WHEN: Today, Thursday, October 6th
WHERE: CNBC’s ESG Impact
Following is the unofficial transcript of a CNBC interview with Heart Aerospace Chairman, CEO & Founder Anders Forslund and United Airlines Ventures President Mike Leskinen at CNBC’s ESG Impact conference, which took place today, Thursday, October 6th. Video from the interview will be available at
All references must be sourced to CNBC’s ESG Impact.
PHIL LEBEAU: Hey Tyler. Mike, Anders, thank you for joining us. We’ve got a lot of things to discuss including the state of electric aircraft, if you will, that are being developed. Where are we Anders in terms of as you were making your moves to develop the aircraft, paint a timeline in terms of how far into the future until we start to see first flight, first commercial flights and then when United is going to be taking passengers?
ANDERS FORSLUND: Well, we’ll see electric airplanes in the air and in commercial service before the end of this decade. So are actually we will enter into service in 2028, but already in 2026 is when we start test flying these aircrafts.
LEBEAU: Mike, when you look at that it’s a huge potential opportunity, isn’t it?
MIKE LESKINEN: It’s a it’s it’s a requirement, right? We have a job as an airline industry to minimize our carbon footprint and eventually by 2050 take our carbon footprint to net zero. And so at United, we’re taking a portfolio approach where we’re going to invest in electrification on short haul flights. And eventually I think medium haul flights, starting with the ES-30 that we’ve purchased from Heart Aerospace. And then for the longer haul flight. We’re looking at sustainable aviation fuel and continuing growth to grow the feedstock and technology that will increase the global supplies of sustainable aviation.
LEBEAU: When you first made the investment, you’re looking out. You’re making a bet on the future and you’re saying, look, we think that this is going to pay off 5, 6, 8, 10 years down the road. Did you have any hesitation in terms of saying not necessarily the money the investment but more, I’ve got to make some bets. I think this is the right one. But we’ve got a lot of hurdles to clear.
LESKINEN: There’s absolutely a lot of hurdles to clear but aerospace development cycles are measured in decades and you have to get started now. We cannot continue doing and operating our business the way we do. It is it is imperative that we change it and the way we’re going to change it is through investing in technology, technology for electric aircraft, technology for sustainable aviation fuel production because existing technology isn’t going to isn’t going to is going to either cause us to fly less which is an unacceptable alternative or to continue with a carbon footprint which we believe is also equally unacceptable. Other airlines have taken the approach of using offsets and I think offsets solves this much of the world’s problem with carbon. And this is actually to truly decarbonize the way we run our business.
LEBEAU: Anders, where do things stand in terms of battery technology right now? Because when we talk with automakers who are leading the charge if you will in terms of development of battery technology, the costs while they’re coming down, there’s such a surge in plans to build EV batteries, which ultimately will be powering your aircraft that it creates the question of is the cost gonna be able to stay as low as you need it to stay?
FORSLUND: Yeah, I don’t think that’s a big problem for us. You know, the utilization rate that we have for our aircraft is tremendous. So with a 30 seater aircraft and you’re flying it 10 times a day, it’s like you’re transporting 300 people every day. So so even if you know, get a few x’s on the costs that the automotive industry is paying on the batteries, you still get a very profitable service.
LEBEAU: And let’s be clear, at least initially, you’re talking about replacing what we would refer to as regional aircraft—
FORSLUND: Correct.
LEBEAU: An aircraft that we would fly let’s say from here to Springfield, Illinois or another market like that. How quickly will you be able to recharge these? In other words when because that’s a big part of what you’re going to need, correct?
FORSLUND: Yeah, we’re going to be recharging them in under half an hour. And that’s tremendous progress being made right now really being fueled by the trucking industry.
LESKINEN: And I’ll pile on because really half an hour the turn time of an aircraft, generally around that half an hour mark so it doesn’t change how we operate and utilize the aircraft. Number of regional aircraft today, you know, the mark you want to hit is 10 to 11 hours of utilization per day and so it really is something we’re already achieving. We have to add the charging into that mix which is something we need to work on.
LEBEAU: Do you sense that the passenger, will they care let’s say let’s say everything goes on on schedule, and it’s 2028 and your some of your regional flights will be Heart Aerospace aircraft, electric aircraft, will the, will the passenger care at all that it’s electric or is it your feeling that we’re seeing enough adoption of EVs and electric powered aircraft or whatever it might be or vehicles that people will be okay with it?
LESKINEN: Look, what the passenger cares about is the interior of the aircraft, experience they have and to have on time departure, on time arrival. And so I think that the passenger won’t see a difference with an electric aircraft what I think they will see as we adopt electric aircraft and I think the cost for 30-seat aircraft, 50-seat aircraft as as the industry evolves is going to be lower cost than a traditional aircraft. And what that means is that small, small city is going to get either service that they didn’t have before that they had to drive to an airport or greater frequency of service that’s going to allow that customer to business customer from that small town to maybe do a trip in and out in the same day whereas before you couldn’t do that with traditional jet powered aircraft.
LEBEAU: Anders, you and I were talking earlier as we were coming over to the hangar, you think that there’s a real opportunity in just what Mike’s talking about in terms of it’s an untapped market. Right now people in some of these smaller markets, they’re flying not not very frequently, correct?
FORSLUND: Yeah, it’s like one in every 200 trips that people are flying if you’re looking at a 250-mile trip. So most people are driving these distances, but it used to be different. So, you know, go back to the 1990s, there were hundreds of small aircraft serving a lot of communities that have now lost service. So the reason people stopped flying small planes short routes is because of the jet engine. It’s a remarkable technology that’s ushered in the jet age, but it’s also been something that’s holding us back now because it’s designed for larger aircraft for for longer routes. So when you bring in an electric motor which is first of all, very mechanically simple, easy to manufacture at scale. It’s something that you can get a lot of synergies with the developments happening in the automotive industry. They can start building small planes that have completely different unit economics.
LEBEAU: You’re just starting to talk with your suppliers and lock them in for the aircraft. How much has the rush of investment if you will into EVs and the need to develop battery manufacturing facilities, not only here in the United States, but around the world, how much is that changing the conversation?
FORSLUND: I mean I think the automotive industry like the example there, you know, with Tesla and all that shows that we, you know, the industry can’t be on its heels. And but I think everybody is also recognizing that this is a joint effort. So it’s not going to become a startup by themselves and appending it. What an aircraft is it’s a Lego kit. It’s a it’s an effort that’s being made by by, you know, an OEM and a bunch of suppliers that are coming together to build this and we’re just humbled to see that that the supply chain, the traditional aerospace supply chain is supporting us so much.
LEBEAU: You’ve got Heart and you’ve also got other investments, including eVTOL, with a couple of manufacturers. Similarities in terms of the development of that versus what Anders is doing?
LESKINEN: There’s one key similarity and that’s in the battery technology. So when you think about a jet engine and the utility of that, the utility of it is because kerosene jet, Jet A has is so energy dense by way and volumetrically. And so the critical enabler for whether it be eVTOL flight or fixed wing electric flight is to get that energy density and the cost of that battery pack to a point where it can compete with something like kerosene, it’s never going to get to the same energy density of kerosene. But we’re on that trajectory and so both fixed wing electric and eVTOL certainly accelerated by what happened in the automobile industry. On eVTOL though Phil, I think we are very involved there and it is my view that eVTOL is going to change the way we live and work. And it’s not taking airplanes out of the sky though. It’s gonna take cars off the road. It’s gonna allow us to live if you live in Manhattan to get out to the airport with predictability in seven, seven and a half minutes from downtown Manhattan out to Newark than you’re gonna get maybe if you’re flying on a regional flight, maybe you get on Heart ES-30 aircraft and your entire trip will have been carbon free.
LEBEAU: Raises the question for eVTOLs, what is the bigger hurdle right now? Is it the technology or is it going to be convincing the regulators and the flying public you’re comfortable seeing these fly around suburban areas, urban areas, wherever it might be?
LESKINEN: Unquestionably it’s the latter. The technology is there today to build these aircrafts, make them safe, make them reliable and cost effective. And I think that technology is only going to evolve and therefore make them quieter, safer, more cost effective. But the adoption, air traffic control, how you integrate that in congested airspace, how you land the aircraft at the airport, how you in, how and where you build the infrastructure to go hop on your eVTOL to get to the airport, make sure it’s convenient to offices where you have business executives—
LEBEAU: Which brings up the ports and the development of those and whether or not that how that develops.
LESKINEN: All that’s going to take lots of planning, lots of capital. And so that’s why we’re as United Airlines we’re there early to get those processes started.
LEBEAU: Anders, are you worried at all by the the economy and in terms of what’s happened and the rising interest rates in terms of what it might mean for commitments that you’re looking for as companies are trying to build new battery manufacturing facilities or secure supplies, whether it’s lithium, whatever it might be? Does that worry you right now?
FORSLUND: I mean, the economy goes up and down. But I think the overall trend that’s going to be happening over the next decade is, you know, the sustainability question is going to be more and more in focus and we have mandates. You know, United has put forth kind of a powerful mandate but we also have governmental mandates and international mandates that is pushing this development. Now obviously we’ll we will see a little bit of a hype cycle here and I think what we’ll see now is that, you know, there’s there’s been a lot of startups, a lot of companies and I think there’s gonna be a bit of a consolidation where where the winners are a little bit being picked.
LEBEAU: How long does that consolidation take? A year, year and a half? And I understand—
FORSLUND: I think that’s yeah, it’s over the next year or two. I think that’s what you’re gonna be seeing.
LEBEAU: Mike, I want to ask you about SAF and the importance of it. The Inflation Reduction Act goes a long ways towards spurring what should be the manufacturing, the supply making of SAF. How quickly does that start to work its way into aircraft? I know it’s not going to happen overnight. But are we looking out three, four years before we start to say, okay, we really see the impact of SAF?
LESKINEN: Phil it’s game changing, and I was gonna speak to interest rates in the capital markets a little bit but let me tie that question together with with the former question. There’s headwinds and tailwinds to startups. The higher interest rate environment, the tougher capital market environment is definitely disproportionately impact, impacted companies that are pre revenue. And that just is, you know, common sense that that’s what, that gets hit the hardest, but you’ve got this huge tailwind of ESG that is pushing. Think about the CORSIA regulation for international air travel and how that’s going to accelerate the need for electric aircraft. And most recently, and you mentioned it the Inflation Reduction Act, and there’s some critical pieces of Inflation Reduction Act that we’re very, very happy about. United was a big proponent of this legislation. One piece is a blenders tax credit that helps boost the economics around sustainable aviation fuel here and now today, and we’re excited about that. That was important, but even more critical and exciting about what the IRA brought is what it’s doing to clean hydrogen and the production of green hydrogen specifically, and to the point source capture of carbon dioxide, where it makes projects that would not have been profitable now very profitable. We have a portfolio pipeline of sustainable aviation projects at United that’s 177 companies deep, and we were pencils down on a number of those because without this legislation, the hurdles were just too far to develop that technology. There are literally dozens of companies that wouldn’t have worked that now are viable startups that you’ll hear about United Airlines and United Airlines Ventures investing in in the coming months.
LEBEAU: Paint a picture in terms of people hear about SAF, it’s very limited in use right now. Just a few airports even have it available for for airlines and we’re talking basically Los Angeles and a few other airports.
LESKINEN: That’s correct. And SAF right now, United Airlines, by the way, has purchased three times more SAF than any other airline in the world. In fact, fully as we look at all the public commitments, we have commitments to buy 40% of the world’s supply—
LEBEAU: But the key is, you need the supply.
LESKINEN: We need the supply—
LEBEAU: You have the commitment—
LESKINEN: And even that is 1% of overall aviation fuel less than 1% and so the key is how do you increase and diversify the feedstocks that you can produce SAF from. Right now, vast majority of SAF is made in a HEFA process that uses wastes, fats, oils and greases. So really think about french fry grease from McDonald’s and getting collected—
LEBEAU: Sure.
LESKINEN: There’s only so much to go around. And so right now what you see global aviation doing is bidding up the price of that scarce resource of french fry grease, and it’s not changing, it’s not changing the carbon footprint of aviation. We’re taking a very different approach at United and that is investing in technology that’s gonna allow us to make SAF from woody biomass, to allow us to produce SAF from waste municipal waste, to allow us I think the Holy Grail is a power to liquids approach, which the IRA does a lot to further. And so that’s what we’re all about at United is how do we make sure that a decade from now and 15 years from now that we have technologies that allow us to produce SAF from numerous sources?
LEBEAU: We’re going to wrap things up here Anders with a couple of quick questions for you guys. Look into your crystal ball, 2030, how many of your aircraft do you expect are going to be in commercial service around the world? And how much will what we’re seeing on the cost and the weight of the batteries that are powering aircraft right now or could power aircraft right now, how much will that change by 2030?
FORSLUND: No, I think that that the first of all, we’ll have, you know, a few 100 aircraft in a few key markets. So I think in the US, for instance, you will see it and in short hops say in Colorado when you’re flying to Aspen from Denver, to be a potential route in the US probably around 100 100 planes. And then what I see about this technology is slowly but steadily increasing. We have a little bit of a lag because sort of when the technology is proven in the lab, it takes a while for it to go right through to mass production and then through certification. But the interesting thing about what we’re building as an aircraft is that although the battery technology is something that we will be replacing, as the batteries get to the end of their life, you know, within every two years, we get the chance to upgrade them because the aircraft is going to last for for, you know, 20 years, so the aircraft that you’re buying in 2028 is going to be a completely different aircraft by 2048. So it’s actually kind of like an appreciating asset for the airlines.
LESKINEN: That’s really key to United’s involvement, by the way, because I think initially the aircraft we’re going to want to fly on routes that are 200 miles and less but as that energy density increases, that same aircraft is going to have a range of 250 miles, 300 miles, which is going to give us a lot more utility here connecting our hubs.
LEBEAU: Last question for you Mike. Look into your crystal ball, 2030, I know there’s you’re putting a lot of bets in a lot of different areas especially when it comes to ESG, carbon capture, eVTOLs, Ander’s company. What do you see as the portfolio if you will by 2030, how much has it expanded?
LESKINEN: I love it, I think I think we will have fixed wing electric aircraft, the ES-30 in particular, flying regional routes, I think probably O’Hare and Denver being key markets for that initial batch of electric aircraft. I think you’re gonna see 100 or so eVTOL aircraft flying routes in our most congested cities so think about San Francisco and New York, flying our customers from Center City to the airport so the trip to the airport will be decarbonized and I think that we will have a a meaningful proportion of our long haul flights powered by SAF, 10%, something in the vicinity of 10% of our longer haul flights being able to be powered by sustainable aviation fuel.
LEBEAU: Can’t wait to see what happens over the next decade. Mike Leskinen who is the head of investor research or investor relations I should say and and also the venture capital fund at United Airlines, United Ventures. Thank you for joining us. Anders Forslund who is the founder and CEO of Heart Aerospace. Can’t wait to see what this aircraft looks like when it when first flight happens in 2026 and then commercial service in 2028. Tyler, I’ll send it back to you.
