Flying-Taxi Company Joby Could Buy Heli-Taxi Company Blade For Cheap

Hailing taxis to get around big cities is something of a rite of passage, but acquiring that urban skill does nothing to avoid crushing Midtown Manhattan traffic. Enter a bunch of companies that want to dodge gridlock by taking to the skies. Blade is well-known as an Uber for helicopters, but after doing an IPO in 2021 as a Special Purpose Acquisition Company (SPAC), its value has been hammered down along with its stock, by about 60% from peaks. Enter Joby, another SPAC but one with a still-robust $13.5-billion market capitalization, and a deal to buy Blade for $125 million. Bloomberg reported rumors of an acquisition over the weekend, and Joby and Blade confirmed them on Monday.

Joby is a leader in the electric vertical takeoff and landing (eVTOL) taxi startup world, with financing from Toyota, Delta Air Lines, and others. The company already bought Uber’s air taxi arm, Elevate, in 2020. The goal with the Blade deal is to plug Blade users into Joby’s products, with flights commencing next year. And the deal is truly a good one for Joby, if it closes on schedule later this year: $125 million is less than half of Blade’s $309-million market cap.

Joby and its competitors, such as Archer Aviation, want to replace noisy gas-burning helicopters with quieter electric aircraft. At this point, they are in the awkward position of being both airframe manufacturers and companies that want to provide transportation services using those airframes. Developing a user base from scratch is going to be difficult, so gobbling up Blade for a bargain-basement price is a logical business move, as Bloomberg noted. The strategy makes sense for Joby: first buying Elevate, then picking up Blade. And it isn’t shocking that Bloomberg got the weekend leak: their deal desk is typically on the ball with stuff like this, and Joby likely wanted the news to break before its reports Q2 earnings this week.

This is really a tale of two SPACs. They haven’t fared well, after a booming resurgence of the go-public approach around the time of the pandemic. Cash-craving transportation startups went for SPACs because they needed a lot of capital up front to grow their businesses faster than they would have been able to via a more conventional venture-capital route. Unfortunately, many of them, like Blade, have burned through the cash and seen the capital markets weaken for subsequent fundraising. For Blade, the deal with Joby is a lifeline.

Air-taxi startups are effectively making one big bet: that customers will pay up to soar above traffic. This is especially appealing for people traveling from urban centers to airports, and for Joby and others that setup is ideal. They can build hubs in downtown Manhattan and ferry customers to Newark Liberty and JFK, where takeoffs and landings are uncomplicated. Airlines like the concept, hence the Delta stake in Joby.

Blade says it wants to switch to electric aircraft, but it’s currently tied to helicopters and seaplanes. Wall Street isn’t crazy about the company’s prospects, but the company did provide 50,000 rides last year, and it’s one of the few firms in this industry that has a decent brand identity. Joby has the financial firepower to solve its looming air-taxi customer problem at a price that’s almost too good to be believed. The SPAC boom sadly turned into a bust, and it only makes sense that one of the few winners would be able to snap up a company that didn’t hit the jackpot.