Lilium faces second bankruptcy as funding deal collapses

Lilium, the German electric aircraft manufacturer, has filed for bankruptcy for the second time, marking a significant setback in the burgeoning air taxi industry. This latest insolvency filing comes after a failed €200 million rescue deal, which was intended to revitalise the company’s operations. The promised funds from the European-American investor consortium never materialised, leading to this unfortunate outcome.

Founded a decade ago, Lilium had ambitious plans to revolutionise urban air mobility with its electric vertical take-off and landing (eVTOL) aircraft, the Lilium Jet. The company had secured investments totalling approximately €1.5 billion over the years. Despite this substantial financial backing, Lilium faced numerous challenges, including technical hurdles and escalating development costs. The first manned flight of its eVTOL regional jet was initially scheduled for this spring, but persistent issues led to delays and increased financial strain.

In October 2024, Lilium first filed for insolvency after unsuccessful attempts to secure a €50 million loan from the Bavarian government. This loan was crucial for maintaining operations and attracting additional private investment. The failure to obtain this financial support led to the cessation of operations and the layoff of approximately 1,000 employees.

A glimmer of hope emerged in December 2024 when the MUC Mobile Uplift Corporation, a consortium of European and North American investors, announced plans to acquire Lilium’s subsidiaries. The consortium, later renamed Lilium Aerospace, pledged to invest over €200 million to resume operations and retain 775 of the original 1,000 jobs. However, by February 2025, it became evident that the promised funds, particularly a €150 million investment from Slovakian investor Marian Bocek, had not been delivered. This shortfall left the company with no alternative but to file for bankruptcy once more.

Lilium’s downfall underscores the financial and technical challenges inherent in the eVTOL sector. The industry has seen significant investments, with approximately US$13 billion poured into various projects since 2019. Despite this influx of capital, many companies struggle to achieve profitability due to high development costs and stringent certification requirements. Analysts suggest that the first certified eVTOL passenger flights might not commence until late 2026 or early 2027, primarily in the United States. This timeline reflects the considerable financial and regulatory hurdles that companies like Lilium face in bringing their innovative aircraft to market.

The collapse of Lilium serves as a cautionary tale for the eVTOL industry, highlighting the importance of securing reliable funding and managing technological complexities. As the sector continues to evolve, companies will need to carefully navigate these challenges to realise the vision of urban air mobility. (€1.00 = US$1.05 at time of publication.)