only did Bristow double its preorder from 50 to 100 aircraft, but we have developed a strategic partnership to accelerate global eVTOL adoption by combining Vertical's category-leading aircraft with Bristow's vertical lift operational and safety track record and experience. We are developing a scalable capital-light eVTOL operations platform for those seeking to operate the VX4. This partnership will offer, to Vertical's current and prospective customers, a ready-to-fly model, providing turnkey aircraft and operation solutions, including trained pilots, maintenance and insurance. We will be able to provide a fully integrated solution to launch services without our customers building operational infrastructure from scratch, allowing them to focus on passenger experience, sales and network integration. This is a first for the eVTOL industry, which we believe will lower the barriers to entry for future customers. This operating model is a key and well-established part of aviation already, for example, across the regional airline industry. Standing up all the elements needed for customers to benefit from eVTOLs is a marathon, not a sprint. But this joint offering from Vertical and Bristow will allow VX4 customers to focus on customer experience, ticket sales and network integration, while Bristow and Vertical jointly manage aircraft operations on their behalf. This is about making eVTOL operations simpler and ensuring that by 2030, the VX4 is the international eVTOL of choice. Please let me hand back to Stuart.

Thank you, Michael. In addition to the progress we've made with strategic Tier 1 suppliers and partners, we have also continued to strengthen our leadership, both on the leadership team and the Board. Starting with our leadership team. As we announced last month, we have expanded our leadership team with the appointment of Mark Higson as COO. In keeping with our aerospace heritage, Mark was trained as an aerospace engineer and brings 4 decades of leading complex global organizations to Vertical. He began his career at BA and more recently served as an adviser to McKinsey and Advent portfolio companies. Mark's strong operational expertise has become increasingly valuable as he has worked to drive the engineering team forward. Alongside Mark, Steve Vellacott has joined as VP of Airworthiness and Head of our Design Organization. Steve spent 3 decades at Leonardo Helicopters working closely with IATA on certifying rotorcraft and brings incredible certification experience as we accelerate towards our stated certification date. In the executive team alone, not including the wider company, our team has been involved in certifying dozens of aircraft and propulsion systems. What we know deeply is how to certify, which is why we are confident in our target certification date of 2028. Further supporting Vertical is our recently bolstered Board of Directors and Lord Andrew Parker is our latest appointment, formerly Director General of MI5; and Lord Chamberlain, Head of the Royal Household. Lord Parker has unparalleled access and insights into U.K. government as well as having substantial experience on the Board of one of the U.K.'s largest defense companies. He has already offered strong guidance as we consider the first locations for our manufacturing facilities. And looking ahead, his deep understanding of government contracts and national security needs will prove invaluable as we strengthen our hybrid strategy and defense offering. Earlier this year, we also appointed Kris Haber, JK Brown and Carsten Stendevad, who are proving great unlocks to new sources of capital. These appointments are already adding value as we enter the critical precertification phase, resulting in improved technical insight, additional capital market access and finally, unparalleled knowledge and routes into the U.K., European and global defense markets. We are confident in our clearly defined route to certification underpinning Flightpath 2030 due to our momentum and progress to date, but also due to our improved capital position. In July, we launched a successful follow-on raise, raising a gross total of approximately $70 million, taking the total raised in 2025 to nearly $160 million. This most recent raise included strong participation from both existing and new investors, and it gives us operational agility while strengthening our position as the leading eVTOL OEM for capital efficiency. Our current capital position enables us to complete our 2025 flight test campaign, including piloted transition flight, complete the build of our third prototype aircraft or final prototype aircraft, which will double our flight testing capability. This aircraft, as I've already said, will be flown both eVTOL and then hybrid; begin the assembly of our next aircraft, our preproduction or certification aircraft; and continue to expand our certification aircraft supply chain, a critical step in accelerating our path towards commercialization at scale. Our guidance for this year remains unchanged with $110 million to $125 million net cash used in operating activities, and our cash runway takes us into the middle of 2026, with our cash and cash equivalents as of today approximately $139 million. To sum up, our capital efficiency for leading flight test progress is unparalleled. We have the strongest partners in supply chain, blue- chip customer backing and the largest, most scalable aircraft in the sector, uniquely being certified to the highest levels of safety in aviation. And as we have explained, our leading large airframe is being built by Tier 1 Aciturri and accommodates our hybrid variant also. We are building toward a future where electric flight is real, safe and scalable. We're not just checking boxes. We are delivering against a clear road map with team, technology and partnerships that are second to none. Our momentum is strong, and I remain confident in our ability to certify the VX4 by our stated time line. To provide more details on our progress and what we will accomplish over the coming months and years to bring the VX4 to market in 2028 and what comes beyond, we will be hosting a Capital Markets event in person in New York on the 17th of September. Please stay tuned for further details on this in the coming days. Thank you for your continued support. We look forward to seeing you in New York next month. With that, I'll hand it over to our operator for Q&A.

[Operator Instructions] Your first question comes from the line of Edison Yu of Deutsche Bank.

I wanted to follow up on the comments you made about defense. Obviously, the macro trends are very favorable in Europe. Can you give us a flavor of what kind of missions or use cases that you're in discussions about taking part in?

Yes, of course. Edison, thanks for the question. As you say, the macro trends are really incredible. I think this has been one of the successes of the Trump presidency, getting NATO in Europe to put the hands in the pocket and increase defense spending over the next 7 years from around $300 billion to $1 trillion. I mean that's a staggering, staggering amount of money and an incredible achievement given the background against people have been asking for this for many, many years. In terms of the missions, as you can imagine, the military are extraordinarily excited by the capability of the aircraft. Silent takeoff and landing with no noise signature and effectively no heat signature is phenomenal in terms of what that kind of opens up. Then with the hybrid being able to turn that on and fly a range of up to 1,000 miles, 1,600 kilometers with a payload of 1,200 kilos or about 2,700 pounds, you open up whether it's logistics, moving, we can get 8 full-size Marines plus all their kit in the aircraft. I don't think anyone else comes close to that level of capability. So I think the missions are innumerable. It's an incredible opportunity. And I'd just remind you, we flew this aircraft in front of the most influential military people in the world when we flew into and out of the largest military air show in the world recently. So we are front and center for this. We're in a great position to take advantage of it.

Got it. And then switching gears just to the rest of the year. Obviously, you've got quite a few things, quite a few streams going on in the next 6 to 9 months. How are you feeling about the full transition, pilot full transition in the second half? What do you think are the biggest hurdles, if any, to achieving that?

Great. We've been clear, and I've been clear since I launched Flightpath 2030 that we'd be doing full transition in Q4 this year. We are still absolutely on track for that. The engineering is going brilliantly. At the minute, what we have is a huge truck with a big pylon on it that's driving up and down runway at high speed, with our tilt actuators on the front, covered in sensors, producing huge amounts of data that we take back compared to our model and then we prove that our model of our aircraft is correct, and we provide that to our regulator. And just to bring this really into sharp focus, we have done everything bar maybe a 20- to 30-second period on the transition and then the slowdown to landing. What I mean by that is we've taken off vertically. We've flown around up to 30 knots. We've also flown horizontally like a conventional aircraft and slowing down to 70 knots just above stall speed. We're only proving out what happens in this period between 30 knots and 70 knots when you're flying on the wing. That's the bit of data we're gathering. We provide it to the regulator, and then we'll be up and running and flying. And I see that as a huge unlock, because that has proved the concept of our aircraft. We have done everything with it then, full transition has done that. We are literally then into the shrink wrap and piecification of product. And as you know, we're building our first certification aircraft that will be ready for testing the end of next year. So hopefully, that makes sense, Edison.

Yes, it sounds like. And last one for me. You mentioned the Investor Day coming up. Can you give us maybe a tease about what kind of topics you may address? Will you be updating some of the financials that you had previously disclosed? Any color there would be great.

Yes, of course. And this has been a remarkable 12 months for us. If you look back to putting out Flightplan (sic) [ Flightpath ] 2030 for the first time, I think we're still the only company in this space that has really put out precise financial figures through this year, '28, 2030 and beyond. So much has changed that we felt it was worth coming back and updating the market on those, specifically on the hybrid opportunity in terms of volumes, revenues and margin, but also expanding a little bit about batteries. I think people are still struggling to understand how that plays in. And to remind everyone, batteries will be over 50% of our revenue about 5 to 7 years after entering service at a 40% margin. That's a phenomenal business model to have the razor/razor-blade model. So we will bring some more details around that. We will also be very transparent on the cost of certification. I've been saying this for the past year. We will talk about it in Q4 this year. So we will be doing that. We'll be talking about the sources of funding and the uses of them as we drive through certification. We'll also provide some detail around our manufacturing plans. And I'm really pleased to say, we'll have a couple of keynote speakers, one of which will be Lord Parker, who will be talking around what is the geopolitical environment, particularly around the defense opportunity for us.

The next question comes from the line of Savi Syth of Raymond James.

If I might, just on the -- you had mentioned, I think, the next aircraft could be preproduction or certification conforming, but then you also mentioned you're building a certification conforming aircraft next year and will be ready for testing by the end of next year. Just curious if I misheard that and where you are in kind of completing that TDR and CDR and the drivers of kind of the decision on kind of what you build next after Aircraft 3?

Yes, of course. So just to confirm, Savi, you're absolutely right. So first, thanks for the question. Aircraft 3 is an exact copy of Aircraft 2. We'll fly it electric, decommission, put hybrid and will be flying as a hybrid next year. The aircraft we build after that will be our first certification compliant aircraft. We'll have locked in the supply chain. It will reflect the certification aircraft. So this, we don't have nonconforming/conforming. We have built out our prototype. We've proved the concept. We'll do full piloted transition. We'll double our engineering learnings from it with the Aircraft 3. And the next one we build December next year will be our first certification ready aircraft that we then will be flying and proving that out with the regulator. But remember, we start from a point where we've already proved the concept of the aircraft works because of all the regulatory involvement we've had over the past 3 years. So this, I'm so excited to get to December next year, because that will be the first aircraft and people will really be able to see how this looks. Huge next 18 months.

Looking forward to that. If I might also, just on the long-term parts purchases, between what you've announced so far, just how much of the bill of materials has been secured to date? And then I was curious if there are any kind of nonrecurring engineering costs associated with this? Or is that something your partners will cover, and when that might come if they don't cover it?

Yes, of course. So today, just to remind you, we've signed a $1 billion deal with Honeywell for everything the pilot sees, feels, touches, and all the software behind how the aircraft is controlled. So that's a huge amount, and it's difficult to say what proportion. But if you think of what that means, we have put the foundations in for the aircraft locked in with a company that knows how to certify. The next contract we announced with Aciturri, that is effectively all of the physical aircraft. So those are the 2 major bits of the aircraft. We also have locked in Hanwha providing the tilt actuators, one of the more complex mechanical bits on the aircraft. So there's a huge amount already done locked in as a supply chain for the certification aircraft. There's a lot more you'll see coming down the pipe over the next 6 months. Those will be some of the things you will see between now and December as we tie in more. And we'll provide a bit more clarity on that when we get to the Capital Markets Day. In terms of nonrecurring expenditure, that is something you will see stepping up over the next 12 to 18 months. As you know, we're incredibly capital efficient. We've done all of this when we fly full-scale piloted. We'll have done it significantly less than $1 billion than anyone else, but to a far higher standard because we've done it with regulatory oversight every single step of the way. Now as we lock in the supply chain, we then get into having to pay some nonrecurring expenditure, whether it's engineering or we start laying out for the production tooling. And that's where we've got some choices to make around hard tooling, soft tooling, et cetera, that we'll look at over the coming 12 to 18 months. But that will drive a bit of first step-up in the spend over the next 18 months.

Your next question comes from the line of Austin Moeller of Canaccord Genuity.

So just my first question here. If we think about the aircraft that you're going to build after Aircraft 3, presumably all of those that you're using for TC testing with the CAA will have an electric powertrain, and the hybrid powertrain aircraft would have to go through a separate parallel certification process?

Yes. Austin, thanks for the question. So you're absolutely correct. The aircraft that we build in December next year is a full electric aircraft, and then we'll build out another 4 or 5 of them that will just prove out this certification aircraft works. We'll prove out our manufacturing capabilities around it as well. I think just to be clear on the hybrid, because our hybrid is effectively the same aircraft, we take out a couple of batteries, install the hybrid in it. We've got plenty of space for that. We can still fit all of the people we need to in it. We've got the largest airframe in the industry. And we will be flying the hybrid next summer, full scale, piloted to prove the concept. That means it's an incredibly fast follower through the certification process. So all electric, still on track for 2028, and we expect the hybrid to be a very fast follower through into 2029. That's how we're seeing this play out, Austin. Hopefully, that brings a bit of color around it.

And would that hybrid powertrain be introduced with the supplemental type certificate? Or is that not how the process works with the CAA?

So yes, you do have to certify that product. But remember, all we're really doing is a modification to the current aircraft. So everything else is there, the flight control system, the airframe, all of that is there. We're just dropping in another propulsion system. So in terms of the step to go from the full electric to the hybrid, it's way less than I think people expect or understand, because we take the current aircraft we have. So we're incredibly lucky by having the right design fundamentals, the right size aircraft and airframe from day 1, we can drop in the hybrid and off we go. It's a great position to be in.

Okay. And just one more question. If we think about the cash burn into this first half of 2026, do you have GBP 104 million right now? Does that enable you to build Aircraft 3 and then build the next aircraft that you're referring to? Or does that sort of get partially through the construction process and get the long leads going with the supply chain?

So as I said earlier to Edison's question, we'll bring a lot more clarity to the financials over the next 1, 2 and 3 years at the Capital Market Day. As we stand here today, we have money through to the middle of next year, and we can do everything I've talked about. So we can and already have initiated production of first aircraft for type certification testing. We'll build out Aircraft 3. We'll fly it full-scale piloted electric. We'll decommission, put hybrid in. So we have developed that hybrid all within the cash envelope. We'll install it in the aircraft within the cash envelope and be flying it. So yes, we've got all the money to keep driving forward as fast as possible on that.

Okay. Great. I look forward to hearing more in September.

Your next question comes from the line of Amit Dayal of H.C. Wainwright.

Stuart, just with respect to this Aciturri partnership, does this imply that your own CapEx needs from a manufacturing, build-out perspective will be lower than maybe what the Street has been anticipating?

So first of all, thank you for the question. In terms of the specific CapEx needs through to certification, whether that's around manufacturing facilities, tooling, et cetera, that is one of the things we're going to be talking about when we do the Capital Market Day. So I don't want to get into the details of that now, but we will address it on 17th of September. I think what I would say is this deal with Aciturri is incredibly exciting for us as a business. They've got outstanding capability. We understand their culture and our culture, how they come together to really move at a pace people haven't seen in aerospace. We're both incredibly dynamic, passionate, fast-moving companies. So we're so excited to be partnering with them for the build of our aircraft.

Understood. And with respect to the defense opportunity, what kind of milestones or what needs to happen within the EU, I guess, within that sector for you to potentially start building an order book for these aircraft?

Yes. Good question. I think the fundamental thing, if I break it into a couple of things. First off, we signed off the hybrid or I signed this off 18 months ago. So this isn't a hope and a prayer. This powertrain was working on the bench last summer. The single hardest thing to do is get the control algorithm to work between the power unit and the battery and our EPUs. We have broken back on that. We know it works. This is why I was very happy to announce it. What we're doing now is replacing one power unit with a different one. So we have done the difficult stuff. We then install it in an aircraft and fly it in public. And to bring this to the consciousness of the military, we flew a very public display of the aircraft in front of all the world's military into the world's biggest military air show a few weeks ago. So an incredible opportunity. Now that's generated a huge amount of discussions. We've already got a lot going on with British military. This has opened up many other opportunities by putting us in the spotlight of over 25 different militaries that were there at the RIAT show. So we are in great shape. I wish I could say more about it now, but things are going very, very well. We've got the right airframe. We've got the right powertrain. We've got capability that no one else can match in terms of range of payload. And I think importantly, a certification date that is faster than most people think, because we build on our certification of the electric aircraft.

Your next question comes from the line of [ Amit Sobelson ] of D. Boral Capital.

It's Jesse Sobelson at D. Boral Capital. Not to belabor the point on the hybrid too much, but I was curious, how do you see the hybrid complementing the fully electric VX4 with the broader market strategy? What exactly is the goal there when it comes to market following the fully electric model?

So I think the first thing is, and I've said this already, we are so lucky that our airframe doesn't have to be adjusted. So we can bring this to market very quickly. In terms of complementing it, the first one is the military one that several people have asked about. There are huge opportunities, the geopolitical environment in which we sit now. We are the only European player providing this kind of product. And that European defense spending is going from $300 billion to $1 trillion over the next 7 to 10 years. So that puts us in an absolutely unique position to access that market, because we are the single only European player. So that is great. Now I actually also look to the DoD and potential contracts there. I've signaled this before in the past. Our first manufacturing facility will be in Europe, highly likely to be in the U.K. We're in deep discussions with the U.K. government about where we can locate it. But I've always said the second manufacturing facility is highly likely to be in the U.S. Now we've got, I mentioned this earlier, a $1 billion deal with Honeywell to supply everything the pilot sees, feels and touches and everything that controls the aircraft. So we've got a deep link into U.S. defense companies. We'll be putting our manufacturing facility here. That's highly likely. So I can see huge complementary opportunity as we certify VX4 full electric and then very quickly follow with a certification hybrid. So I do think it puts us in a great light. There is also, on top of all of that, commercial opportunities for the hybrid, which opens up a lot of different types of mission for the product. And maybe with that, if I can just invite Michael to see if there's anything else he would like to add on that.

Yes, sure. I mean that's a really good question. I think there's actually 2 complementary adjacencies here. What we see with most of our commercial customers today is relatively short-range missions. So things like connecting airports to the surrounding catchment area, tourism, so site seeing flying into hotels, luxury destinations, and then some short-range regional connectivities where you might have geographical constraints that may mean it's difficult to get around on the ground. If you're flying those shorter missions, so less than 100 miles, the battery solution is perfect. It's really designed for that opportunity. Where hybrid comes in is that ability to fly longer missions without need for charging stations on the ground, greater endurance and so on. And really, there's 2 kind of different use cases. So this is not just a defense opportunity. There's absolutely a helicopter displacement opportunity. So when you look at our hybrid variant, it looks really competitive against intermediate single light twin helicopters. That's about a 400 helicopter a year market that we think we can tap into. And then, as Stuart said, there's actually a huge spectrum of different defense use cases ranging from the logistics, Medevac, AutoAirVac, ISR, surveillance, et cetera. So they're really complementary. We don't really see one market cannibalizing the other. Effectively, we get 2 aircraft for the price of just over 1 with some really nice adjacent opportunities.

Great. That's some really great detail. I appreciate that. And then to switch gears just very quickly here. There's clearly been a lot of success with recent testing. So I was just curious, based on the wing-borne testing completed recently, what have been the most significant technical learnings? And how might those influence the final design or configuration of the certified VX4 when compared to the current prototype?

I think the thing I'd just remind everyone, the wing-borne testing was into public air space over people and schools and hospitals, et cetera. And that was with joint liability with the U.K. regulator. So we had to prove to them that this aircraft was capable to fly in public air space. So a huge hurdle to get over. Really exciting that they let us do that. In terms of learnings we got. What we learned was that our design is brilliant. And I mean that sincerely. The aircraft performed absolutely perfectly. It was so exciting for us as an engineering business to see all of the hard work that we've done, all of the modeling we've done take to the skies in real life and match everything we expected it to do. So we are now building the last little bit of evidence, as I said, for these 2 30-second moments, where we accelerate from 30 to 70 knots and decelerate from 70 to 30. Everything there looks great. Again, we just got to build the evidence base. So what we've learned is we have done a brilliant job. The aircraft concept works. Everything is on track for full transition this year, which then means everything is on track to build the final -- sorry, the first certification-ready aircraft in December next year. So a hugely, hugely exciting last few months for us.

I'd now like to hand the call back to the management for final remarks.

Great. So I'd just like to thank everyone for joining us on the call today. Really, really appreciate it. Some great questions. So thank you for joining. I really look forward to seeing you all on September 17 here in New York, when we can bring some more clarity around the financial plan from here through to certification, including revenue opportunity after that, cost of certification, sources of funds for that. And I think we'll have some incredible keynote speakers, including Lord Andrew Parker. So look forward to seeing you all then. Thanks again for all the questions.

Thank you for attending today's call. You may now disconnect.

Thank you for standing by. My name is Carli [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to the Vertical Aerospace Q1 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Charlotte. Please go ahead.

Hello, everybody. Good morning. I am Charlotte Cowley, Director of Strategic Finance at Vertical Aerospace and I'm delighted to welcome you to our Q1 2025 earnings call today. Before we get started, I would like to remind you that during today's call we will be making forward-looking statements. These statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Any forward-looking statements we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. We've posted an accompanying slide deck to the Investor Relations section of our website at investors.verticalaerospace.com which contains information and cautionary warnings on forward-looking statements. For a more complete discussion about these risks and uncertainties, we have also filed a 6-K with the SEC this morning. Now, I would like to hand you over to Stuart.

Good morning, good afternoon, good evening everyone. Thank you for joining us. Welcome to our Q1 call. I'm Stuart Simpson, the CEO of Vertical Aerospace. I'm going to cover 3 things; firstly, to remind you why we believe we are set to succeed. Secondly, I'll update you on our progress during the quarter. And thirdly, to give you some color around the big announcement provided yesterday, our hybrid program; a hybrid aircraft with a range of 1000 miles. This represents a huge additional market opportunity for us across defense and wider commercial operations; all incremental to our base Flightpath 2030 that has already been communicated. Given it is all about having the right capacity for moving people and things, this hybrid gives us an incredible opportunity because we have the largest dimensions of our tilt rotor pairs [ph], and this puts us in a brilliant position to be able to dominate this space. Then Dr. Limhi Somerville, our Director of Engineering, will discuss our battery and technical details and progress made on hybrid state. I'll then touch on where we closed the quarter in terms of financials before we open the call for questions. In November, we launched our Flightpath 2030 business strategy, assessing a clear roadmap to lead the eVTOL sector by the end of the decade. We established transparent financial and operating metrics for 2025, 2028, 2030 and beyond, including a credible timetable for certification. As you will hear today, we've already made meaningful progress towards achieving these targets; further strengthening our belief the Vertical is going to be a winner in the sector. We have a best-in-class aircraft in terms of safety, capacity for both people and luggage and comfort. We are the only eVTOL player positioned to serve the full global market by certifying to the highest aviation standards. We are moving at pace through the certification process with all phases, piloted flight tests on-track to be completed in 2025. We have a highly capital efficient approach with a clear path for profitability, spending approximately 75% less than our peers for a superior product, and we have a lean and highly experienced team that has certified 30 plus aircraft and propulsion systems. Turning to our progress since the start of the year, it's been a quarter of significant momentum and I'm pleased to share several key developments as we advance our mission to bring electric flight to customers. Starting with our test program, where we have achieved a number of important technical milestones; building on our completion of thrustborne testing earlier this year. Most notably, we delivered record-breaking piloted high speed taxi tests without VX4 demonstrator. These tests validated key systems under real world conditions, and are a major step towards our next piloted wingborne flight, which we anticipate starting in Q2. Completing piloted wingborne will be an incredibly significant moment for us. Not only will this make us in the Top 2 OEMs in the industry for piloted flights tests, but as a UK-based aerospace business, where unlike other jurisdictions, the burden of safety is shared with the regulator, having a joint liability with the company. As such, each phase of testing can only occur with specific approvals from the UK Civil Aviation Authority. As you can imagine, we are working incredibly closely with them to achieve this next step. To this end, we have submitted around 20,000 pages of documentation to the CAA to extend our permit to fly to encompass pilots in wingborne flight. The CAA’s approval of this test will serve as a strong signal of their confidence in the safety, design and ability of VX4 aircraft to operate public airspace. We expect to advance to this stage over the next few months. I would like to address one topic that has arisen in recent days. We are aware a claim was made that the UK CAA will be aligning their certification standards to those at the FAA. As you would expect, we have very frequent interaction with the CAA as our home regulator, both at the working level, and with most senior levels of its executive management team. Since that claim was made, the CAA’s management have confirmed following to us in writing; the CAA’s position on certification of eVTOL aircraft is set out transparently in its certification of eVTOL aircraft publication available on its website. This document confirms the CAA will use SC-VTOL as the certification basis for eVTOL aircraft in the UK. SC-VTOL includes the safety requirement that these aircraft demonstrate a catastrophe failure rate of 10 to the -9. There has been no change to this published certification standard for eVTOLs. The CAA is working with other authorities, including both the FAA and the ARTA [ph], towards international harmonization of eVTOL certification. Based on this written confirmation, it is clear to us that the UK safety objectives remain unchanged. Any such change required due process, which includes a public consultation. As we have said for several years, we welcome attempts between global regulators to harmonize certification standards, but we do not believe this should or will be at the expense of passenger safety. We firmly believe that passengers will expect these aircraft to be as safe as commercial airliners, and we know our customers share that view. Safety is non-negotiable. We remain confident that by certifying our aircraft to the highest commercial aircraft safety standards globally, we will be uniquely positioned in the industry with the only offering capable of serving all jurisdictions around the world. This brings me to another important point. These aircraft are being designed to carry passengers and will be certified as such, which is why we maintain it is absolutely critical to conduct a piloted test with one of our experienced test pilots in the cockpit under real-world conditions. All the data we have from previous flight tests, hours of modelling and numerous simulations give us total confidence in the capability of our aircraft and the success of our upcoming piloted virtual wingborne flight tests. In terms of our operational goals for 2025, we're on track to complete all phases of our piloted flight test program by the end of the year, including transition flight, the final stage of testing, giving us even more confidence in our certification timeline. The team's discipline and execution continue to prove that we have the right approach to certification and development. And that the VX4 is one of the most advanced eVTOL aircraft under development today. And as you know, we do all our development with a pilot on board to ensure that we get not just digital feedback and data, but information from our test pilot, real-world insight from some of the world's most experienced test pilots. This ensures the final aircraft will meet our customer expectations for safety, comfort and quality. Importantly, as we continue to progress on our priorities, we are on track to double our airborne test fleet capabilities this year. As we complete the assembly of the identical twin prototype aircraft, which has already been moved to our flight test center, Cotswold’s Airport for finalization of the assembly. This will also unlock further learnings as we install the hybrid powertrain that we referred to earlier in the court. Moving on to partnerships; we have made significant progress, both commercially and strategically. Just last week, we finalized the key decision to advance our production plans. Specifically, we formalized and expanded our partnership with Honeywell to deliver flight controls and aircraft management systems for our certification and production aircraft. In addition, we've chosen Honeywell for inceptors [ph] to make VX4 easier and safer for pilots to fly. This partnership and the use of Honeywell's leading systems will unlock the efficiencies and speed necessary for Vertical to lead the industry and bring in the safest and most scalable product to market. It is contract of some significant value, worth approximately $1 billion over the next 10 years. Honeywell has been and will continue to be a fantastic partner. I'm delighted we've got such a close working relationship over the last 6 years, and can see this lasting long into the future. We are also supporting the acceleration of the global-wide industry charging infrastructure by adopting the combined charging standard, CCS, the VX4; the same as BETA and Archer. We believe a unified approach to charging is essential for the industry to be successfully global. It will help ensure seamless integration for OEMs, operators and infrastructure providers, while reducing costs and accelerating the adoption of electric aviation. Using the CCS fast charging standard will allow Vertical’s VX4 to achieve quick turnaround times, including rapid battery charging and conditioning for shuttle operations. Ultimately, our adoption of CCS will enable immediate interoperability with all CCS charges of this standard, including BETA’s growing network. Finally, we've announced the addition of 3 new Directors to our Board building on the steps we talked earlier in the year with Dómhnal Slattery rejoining as Chair, and Eamonn Brennan joining as a Board Advisor. Three new Directors are Kris Haber, JK Brown and Carsten Stendevad. With these appointments, we continue to strengthen our governance and strategic leadership with deep complimentary experiences, particularly in industrial scale up and all 3 have phenomenal capital markets expertise. Chris, amongst other roles, has been the COO of Investcorp and Advent International. JK was a Founding Partner at Och-Ziff Capital Management. And Carsten is currently Co-Chief Investment Officer for sustainable investing at Bridgewater Associates and a Board Advisor to GIC. Their combined insights and expertise will be invaluable as we enter our next phase of development. I will hand over to Dr. Limhi Somerville, our Director of Engineering, to provide some detail on our success in battery development; the team he has been leading for the last 6 years. It is the strength of the innovation and capability within this team that has enabled us to unveil details of our well-advanced hybrid program yesterday. It is tremendously exciting and unlocks new additional multi-billion dollar market opportunities for us. This aircraft will have a range of over 1000 miles, opening up additional use cases, most specifically within defense, cargo, emergency services and long-range commercial missions; where it is all about moving people and things. As I said before, our airframe is of a greater scale than peers [ph]; so we feel we are well placed to dominate in this space or represent upside opportunities to the targets we shared in Flightpath 2030. The hybrid powertrain will be integrated into our next-generation VX4 variant with flight testing plan to start next year. Within Flightpath 2030, it is worth remembering that our battery systems will be replaced more frequently than the airframe itself; 1 to 2 times a year depending on how our customers fly and use the aircraft, something akin to the razor-razorblade model. This means into the 2030s, Vertical’s revenues will reach a 50-50 split of aircraft battery with a very healthy gross margin of greater than 40% for the battery. In addition, there are most likely second life applications such as marine or CTO [ph]; for example, which will provide an additional source of revenue for the business, again, not included in the base case Flightplan 2030. I'm incredibly proud to say that Limhi is due to present to The Royal Society of London later this month. The Royal Society is the UK's National Academy of Sciences, and Limhi has been invited to give a presentation to this prestigious institution on Vertical’s battery capability and how Vertical is set to lead the industry. That presentation will highlight the incredible promise of our proprietary battery technology. Over to you, Limhi.

Thanks, Stuart. Hello. My name is Dr. Limhi Somerville. I've been at Vertical Aerospace for 6 years, and last year became Director of Engineering. I used to lead our powertrain, before that battery teams; which is why I will speak to you today. Some information about me before I start. I previously worked on battery systems; Jaguar Land Rover and at ALGO [ph] National Laboratory in Chicago before that. I also spent 5 years chairing the EUROKAI Electrical Subgroup 1 of working Group 112, leading on many of the existing certification standards accepted by EASA as part of the SC-VOTL means of compliance for battery and electrical system certification. So what I will share with you today; first, our battery system team capabilities and manufacturing approach are world-class. Second, we have evidence of this, having now achieved significant milestones [indiscernible] to a category enhanced certification. And third, we're open for business, ready to sell our advanced battery systems to the world. Finally, I will touch on the last 18 months of development on our hybrid program and give you an insight on our quiet confidence in this area. Let’s fly through it now. One, world-class battery team, systems, capabilities and manufacturing. Our lithium ion battery systems are the cornerstone of our airport, backed by more than 6 years of development. Here is what sets our battery apart. The team is comprised of perfect blend of aerospace, automotive and control electronics experience. This has not happened by chance, it gives us the right blend of performance, focus and certification rigor. Energy, power, density and performance; our battery packs achieve a 4:1 cell-to-pack ratio delivering more than 200 watt-hours per kilogram depending on cell choice, including electronics, controls, sensors and wiring. Cycle life and durability; our cells deliver more than 800 full cycle equivalents with approximately 90% capacity retention, ensuring lower maintenance costs and reliable performance over the aircraft’s life. Cost efficiency for life of the vehicle; our battery systems will be replaced much more frequently than the airframe. This means overtime, battery costs drive a much higher proportion of the long-term high margin revenue. Our battery systems have been designed to allow replacement of the cells with minimal cost, fast charging and cooling through millions of cell module and full pack cycle hours in proprietary testing rigs; our system can be optimized to charge fast, getting the balance between turnaround time, lifetime and performance precisely how the customer wants it. Highest certification standards; we have designed our systems from the very beginning to comply with the EASA and the CAA stringent SC-VTOL regulations which is the highest levels of safety in aviation. Software integration; we utilized a proprietary battery management and control system that is designed for the highest assurance level, achieving sensor redundancy, software optimization and excellent prediction of remaining power. Manufacturing; our business uses a capital light and efficient operating model pre-certification, whilst ensuring we have the intellectual know-how and capability to scale up and we’re ready. I've seen first-hand the risks associated with early industrialization; not only does it often consume millions in purchase of equipment, is unsuitable, but ultimately it can also force poor decisions on the designs that now legacy manufacturing equipment is considered non-negotiable design hard bots [ph]. Two; developments derisking the SC-VTOL certification. Our advancements significantly derisk our path to the CAA and EASA SC-VTOL certification targeted for 2028. The SC-VTOL framework sets rigorous and clear safety and performance standards that we can show compliance against with our technology. The key developments include, we're on our 8th iteration of battery design since Vertical Aerospace for this capability in-house. We have been using our own batteries to power the VX4 prototype flight test for years and we're on the 11th battery. Our latest design is the safest, lightest and the most capable yet, and we haven't finished. With 2 more development cycles in the next 12 months before locking down the final battery for our production aircraft. Let me give you an example of the benefits coming from each iteration. Between aircraft 1 and our current prototype, we saved more than 100 kilograms; that's 10% of our battery system mass, whilst also improving mechanical, thermal drop and power performance. We've been developing the technology in our battery systems for years. Our first propagation and drop tested battery backwards in 2020 with both, EASA and the CAA in attendance. On April 9, 2025 we passed the 15.2 meter full pack drop test which is comparable to the fuel tank drop test on a traditional rotor craft [ph]. To be clear, we passed this same drop test on our battery system in 2020, 5 years ago. According to the requirements designed by EASA [ph] within SC-VTOL, we continue to optimize the design to reduce mass significantly; and then pass this test again this year. Passing that test is comparatively easy. Passing that test with all functionality present at the energy and power density we have is tough, and we've done it. Battery System propagation testing. We've completed nearly 200 propagation tests to-date across multiple different battery iterations; aiming to not only meet the EASA SC-VTOL means the compliance 3 standard, but also understand our performance against them. On April 29, 2025 we passed our latest full scale thermal one-way propagation on the sub-pack from our VX4 aircraft. We have 2 further optimization amounts to go as we continue to test and optimize the battery systems further and ensure we understand it can pass all of the nuanced edge conditions that are possible. What this means is that in line with the EASA SC-VTOL requirements, if a battery fire were to occur on one of our vehicles in flight, we’d be able to continue safe flight and landing either to the destination or to an alternative landing port with full maneuverability of the aircraft, disempowered [ph] from the aircraft, and all of this whilst ensuring the complete safety of the occupants and the aircraft itself. Whilst there cannot be any guarantees on timeline to certify, we've taken industry leading certification standards, applied them rigorously, and iterated multiple times until we pass them using a battery that is exceptionally high in energy and power for the mass at a cost that makes the business profitable in the future. Three; we're open to business. We're selling our battery systems in newer opportunities. One of our most significant investments of Vertical has been on the development of our hardware, software and mechanical battery systems. We believe we have one-off if not the best battery teams in the world, and we're now ready to tell the world about what they've achieved, because they've achieved it. We've used this exact same approach of technology development on battery as we have on a hybrid program; iterate quietly, make progress on the difficult technological work to show it works, and at a performance point we think is commercially viable in the shadow of the world. For the last 18 months we've been working on a hybrid powertrain system. Our aircraft has a segregated electrical architectural for redundancy and to comply with the category enhanced requirement; that means we can continue safe flight landing after any single failure. This capability allows us to take off and land in all electric configuration. Crews with the turbine operating when noise is less impactful, and charging all batteries if it's needed; and then land again in an all-electric configuration. Obviously, this significantly impacts the range capability of our vehicle as Stuart has just made clear. The first type of generation used a combustion engine, and the second generation will be a gas turbine. We are so far developed in this that we're planning to incorporate it into our third prototype aircraft, Staryfly [ph] testing in 2026. I really want to be clear on the technical significance of what we've done so far. We have proven the capability of a single engine to provide power for multiple electrically independent systems, including under edge case failure conditions. This is one of the most technically complex parts of development, and critical to being able to operate under category enhanced type so difficult [ph]. Now we've done that, we will incorporate it onto the prototype aircraft for flight testing, coupled with our best-in-class battery systems and start testing in 2026. This is also where our large aircraft and cabin is beneficial because the volumetric limitations on a smaller airframe would stop us from making such a change without consuming the available cabin space, and thus invalidating its value or requiring a completely new or significant change to the types of certificate. In our case, the range payload benefits of hybrid can be gained by consuming the luggage compartment and a minor encroachment on available cabin space which is very spacious in an all-electric configuration. Of course, in unpiloted configurations, there would be no need to encourage on that available volume at all. I hope you found that informative. I’ll now hand back to Stuart.

Thank you, Limhi. As you've heard, we're adventuring across every dimension, technology, commercial traction and strategic positioning. We remain focused on achieving our certification goals, progressing towards production and building long-term value for our shareholders. In terms of our finances, we continue to demonstrate sector-leading capital efficiency while investing appropriately for the continuing successful execution of our plans. Net cash used in operating activities for Q1 2025 was approximately $30 million. And our guidance from spend for the year as a whole is unchanged at approximately $110 million to $125 million. We closed the quarter with approximately $90 million cash and cash equivalents on hand. As I highlighted on the full year call in March, each time we report there will be a non-cash financing movement relating to our outstanding convertible low notes. This is highly volatile, driven by a calculation relative to the prevailing stock price. For Q1 this was a £396 million credit to the P&L; and just to be clear, non-cash. Just starting to wrap-up. To remind you again of what we've set out to achieve operationally this year, you can see the points on the slide and we're on track to achieve. And in addition, we have announced our new hybrid aircraft. Before turning over to Q&A, I would like to remind you why we believe we are set to become one of the winners in the sector. Incredible progress today, a clear plan for 2025 and beyond, with a clear route to certification in 2028. We have a best-in-class aircraft set to be certified at the highest safety standards to be able to support our customers across all geographies with a capacity for both luggage and passengers that is unmatched in the sector. We have announced our advanced hybrid program, creating an aircraft with over 1,000 miles capability and opening up further multi-billion dollar opportunities. And we have an incredibly focused and highly capital efficient business model. We focus on where we as Vertical, can make a real difference, and then working with world-class partners for efficiency and effectiveness. Thank you again for joining us today. We'll now open the line for questions.

At this time, I will now turn the call over to Charlotte for questions.

Thank you. So we just thought we would raise one question that we got quite a few people asking us yesterday, on the back of the hybrid. So this is to ask Stuart, what is the impact on our cash spend, and our cash burn going forward given the hybrid announcement yesterday?

Thank you for the question. I think the first point to note is, we’ve been working on this hybrid powertrain for some 18 months. So all of that development that Limhi and the team have done was within the cash spend that we talked about over the prior years. So we've done a huge amount of hard work in terms of getting battery to talk to the motor, to talk to our EPUs [ph]. All of that was in the cash envelope we’ve already had demonstrating the incredible capital efficiency by being really, really focused on what we're doing. So as of today, no change to our guidance for this year. The cash spend for this year remains projected to be in the range of $110 million to $125 million.

Thanks, Stuart. So back over to you operator for polling for the Q&A but we just wanted to address that as we’ve had a lot of incoming yesterday.

[Operator Instructions] First question comes from Savi Syth with Raymond James.

I was wondering if I could ask a little bit more on the certification sample that SC-VTOL [ph]. And just -- is that a supplemental type certification or would you have to start from scratch with EASA? And just along that, if you kind of go towards the path of [indiscernible], is there kind of a pathway through revenue generation before EASA certification?

Good morning, Savi. Thank you for the question. In terms of the hybrid product, it goes within our current airframe. So everything that we're doing there, we're on track with. And to be clear, nothing that we've announced on our hybrid distracts us from the core underlying electric VX4 aircraft which is well on track for certification in 2028. The hybrid will be certified as a separate aircraft, likely in and around the same time as the electric VX4, maybe slightly delayed because we're -- as you know, we haven’t fitted it into an aircraft yet. That being said, we will have a full scale piloted hybrid aircraft flying in Q2 next year. It's incredibly, incredibly excitement -- exciting moment for us. In terms of earlier revenue opportunities; we've been in deep discussions for several months with various potential customers. We can't really say any more than that in terms of short-term changes, cash flow guidance, etcetera. So I'm sorry I can't go into detail on that but thank you for the questions, Savi.

Just to clarify, does defense have different certification requirements? Is that a fair assumption?

It does depending what these cases are, yes. So there are potentially ways that this could be certified earlier but we don't want to get into that at this minute. Let’s just say we're just incredibly excited to put this aircraft out there having been working on it for 18 months.

Makes sense. I realized I have a bit more 2-part question. So I will get back in the queue. Thanks.

Your next question comes from Austin Moeller with Canaccord.

Hi, good morning. Just my first question here. So, will the hybrid powertrain be integrated into 1 of the 2 existing airframes that you have to conduct testing next year or would there be a third airframe that you would be integrating that into?

The hybrid will be going into the airframe that is well under construction at the minute. We've done a huge amount of the build work on that. We'll be tidying that up over the next 3 months, 4 months. First of all, we'll be flying it as an all-electric aircraft. As I've mentioned before, we continue to drive the VX4 program to completion and certification in 2028. We will then retrofit the hybrid powertrain to that aircraft, and we'll have that flying in Q2 next year; Q2 2026. Hopefully, that clarifies it Austin.

Okay, that’s helpful. And just to follow up. So on the EASA certification process, I think it mentions in the shareholder letter that you expect to complete the flight test program this year but presumably there would be additional flight testing with additional aircraft units in the out years here as you work towards your type certificate or how should we be thinking about that?

Yes. Good question, Austin. What we referring to there is going through 4 phases of flight test expansion. We're going into wingborne over the next couple of months, an incredible moment for us as a company. As you know, there's joint liability with our regulator and when we do wingborne, we will be into public airspace. So it's a huge vote of confidence in us that our aircraft will be flying in public airspace. It's basically a huge sign from the regulator that they believe we're on the right track and are happy to say the aircraft is safe to fly in public airspace. Later this year we'll then do the full transition; so incredibly excited about that. That completes the 4 phases. We then will have 2 aircraft capable of repeating that multiple times to generate more and more test information that we feed into our models and to continue to develop our understanding of the VX4. So hopefully that explains it. We will definitely be doing a lot more flying.

Excellent. Looking forward to it. Thank you for the clarification.

Your next question comes from Jesse Sobelson with Boral [ph] Capital.

The first one I have is just a little bit of a detail oriented item here. With testing of the play-electric aircraft, I just want to make sure we're 100% fully understanding expectations for wingborne testing. And you say it’s in 2Q 2025; is this phase beginning in this quarter or is it expected to be completed in this quarter?

It will be beginning in this quarter. And as I just said, this is an incredible moment for us because we have a huge high bar to climb to be able to fly in public airspace. So it really does set it apart. It's an incredible moment for the company when that happens, and we are absolutely targeting that in Q2 2025.

Great, great. Thank you very much for the clarification there. And then, I did want to touch upon the hybrid announcement. I think it’s very interesting. With respect to commercial opportunities, how does the introduction of a hybrid electric propulsion system expand Vertical’s capabilities from maybe focusing just on urban air mobility to expanding to regional air mobility? Is it possible that airlines could be pursuing this for use for short regional flights in the future?

Yes. Great question, Jesse. The capability of this aircraft is utterly transformational. It'll have a range of over 1,000 miles, it will have a payload capability of over 1,100 kilograms. And this is all because we have the best airframe in the industry. We always knew from day one that defense and longer range commercial opportunities would be opened up by a hybrid powertrain. So we've had this working for a long time in the knowledge that this will come along and be an opportunity. And of course, having the biggest airframe means we will be the most capable in the sector, more people and more things over a long distance.

Our next question comes from Laura Lee [ph] with Deutsche Bank.

Thank you for taking my question. And congrats on all the progress. So my question is about the battery business that you talked about. So how will that business model look like? Is that like it’s direct sales or like as a service? And also, any color on the timeline. Like, when do you expect it to start generating revenue?

Laura [ph], thank you. That's great question. I'll do short intro and then hand it over to Limhi. The battery and battery capability led by Limhi and now by the wider team is incredible. I am so proud to be able to work with these people; what they've done is incredible. We see huge opportunity here as we move forward, both selling our battery powertrain capabilities, but also the second life. So we take the batteries off the aircraft, off of the VX4, than opening up a new opportunity to sell those again for different applications, whether that's marine, CTL [ph], etcetera. With that, Limhi maybe if you want to add a little bit of color or commentary around that.

So, really it's predominantly been around making progress against the battery system and trying to prove that we could technically do the things that we both said and we were required in terms of the technology itself. So that's kind of the bit that we've hit. We've been contacted for years now with respect to battery systems of individuals interested and we've rejected a number of them because of the focus we’ve put in both on that and the wide opportunities were not coming along. I suppose this is us informing everyone that we will start accepting some of those, we will start looking into some of those now, and certainly in the coming weeks and months ahead I'd expect to hear more about that. Precisely because we're getting really good values, we're getting -- we’re seeing great performance and kind of getting lots of points that are quite difficult and problematic to be able to hit at a really good energy and power density. So, I hope that answers your question or at least give some color that Stuart was referring to.

Yes. Thanks, Limhi. And Laura [ph], just to remind you, every airframe that we sell, there is an underlying amazing battery business here for us. Every airframe we sell, we'll get 1 to 2 batteries a year at a greater than 40% margin. So within after launch, it will be 50% revenue from batteries, 50% from the airframe. And it's a fantastic ongoing business, the razor-razorblade model. So really exciting part for us.

Your next question comes from Amit Dayal with H.C. Wainwright.

With respect to certification in other jurisdictions, how should we think about what is taking place for the U.S. market, the EU, and other opportunities or other jurisdictions you are pursuing?

In terms of certification, as you know, our home regulators is the CAA; they are linked to EASA in terms of standard they’ve set at both very, very clear. They're using the SC-VTOL certification basis at 10 to -9; the same as a large passenger carrying jet. We believe this is what market wants. We believe this is what customers want, and safety should be non-negotiable. Now, that is the most challenging standard in the industry. We know how to hit it. We can hit it. Because it's a little bit higher than others, we will be working with all the regulators around the world to passport [ph] the aircraft into those markets. We're extremely excited about getting to the U.S., getting to the Middle East, getting to Asia; huge opportunities for us there. But in terms of certification, we will do it in the UK working hand-in-hand with them as our home regulator, at the same standard as EASA who we are also working incredibly closely with. Hopefully that gives a bit of a feel for it, Amit?

Yes, no. I appreciate that. Thank you. Just one more from me. How are you building sort of customer relationships at this point? I know it's really testing given that you’re testing and going through all the certification stuff. But in terms of facing customers and showing as a product, etcetera, what kind of feedback are you getting? Any color on that side of the process would be helpful? Thank you.

Yes, great. Really good question. I think this is something that sets us apart as a business. We have an incredible order book, we are very proud to have American Airlines, Bristol, Bangkok, Japan, Cacao [ph]; a phenomenal customer base all across the world. And that's underpinned by our certification standard at 10 to -9. In terms of how we manage the relationships; we've been listening and working with our customers from Day 1 in terms of what the aircraft capabilities need to be. And that's one of the reasons we have the best airframe. We start with 6 full-scale business class passengers and really importantly, they can take luggage on it. So we launched with 4 people plus 120/130 kilograms of luggage capacity; no one else can do that. We can quickly expand within same airframe, no big certification hurdles to 6 passengers. And how we maintain this relationship? Twice a year we bring our customers to us in Bristol [ph]; they spend 2, 3, 4 days with us twice a year, and we walk through -- okay, how the aircraft's evolving, get them to meet the team. But most importantly, understand their use cases, how they want to deploy it, and help them model out how we bring this to market in a way that's incredibly successful and profitable for them, and we can provide them with the aircraft that they do. So we're very proud of all of our customers.

Your next question comes from David [ph] with Barclays.

Can I just follow-up on that. I think there had been an announcement from a significant UK airline that they were considering looking at another platforms. Is that something you're hearing from any of your other customers that they're looking around? Like you have the whole market pretty well under control.

David, great question. I think one of the things I inherited when I took over as CEO was an order book that have been closed for a couple of years. Now, it's one of the things; we are going to open up that order book this year as we deepen and expand our customer base over the coming months and year. So we will absolutely be having conversations, not just in the UK but all across the world as we look to further bolster that order book as we are getting closer to certification. And we've got a confirmed date in terms of when we get certified. We know we can hit it. Now is a great time to really start opening up that order book again across the world. So, hopefully that gives you a bit of a color commentary without going into specifics, David.

That is helpful. Limhi, we've heard a characterization of battery as kind of a choice between airing more on the side of safety, airing more on the side of being aggressive and towards performance. I mean 200 watt hours per kilogram; it seems like you are trying to push performance. So I guess one, would you agree that that is a fair characterization of the choices that suppliers are making on the battery side? And where do you fall -- if so, on that sort of spectrum in your batter design?

David, I'll just take that and later hand to Limhi. Just to be clear, safety is paramount for us, non-negotiable; so we are doing everything and I think we are [indiscernible] and that’s what Limhi and the team have done is remarkable, and we will have a battery certified to 10 to the -9; absolutely best in the industry. So, we must put that up front of that. I think with that, Limhi, if you want to comment on David's other point about power density, etcetera.

Yes, thanks Stuart. And thanks for the question, David. Fundamentally, to come back to Stuart's point, that really is the goal always is we have to be able to show that we're safe. And if you take the EASA as an example, they gave an example, they gave an excellent talk a couple years ago. It's basically what looked like a battery onion as they went through the different layers of safety that they expect in order to be able to clarify that, that rode this confidence [ph]. And that's essentially the same goal that we've gone from -- gone for. But to give you an example, when we went from aircraft 1 by aircraft 2, the only thing that changed was actually -- or the primary thing that changed, not the only thing that changed but the primary thing that saved us mass was an optimization of the plastics that we were using. And so it was pretty good before but not great, and then we optimized and we went through the plastics that we were using; both in the selection -- material selection and essentially mechanically how it's structured. And so that's where the unit comes from. It doesn't impact safety in that respect; in fact, the safety got better because we moved more towards self-extinction materials and plastics. And so from that perspective -- you know, to come back to Stuart’s point, that really is the baseline. There's no way around that, you've got to achieve that. Everything that we're doing is achieving that whilst trying to optimize and make us better in terms of performance. I hope that answers your question.

Super helpful. If I can just squeeze one more, Stuart. [Indiscernible] and I think you announced there or any preview you can give us on how you’re thinking about the EPM?

So nothing we can announce other than the current ones we have are doing an incredible job; they are outperforming on every dimension. We've got handful of options as we look to move forward through the certification and put in place a certification contract and production contract. So nothing to announce as yet but we're really confident in that space that we've got incredible views on our current aircraft.

There are no further questions at this time. I'll now turn the call back over to Stuart for closing remarks.

Thank you. First of all, thanks everyone for joining. Really, really appreciate you taking the time. This has been an incredible past few months for Vertical, absolutely transformational for the business, starting in December where we restructured the balance sheet. From that point on, raising $90 million in January, the flight test progress this year has been incredible, and we are so close to wingborne flying. As we said, we'll be doing that within the next couple of months, and certainly in Q2; absolutely fantastic. It will really set us apart versus other people because we are doing this under the [indiscernible] of a regulator that is validating our aircraft to be safe to fly in public airspace. We've signed our certification production contract with Honeywell. We have strengthened our Board, and really importantly, the announcement of the hybrid. We've been working on this for some time, we are so proud to be able to be bring it to the market today, arranged 1,000 miles, capacity of 1,100 kilos, low noise signature; it really does open tremendous, tremendous opportunity for us across defense and those commercial markets. So, I don't think we've ever been better placed for success. So, thanks again for joining. We really appreciate all the questions. I look forward to updating you, hopefully, pretty quickly on some further news. So, thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may not disconnect.