Q1 2024 Joby Aviation Inc Earnings Call

Participants

Teresa Thuruthiyil; Head, Investor Relations; Joby Aviation Inc

JoeBen Bevirt; Chief Executive Office, Founder, Director, Chief Architect; Joby Aviation Inc

Didier Papadopoulos; President of Aircraft OEM; Joby Aviation Inc

Bonny Simi; President of Operations; Joby Aviation Inc

Matt Field; Analyst; Joby Aviation Inc

Paul Sciarra; Executive Chairman of the Board; Joby Aviation Inc

Andres Sheppard; Analyst; Cantor Fitzgerald

Kristine Liwag; Analyst; Morgan Stanley

Savi Syth; Analyst; Raymond James

David Zazula; Analyst; Barclays

Edison Yu; Analyst; Deutsche Ban

Austin Moeller; Analyst; Canaccord Genuity

Presentation

Operator

Greetings, and welcome to Joby Aviation's First Quarter 2024 Conference Call and Webcast. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Teresa Thuruthiyil, Joby's Head of Investor Relations. Please go ahead.

Teresa Thuruthiyil

Thank you. Good afternoon and evening, everyone. Welcome to the GLV aviation conference call to discuss the Company's financial results for the first quarter of 2024. We announced our results earlier today, both our Q1 2024 shareholder letter and a webcast of this call are available online at the Investor Relations page of our website at ir dot GOV aviation.com.
Our discussion today will include statements regarding future events and financial performance as well as statements of belief, expectation and intent. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a more detailed discussion of these risks and uncertainties. Please refer to our filings with the SEC and the Safe Harbor disclaimer contained in today's shareholder letter. Forward-looking statements included in this call are made only as of the date of this call, and the company does not assume any obligation to update or revise them.
Please note that today's call will include results reported on a non-GAAP basis. Our Q1 2024 shareholder letter provides the reconciliation between GAAP and non-GAAP measures. On the call today, we have JoeBen Bevirt, Founder and Chief Executive Officer; Paul Shearer, Executive Chairman; Didier Papadopoulos, President of aircraft OEM; Matt Field, Chief Financial Officer, and also joining us today is Bonny Simi, President of Operations. After management's prepared remarks, we will open the call for questions.
And with all of that said, I'll turn the call over to JoeBen.

JoeBen Bevirt

Thank you, Teresa, and thank you all for joining us this afternoon. I'm pleased to say that we had a remarkable first quarter of 2024 pact with sector-leading progress across all three of our focus areas, certification, manufacturing and commercialization, keeping us on track to start commercial operations.
Next year. I hope those who follow our results are starting to see a pattern. The JV team and the JV approach continue to deliver quarter over quarter year over year with dependable results and credible timelines for DDA is going to unpack our progress on certification in a minute, but I'd like to draw particular attention to the fact that we've started submitting our first system level test plan. These are a key part of the fourth stage of the type certification process and demonstrate the maturity of our certification program.
Company was the first air taxi company to complete the first second and third stages of the FAA type certification process. And this quarter, we became the first and so far only air taxi company to have our final airworthiness criteria. Our G. one certification basis published in the Federal Register. The progress we've made, particularly in completing Stage three, is central to allowing us to proceed with full confidence in our design and approach supporting our certification program as a tremendous amount of testing as thousands of individual parts subsystems and full assemblies are put through their paces at GLV the vast majority of this takes place in house. As Didi will explain, this approach allows us to move with significant pace and agility, particularly through the fourth stage of certification, which is focused on testing. Our engineers are able to get real-time feedback on the performance of the parts they're working on by literally walking up to their colleagues and chatting with them face-to-face instead of relying on distant third parties. We have developed these testing facilities over several years and believe they are essential to achieving our goal of starting commercial operations next year. Our flight test campaign also plays an important role in achieving those goals. And I'm pleased to say that after more than four years of flying full-scale preproduction aircraft, we've accomplished everything we set out to do with these aircraft and more as our focus shifts, flying our production prototype aircraft, our second preproduction aircraft will now transition over to its next life as an R & D asset having flown more than 25,000 miles across more than 750 flights, including more than 100 with a pilot on board. It was the first air taxi to fly in New York City and at completing testing that has benefited the wider industry, including precision landing tests with the FA and acoustic testing with NASA. I'm incredibly proud of the team looked after and flew our two pre-production aircraft, and we look forward to focusing our resources on our increasing fleet of production prototype aircraft as we continue to make sector-leading progress on certification. We're matching it with equal progress on manufacturing. Our second production prototype aircraft roll off the line last week and will now enter our test program. And by the time of our second quarter call, we expect yet another aircraft will have rolled off the line, meaning we'll have four full-scale aircraft in our test fleet to support our ramp-up in production. We acquired an existing facility in Dayton, Ohio, and broke ground on the expansion of our pilot production line in Marina, California. The new building in Merida will more than double our existing footprint, providing space for us to deliver up to 25 aircraft per year. Our facility in Ohio will additionally support our operations in Burkina and is the first step on our journey to develop facilities capable of delivering up to 500 aircraft per year. We believe this stepwise approach to expansion is the smartest way to deploy capital. And we're grateful for the continued support of Toyota as we plan our approach to scale manufacturing as well as working side-by-side with the Toyota team on a daily basis, we were pleased to welcome a number of executive level visits from Toyota during the quarter, including she gets on EVP of Production, engineering and manufacturing at Toyota North America, Kitazawa president of the advanced engineering development center at GMC, Laura on President, powertrain company at TMC and commodities on President, Commercial Vehicle company at TI. And what I love about these visits is that they really speak to the spirit of the Toyota team. Toyota is a company led by engineers who want to be out on the production line, looking at every detail every process. And every part just like us, I'm incredibly grateful for their support. And I wish as we grow our production, the value of our relationship will only increase.
Turning to our third area of focus commercialization. We again made great progress in the quarter. On the domestic side, we continue to work on securing infrastructure in our key target markets of Los Angeles and New York.
Well, on the international side, we signed a multilateral agreement with three Abu Dhabi government of ours, the Department of municipalities and transport, the Department of Economic Development and the Department of Culture and Tourism. This agreement identifies government support for establishing and scaling air taxi service in the Emirate and builds on last quarter's announcement that we have secured the exclusive right to operate air taxi services across the Emirate of Dubai for six years. The agreement also opens the door to enter Emirates services and flights across the wider UAE We also widened our partnership with the U.S. Air Force announcing that we plan to deliver two aircraft to McNeil Air Force base in 2025 as part of our $131 million contract with works. Mcneil is home to the U.S. Special Operations Command U.S. Central Command and units from the Air Mobility Command. And this deployment will mark, our first opportunity to work directly with operational units from the DoD. Our work with the DoD is just one of three distinct pillars that make up our go-to-market strategy alongside our work with Delta in the US market and with a range of partners in international markets, including Dubai. As I said at the outset, the JV team continues to deliver sector-leading progress across certification, manufacturing and commercialization. There isn't another important piece of the puzzle. However, that hasn't received much attention to date and where GOV is also leading the way that's the work we're doing to prepare for operations to put it bluntly, you can certify an aircraft and you can build a production line for the aircraft. But without the backbone of the operations where you won't be able to operate your aircraft effectively, if at all. And to be clear, this is work that has to be done, whether you intend to operate the aircraft yourself or sell it to a third party. We've been working on this topic for several years now from writing a pilot training curriculum and running apartment 35 operation to maturing the software stack we brought across from Uber Elevate when we acquired that division and welcome their incredible team. And I'm glad Bonnie is joining us today to highlight some of that work. Bonnie has a remarkable amount of experience in airline operations and has been working with jobs since 2017. First as an investor and more recently as our President of Operations and like DDA in that she is the longest standing executive in our position across all of the publicly traded companies in the sector, which speaks volumes about the strength of our team and our commitment to delivery. Last quarter, we set out our goals for 2024, and I'm pleased to say we're on track to deliver them. It's GLV's unique vertically integrated approach that ensures we continue to deliver on these goals at pace. There is a trend amongst the companies in our sector to highlight how they're taking risk off the table by relying on the traditional aerospace supply chain. But it, Joe, we believe the opposite is true. We don't outsource 80% of our parts. We don't outsource the majority of our testing. We don't rely on others to build an operational software stack. We do these things ourselves, not because we're protectionist, but because we're pragmatist, if you outsource 8% of your supply chain, you give up control of 80% of your product. You can only be as fast as your slowest supplier and your product is only as reliable as your least reliable supplier as we see other traditional aerospace companies reintegrating suppliers to address current issues. It's clear that in a new sector like ours, where the certification basis has only just come together where we're building aircraft that has never existed before using parts that have never been combined before. We need a level of responsiveness of agility of responsibility. You just cannot get when you outsource every that approach won't be cheaper, it won't be faster and it won't be better. It obscures risks and resultant evolutionary change instead of the revolutionary change, we're looking for it, Joe, we were building a different sort of aviation company. One, we're in control of the quality and speed of manufacture where we benefit from shared learnings amongst our team and where we're able to prioritize the best possible performance and best possible experience for our customers. We are building a next-generation aviation company and to talk more about our progress on that front, I'm going to hand it over to Didier.

Didier Papadopoulos

Thank you, Jobin. It is such a pleasure to be part of building this next-generation aviation company in my 15 years at Garmin, I saw repeatedly have vertical integration leads to superior products and a durable advantage in the market. By joining Toby three years ago, completely blew me away the amount of cross functional design, manufacturing and testing that we're completing under one roof is truly unique, not just in aerospace, but to all hardware, software development and production every day, I see our approach paying off, saving us kilograms of weight weeks of schedule and thousands of dollars on our bill of materials. I truly believe there is no other aviation company on the planet with as much depth and breadth of in-house engineering, knowledge and capabilities as we have here at GOV. And that's an investment that we believe will have compounding returns over time. This is no coincidence that as a result of carefully weighing the decision to in-source or outsource each components across the aircraft, we do have a number of strategic supplier partners, including Garmin story and Toyota, where we're able to identify partners with the right values and long-term view. We have invested in deep relationships that are key to our success, but we won't compromise on agility, cost performance or quality. And our approach continues to result in a leadership position across our industry. As Gerben mentioned, this quarter, we became the first and remain the only electric air taxi manufacturer with finalized airworthiness criteria from the FDA. As we stated last quarter, the final G. one resulted in no design changes and allows us to move ahead in stage four with confidence is also the foundation of the progress we're making for all three of our path to market commercial launch in the U.S. deployments with the DoD and launch in Dubai, where we're working with the UA. E's general Civil Aviation Authority to leverage the documentation and testing we're doing for the FDA. Having our finalized airworthiness criteria is a really fundamental step. As we said before, it does mean that both we and the FDA have additional paperwork to do as we work through refinements to our means of compliance and certification plants. We believe we are on track to close all these by next quarter and expect our progress in stage four. It accelerate in the back half of this year. While we complete that work this quarter, we continued to progress at pace on Stage four, building on the learnings from our Pathfinder testing and test plan submittals at the end of last year, we submitted to the FDA equivalent level test plans covering the control surface actuators, pilot interceptors, Mission display, computer and vehicle navigation computer plus many structural elements of the aircraft. We're now preparing to perform for credit testing on many of these articles. Also part of Stage four, we submitted two qualification plans related to the aircraft energy storage covering the charge sport and pump and battery control and distribution and in a huge win for the team. We continue to move up the aircraft testing parameters with the submittal of our first system level test plan. As a reminder, we conduct testing at every level of the aircraft from individual components to full vehicle, and we're making progress at multiple levels of the pyramid simultaneously. This test plan covers the functions of our unique low workload flight controls and Vector thrust propulsion system. And it's a perfect example of why vertical integration, it's key to our success with the design and development of the software and hardware for both flight controls and propulsion completed in house. We've been able to optimize and efficiently manage all of this as one integrated system making progress much faster than an integrator between a whole host of partners. This has proven to be true across our entire aircraft. The more pieces of the puzzle we have direct control over the faster we can identify elements of our hardware or software that need improvement and we can deploy solutions that are optimized for our needs. That's precisely why this quarter, we completed several upgrades, our in-house testing capabilities that are critical to our certification campaign. We developed and installed new tilt, variable pitch and control surface actuation load test stands in support of test plans governing our actuators as well as our integrated flight and propulsion system in support of the battery qualification plan submitted this quarter, we brought online a state of the art battery test building that can safely house routine thermal runaway testing for showing FDA compliance. And in the next few weeks, we expect to submit our second system level test plan covering the endurance of our propulsion system, which is why we have upgraded our propulsion system test and or Worley a remarkable test asset. You need to JV that you can see in action in our shareholder letter, we've enhanced authority to operate at higher speeds and tests across a wider spectrum of the flight envelope, thereby recording even more data for use with the FAA testing is a muscle, much like manufacturing and operations and is a critical part of the safety development and certification of new aviation technology. It is the only way to completely understand all safety and performance parameters of the design. And by doing the majority of our testing in-house were not only able to provide faster feedback to our design and manufacturing teams, but also have perfected our testing facilities and processes alongside our aircraft. I am proud of the team for delivering on these mature test assets that we know well accurately and efficiently give us the data we need to demonstrate the safety and performance of our aircraft, including for FAS credits. Of course, the ultimate test for any aircraft program is flight testing with a full-scale representative aircraft. This quarter, we successfully completed our pre-production prototype flight test campaign After logging more than 1,500 flights is 33,000 miles with our two aircraft. I want to provide a little more detail on what we've learned from our four years of constant flight on full-scale representative aircraft. Because this comprehensive flight testing uniquely positions us for success across certification, manufacturing and preparing for operations. First, we have developed a world-class flight test team. Our pilots, flight test engineers and maintainers are now highly experienced as safely and efficiently executing the different types of flight tests that will be needed for certification. This is critical as we move to the next phase of our program, where we will use our production prototypes to drive on all of the flight testing, we will then perform for FA credit.
Second, we have validated our design, including elements such as human factors and handling characteristics by flying at high speeds and altitude different states of charge and a range of weather conditions. We collected all these learnings into our models, components and systems. The resulting improvements have already been designed into the parts we're producing now. Third, we gathered extensive testing data that informs the Stage four test plans we are writing and submitting to the FDA, which we believe sets us up to have those documents accepted in short order.
Fourth, we have fed learnings into our operations and maintenance program, both for taxes, notification requirements like manuals and to inform our airline operations that Bonnie will speak to more in a moment. 10 pilots have flown Adobe aircraft through transition, including the four U.S. Air Force pilots who trade with us in Marina last year. We have fine tuned our pilot training course, to safely prepared commercial pilots to fly the jobs aircraft in about six weeks. We're developing tools that continuously monitor the health of the aircraft systems based on operational flight data, which will be key to efficient operations at scale. And finally, we've been able to uniquely contribute to and shape the formation of our industry by providing regulators with real practical data on aircraft characteristics like out wash and precision landing that will inform standards being developed for the broader industry on infrastructure and operations. I want to thank and congratulate the entire team on for years incredibly successful flight.
In closing, I want to touch on the remarkable progress. Our team continues to make on ramping up our manufacturing capacity. We've always taken a pragmatic approach to scaling manufacturing, and that approach is already paying off. Last week, we rolled our second production prototype up the line in Marina, and we have two more aircraft close behind in final assembly as we go through each build cycle. We're learning and improving many parts of our manufacturing processes to shorten build time, improve quality and reduce waste is our key ingredients for successful economical production at scale, and we're building them into our processes now rather than when we have already made much more significant capital investments. We are on track to achieve an annual production rate of 12 airplanes worth of components by the end of this year. To reiterate some of these will be complete. Aircraft and others will be parts used for development and certification testing, which requires us to shake Bake & Break many parts as we demonstrate they meet the requirements to get to the next step. We've begun work on a significant facility expansion in Marina. The new building will more than double our manufacturing space at the airport, allowing us to target 25 aircraft per year as we continue to develop facilities in Dayton, Ohio that will support us in our goal of producing up to 500 airplanes a year at the same time, we're expanding our conforming production to support for credit testing. In addition to ramping production of conforming flight electronics this quarter, we began assembly of our first ever a conforming sale, which will be used as a structural test asset in for credit testing later this year. This progress is underpinned by the maturity of our quality management system, which continues to evolve towards meeting all FAA requirements for us to receive a production certificate from testing to certification and manufacturing. The job. The team continues to knock it out of the park. And I am so so proud to be part of the team that's doing the hard work to bring to market the right aircraft for our mission.
I'll now hand it off to Bonnie to discuss how we're preparing for what comes next in EDA.

Bonny Simi

It's a pleasure to be here to introduce our work on operations. As Gerben said at the outset, there's a significant amount of work that needs to be completed. Before anyone can operate this new type of aircraft, you can achieve type certification and build a fleet of aircraft, but without items like FAA certified full motion simulators, a maintenance and operating certificates, FAA approved pilot training programs and safety management systems. You won't be able to run a commercial aviation service some of those items like maintenance procedures and manuals are actually a prerequisite for Type Certification. And to be clear, these requirements don't go away if you intend to sell the air any operator, we'll need every one of these systems in place in order to launch even a basic operation.
In 2020, when I joined Joe B full time, we sat down and mapped out the full set of requirements to start operations. And we've been working on them ever since because we realize that many of them like simulators have a long lead time for like pilot training programs could not be bought off the shelf. Now that we have a clearer line of sight to start of commercial operations, we thought it would be valuable to touch on the work that we've already completed and the milestones that lie ahead.
Next month, we plan to host a teach-in session where we will cover this topic in more detail. But for now I'd like to introduce the broad team. Our work to repair for early operations can be divided into three categories, FA authorizations, infrastructure and software with safety as a common thread underpinning all three, when we say infrastructure, we mean the development of standards for landing sites and the landing sites themselves, the development of charging solutions of ground handling processes and decisions about aircraft storage and shipping, as well as the location and build-out of maintenance and simulator facilities. And by software, we mean scheduling tools, the pilot flight planning tools, the customer interface, maintenance, tracking the data links to the aircraft. And so much more just like for JDA on the certification side of the business for operations, the long pole in the tent is FAA approvals and certifications, and this is where we are focused in the near term. By pulling ahead our work on operations, we're able to derisk our go-to-market strategy and ensure we have the right foundation in place to scale in order to fly an aircraft for commercial passenger use. There's an extensive list of requirements and federal certifications that you need, including a Part one 35 operating certificate that allows you to carry passengers for revenue apart one, 45 maintenance certificate that allows you to efficiently maintain and repair the aircraft as approved under its type certificate simulators that are certified under Part 60 to be used to train pilots for commercial operations and FAA approved pilot and maintenance training program these are all in-depth processes that require years of work to get across the line. And we've made excellent progress already in May of 2022, we were awarded our Part one 35 operating certificate, enabling us to use conventional aircraft to simulate test and iterate on our future airline service. Even before we have the the aircraft ready to take passengers we received our Part one 45 maintenance certificate earlier this year.
Another item we've been able to tick off the list in advance. We've been working for years with our partner CAE., which we announced in March of 2022 to develop parts 60 full motion simulators. And we're in developing the certification plan to submit to the FDA as Gideon mentioned, we're developing our pilot training program and testing it with the U.S. Air Force. This will form the foundation of our commercial pilot training program with both our one 35 and one 45 certificates as well as the simulators in place, we'll be able to get the jobs aircraft into service more quickly. Last but certainly not least, safety is at the core of everything we do at GLV. Just last month, the FAA announced a requirement for safety management systems or SMS for all one 35 operators at our SMS has already been accepted by the FAA into their voluntary SMS program. We're also the first and only in our industry to pass the stage one international standard for business aircraft operators is Bayle audit and important external validation of the preparation we've done to operate safely. While these FA authorizations may seem like a membership, I hope that you'll take away a significant amount of work that's well underway at GOV to ensure that we're ready for operations on day one last week's announcement regarding the expansion of our operations, and Marina is also a key part of this work as this building will host our expanded pilot training and flight simulation center as well as aircraft maintenance facilities that are designed to support the scaling of GOV's commercial operations. We're always looking ahead and making sure that we're taking the most efficient route to starting commercial operations while putting safety at the center of everything we do. But work done by our operations team is central to this and is another area where GOV is leading in the sector. All of these preparations are well underway as we target operations in Dubai in late 2025. I look forward to unpacking these topics next month in more detail at our teach-in session on operations, and now I'll hand it over to Matt to cover financials.

Matt Field

Thanks, Bonnie, and good afternoon, everybody. As you have heard from the team today, we continue to lead the industry across all elements of our business certification, manufacturing and commercialization. We also continue to lead the industry in having the strongest balance sheet. We ended the first quarter of 2024 with cash and short-term investments totaling $924 million, right in line with the guidance we shared for the year. This represents a use of cash totaling $108 million, reflecting our measured pace of growth and investments. Also, as a reminder, we had an extra pay period in Q1, which results in a higher cash flow outlay. For the quarter.
We incurred a Q1 net loss of $95 million, reflecting a loss from operations of about $146 million, offset by interest and other income of $51 million. Our net loss was lower by $21 million compared to the prior quarter, reflecting a higher favorable revaluation of our warrants and earn-out shares, partly offset by a higher net loss from operations increased operating expenses in the first quarter reflected a continued measured pace of investment in our certification and manufacturing personnel and operations, lower sequential payments from government contract deliverables and higher stock-based compensation expenses at the start of the fiscal year.
In terms of revenue, we mentioned last quarter that we would expect it to be somewhat lumpy as our work that's underway. With the DoD, and we expect revenue to grow along with our flight hours throughout the year, especially as we look ahead to the delivery of our second aircraft to Edwards Air Force Base adjusted EBITDA, a non-GAAP metric that we reconciled to our net income in our shareholder letter was a loss of $110 million in the first quarter. This was about $14 million higher than in the prior quarter, reflecting the higher operating expenses mentioned earlier. Our adjusted EBITDA loss was $35 million higher than in the same period last year, reflecting the growth in our organization, expenses to support manufacturing and certification, lower DoD contract deliverables and higher production volumes as we ramp up manufacturing on our way to an equivalent of 12 aircraft per year as we exit 2024. As mentioned at the outset, we ended the quarter with $924 million in cash, cash equivalents, and short-term investments. Our primary use of cash in the quarter was to support our operations where we continue to invest in our certification efforts, manufacturing and early go-to-market initiatives, which Bonnie highlighted. We spent about $7 million on property and equipment, which includes investments in test equipment assets that Gideon mentioned earlier and the acquisition of our facility in Ohio. We continue to maintain a disciplined approach to our spending and to the growth of our company as we supplement our certification work with measured go-to-market initiatives in advance of commercialization next year as always, you can expect us to continue to align our investments with the growth of the business. Accordingly, we remain on track with our full year cash spending outlook of $440 million to $470 million.
This concludes our prepared remarks, and we look forward to having you join us for the teach-in on operational requirements with Bonnie in June.
Operator, would you please instruct participants on how to ask questions?

Question and Answer Session

Operator

(Operator Instructions) Andres Sheppard, Cantor Fitzgerald.

Andres Sheppard

Hi, good morning, everyone. Congratulations on the quarter and thanks for taking our questions. Job and you know, I want to maybe start with you a obviously a lot of movement and partnerships. They're curious to get your thoughts. You know, it almost seems fundamentally that the industry is perhaps moving more and more to ramp up commercialization there faster than than in the US. Now obviously, this is still contingent on certification, but just curious your thoughts on how you see that marketing developing in, particularly in the near term? I get the sense that it's becoming maybe more and more scalable faster. Just curious to get your thoughts. Thank you.

JoeBen Bevirt

Thank you, Andreas, and great to hear from you. So yes, we are seeing fantastic lean in from all the different government agencies in the UAE, and we're very grateful for the support across the regulatory side, the infrastructure side and yes, very excited about the momentum. I would say that all of the work that we're doing there is built upon the foundation of the work we've been doing for the last six years, plus with the FA and leverages everything that we're doing on Stage four, the certification basis. So this is really a it up a box plus one offer opportunity for us in addition to the fantastic work we're doing with the DoD as we prepare to take it two aircraft to McNeil aerospace in Florida.

Andres Sheppard

Got it. Okay. That's super helpful. Thank you for that context. And maybe just a quick follow-up. I'm curious if we have a time line as to when you would expect to roll out the, um, maybe the first conforming aircraft and how close are we to transitioning that from a conforming aircraft with a pilot onboard? Thank you.

Didier Papadopoulos

Thanks, for the question on that front, aligned with what we communicated in the previous quarter.
In terms of our roadmap on that front, maybe reiterate, there's three key things that are required to make progress on conformity one, making sure that we have our design released and submitted and accepted by the FDA two is developing our conforming manufacturing line so that we can build to those designs and then three progressing towards Stage four, where you actually have the test plans against which you're going to execute with your test assets.
As a reminder, there's no way around those three things. And that's been our focus.
And as you can see, we've been able to make progress on all these fronts and pretty happy with that.
Now on you execute on these in three tiers, right.
One, if we think about the perimeter we've talked about before the components systems and then you move into the aircraft. We've talked about a lot of the component development and execution last year and how we're building on that this year, having submitted additional test plans on more components, but also now we're moving into the system level tier of that pyramid and again making progress on that. So you should expect us to see continued to progress along that midyear towards the tip of the pyramid, which is the aircraft in short order. We're well on track that we discussed in our roadmap last year.

Operator

Kristine Liwag, Morgan Stanley.

Kristine Liwag

Hey, good afternoon, everyone.
Yes, so you know, look, it sounds like from your prepared remarks, things are progressing towards commercialization on. Thank you. For all the details you provided regarding your progress with the U.AE. So I guess, you know, for your first commercial mission on, is this going to be an international route or with a country like the UAE? Or is this going to be U.S. based? Any color on that would be helpful.

JoeBen Bevirt

Interesting. Yes, we do see we do continue to see two really exciting path forward, both here in the US in and New York and LA in partnership with Delta as well as the path in the UAE and the really significant lean in from the GCA. two bring the opportunity for us to begin commercial service next year. So very excited about that. And again, on the DoD front, very pleased with the progress on that on that third pillar as well.

Kristine Liwag

Great. And then when we look at other routes, like I'm sure you have the aircraft business nearing certification, you're studying some of these routes a little closer. Do you have any updated view regarding, you know, a price that you're going to charge for some of these routes? And then as you're evaluating US and international on opportunities like what city pairs or within which cities on stops. Are you really looking at what are the economics of that on any additional detail about actual operations would be helpful.

Paul Sciarra

Thanks for the question, Christine.
This is Paul.
I'm on. We're obviously very much deep in the evaluation of routes to understand price elasticity and understand demand across them. And that goes for the geographies that we're looking at here in the US and now more recently, both in Dubai and then more broadly across the UAE, given the recent announcement, we don't have any updates to our broad thinking around economics, except to say, both in the U.S. As we think about New York and L.A. And obviously, as we think about Dubai and the broader UAE. And all of those are areas that have relatively high propensity to pay. They've got difficult, in many cases, very difficult infrastructure to navigate on the ground. So they're really sort of tailor made locations as we think about the first few locations for launch. I mean, I think we're very much deep on the UA side so there are 14 million tourists there. There is a large number of sites across the various Emirates that are not so easy to access. And I think that that demand profile is going to look very favorable, but we're not yet at a point where we're going to kind of talk about the specifics around what that's going to look like, although the work is ongoing, and we hope to have updates on that.

Kristine Liwag

Great. Thank you and looking forward to seeing that progress.

Operator

[Savi Syth], Raymond James.

Savi Syth

Hey, good afternoon, everyone.
And just on the flight campaign, can you talk about the type of flying that are done on the preproduction aircraft versus the production aircraft and including what are the differences between the two of any notable differences between the two as you operate them?

Didier Papadopoulos

Yes, Ari, thanks for the great question. So the campaign we just that we just completed on the earlier airplane was obviously extremely successful, right on 51 hundred flights, 33,000 miles, and it covered a lot of aspects in terms of our comp performance, maintainability and so on that we talked about earlier. And one of the key things that we identified is that the fundamental design of the airplane is solid and it delivers on the mission that has the difference between that aircraft and the aircraft that we're producing right now from the manufacturing line is that the airplanes coming out of the line right now are effectively being built under our production manufacturing line following our quality management system, which really drives us and progresses us towards the production certificate price as a reminder, we need a Type Certificate production certificate and operational certificates, right that Bonnie talked about that production certificate element is one of the unique things and really exciting things to be exercising right now with the airplanes at all, we're running out the lines right now.

Savi Syth

That's helpful. And then the type of flying is just kind of progressing the same way as you did with the first one?

Didier Papadopoulos

Absolutely very similar type of flying between all these airplanes.

Savi Syth

Got it. And I appreciate the color on the operations side. And I was just wondering, we've gone from famine last year to face this year on pilot availability for the mainline and cargo airlines.
But generally, I think pilot supply is going to remain tight over a longer period of time. So I don't know, Bonnie, do you have any thoughts of jobs can be the solution for the part one 21 operators and and also just as you look to stand up, operations is how long before you launch operations, you need to start building your own pilots fly.

Bonny Simi

Thank you, and it's great to be joining the team here on the call and thank you for the question. This is definitely right down the alley of the pilot for 30 years. I know that the shortage has been a factor often for years. And but we're not concerned because for us in the early years of operations, we're going to utilize what we call an initial cadre of experienced pilots that draw from a demand of two focus areas. One, there's a group of pilots, initial coverage. You enjoy being part of new aircraft introductions. And so we even now we constantly get we outreach from pilots who want to be part of something new and these are very experienced pilots. And then as a part of myself and as a mother, I you know, I know a significant number of pilots to really favor solutions being home every night, military pilots, tired of being away from away from home and mothers and fathers trying to raise to raise a kid. And so this is a solution for them. So there are many female hires in particular who opted out of they got their commercial pilots license and then they decided that it just wasn't going to work for them. So bringing them back into the fold and then behind that group of several hundred pilots for our initial cadre we're already building a pipeline of pilots. So we've got Adobe Aviation Academy where we're building out a Part one 41 program. We're starting with our employees and then ramping that up. So that will sink in time for us, too, to scale of service and gas, we actually looked at as our solution as a piece of the solution for the broader one 21 because pilots will spend a couple of years with us and some may move on to the airlines. And some actually will find the lifestyle very favorable for them.

Operator

David Zazula, Barclays.

David Zazula

Hey, thanks for taking the question and afternoon. First one is maybe for Dave, if I could just get a little more color on the electric storage qualification plans that you've submitted, the feedback you've gotten from the FAA on that and what the Our plan is to progress along with electric storage and propulsion certification kind of in the near term?

Didier Papadopoulos

Yes.
So Regeneron, the electrical system distribution system has multiple test plans that we submit to the FDA. Some of them are associated with qualification and relating to the environment, for example, others are operational in terms of being able to manage the state of charge of the aircraft. So they vary in multiple areas.
I think one thing that's really important relating to your question about the feedback is most of these have been and work with the FAA for multiple years, right? So for the most part, those are not things that we're dropping on the FAA for the first time here. They have been I've gone back and forth with the FDA on multiple occasions that are the result of not only discussions but with the FAA, but also more importantly, the result of actual flights that we've executed on the two airplanes over the past four years. So the results are really exchanges already positive with the FDA. In fact, just before this call, we were on a call with the FAA and discussing that as well as a visit there, a coming to Jody to discuss some of the remaining items. So overall, very, very positive.
Maybe one last item on that and that's what really gives us the ability and the commitment to go and invest in testing facilities, like we've talked about in a few minutes ago, the investments we have in our battery facilities are really a testament to the confidence we have with those tests.

David Zazula

Thanks.
Very helpful. And if I could just follow up on an earlier question specific to the exclusivity in the UA agreement. Can you just give a little more on the level of exclusivity that you're expecting to see there out of the agreement? And then how that would play into the interim or travel that I think you mentioned in the letter?

JoeBen Bevirt

Yes. So again, we have a six year exclusive for providing air taxi service in the Emirate of Dubai. And that is granted to us by the RTA, which is the authority that has I've been given the purview to regulate air taxis. And so this is a partnership that we've been working on since 2018, 2017, 2018, and it's fantastic to seeing it coming to fruition and very grateful for body and the operations team for for leaning in on on preparing for operations there and also very grateful for DT certification team on the work they're doing with the GTA.
To begin, I'm laying the groundwork for type certification so again, we're very pleased with the progress in the UAE as we are very pleased with the progress that we're making here in the US with the FAA and the excitement that we're seeing from countries around the world for this really important new technology.

Operator

Edison Yu, Deutsche Bank.

Edison Yu

Thanks for taking our questions. First one on search. I'm wondering if we have some sort of scenario analysis we can maybe share in terms of what kind of time line as a maybe and I know it's a tough question to respond to, but it just seems things are definitely delayed and moving slower. So could you maybe share kind of some scenarios you could see on maybe when we could get to the finish line and what would be the gating factors?

Didier Papadopoulos

Yes.
Thanks for the question, Edison.
We remain very excited about the engagement on the FA side and the progress that we're making on all fronts. Like we said earlier, a lot of our focus primarily this quarter has been in three key areas as it relates to FA. one. We're really excited about the G. one being signed and published in the Federal Register. But I was just as we said in last quarter, this one came in with more prescriptive details on the showing compliance elements, which led to additional updates that were needed to them in the compliances and the area specific certification plans. So the FDA had to work with us to support some of these refreshes, and we spent quite a bit of time making great progress on that front.
Number two, we continue to make progress on submitting test plans that I talked about earlier, which now covers a broader range of types of stuff plans we submitting such as equipment and system level test plans, but up seven, probably most importantly for me, a lot of the work has been going on on really upgrading a lot of the test assets that we have here, which is really really essential when you think about the level of vertical integration edge will be, which is really unique to our success story and then our plans and ability to deliver and execute on these in the second half with stage four. Those were some amazing achievements and effectively where we spent a lot of our time purposefully this quarter.

Edison Yu

And just to follow-up on on Middle East and actually just one on international. I know we're not giving any specifics on the assumptions or the economics, but in terms of the go-to market or the business model at a high level. Is this something are you planning to, for example, in the Middle East to to operate it to sell it direct? How do we think about just how the go-to market will look like for the the business model will look like.

Paul Sciarra

Thanks a lot out of thin.
Um, this is Paul. So with respect to our planned operations, in Dubai on, we're going to be doing a lot of work with respect to both operating those aircraft. That's in line with the agreements that we've made with our TA and we expect that to extend across the Emirates as we think about expanding that service. So that's going to look really similar to how we think about commercial operations here in the US. Now all that said, and there may have been some sort of misinformation or sort of misconstrue will come from some folks on this. We've always been very flexible as we think about what is the right way to commercialize. So when we think about customers like the DOD, for example, that is very much going to look like over a long arc on something like a sale of aircraft with sort of ongoing maintenance and support that sort of recurring on the backend. So GOV has two different ways that we're thinking about going after the market, some cases where we're likely to be very vertically integrated. We're actually doing the operations ourselves and a set of customers and potentially geographies where our commercialization looks a lot more like aircraft sale. And you've already seen that really play out on in the way that we're thinking about, say, the UAV market and in turn the DoD as a customer, and we're going to maintain that flexibility as we think about continuing to expand on our modes of commercialization over the next 12 to 18 months.

Operator

Austin Moeller Canaccord Genuity.

Austin Moeller

Hi, good afternoon. Just my first question here. Can you differentiate the key hardware differences between your previous viable prototypes and the current production series aircraft that are rolling off off the line at Marina now?

Didier Papadopoulos

Yes. Hey, Austin, this is a great question.
So on the differences between some of the electronics components, for example, or the actuation systems are primarily, I would say, evolutions between the previous aircraft and the ones coming out of the manufacturing line. The vast majority of these fit. And primarily, I would say two categories. One is expanding, for example, the environment or the flight envelope for this piece of equipment. So think about temperatures, for example, vibration and so on. And the other set is really associated with and learnings that we've collected over time relating to expanding, for example, the reliability aspects of these equipments. So the changes are again an evolution based on the four years of collective data from those two airplanes.

Austin Moeller

Great.
And any updates on your relationship with Toyota and if for how they might become the contract manufacturer over time while you're running flight operations?

JoeBen Bevirt

Yes. So as I mentioned, it is Japan. As I mentioned, the <unk>, the partnership with DoorDash has has been incredibly valuable for us. They've had team members on site with us here in California since 2019 and and as well as an incredible team working alongside us back in Japan. And I think as many of you know, Toyotas, one of the most incredible companies in the world when it comes to manufacturing are very complex systems. It very large scale with just spectacular quality. And so having them working shoulder to shoulder with us as were we planned our manufacturing expansion in Marina as we're looking to the layout of our Phase one manufacturing facility and planning for that. And then even looking beyond that, they are it's the best partner that I could ever imagine. And it was, as I mentioned, incredible to have Schick Asana as well as guide Asana and Kharasan. I'll join us and visit us this last quarter. We and we couldn't be more pleased with the support that we're receiving and optimistic about the path in the future alongside Toyota as we shift to from a development phase into scaling phase. And I think it is or is that our final question, should I so I think just as we yes, in closing, I would like to I'll talk about what a incredible opportunity that we see in front of us as a company. We are so proud of the team we're building and the way that we're approaching it and building this new industry. We think that our that our vertical integration is our SuperPower and that the I think of this very akin to the early days of automotive in the late 1890s and where we were making cars in very small volumes. And I see the decades that lie ahead of us as incredibly exciting as we take and to the year as a civilization. And so I'm I'm really, really pleased with what the team we're building. The culture we're building and the technologies we've developed and really look forward to talking to you all again next quarter. Thank you all so much.

Operator

Thank you. This concludes today's conference. You may now disconnect your lines at this time. Enjoy the rest of your day.