Lilium N.V. (NASDAQ:LILM) Q3 2022 Earnings Conference Call December 6, 2022 8:00 AM ET
Company Participants
Geoff Richardson – CFO
Klaus Roewe – CEO
Sebastien Borel – SVP, Commercial
Conference Call Participants
Colin Rusch – Oppenheimer
Alex Potter – Piper Sandler
Bill Peterson – JPMorgan
Adam Forsyth – Longspur Capital
David Zazula – Barclays
Savanthi Syth – Raymond James
Geoff Richardson
Good morning, everyone. Welcome to Lilium’s Q3 2022 Business Update Call. My name is Geoff Richardson, Chief Financial Officer of Lilium.
Before we start, let me go through a couple of housekeeping items. This is a virtual conference call, and for the moment, all participants are in listen-only mode. Today, we’ll give you an update on our progress since our last call in September. There will be time for questions after the presentation. We scheduled the call for 45 minutes, including Q&A time. Please note that this conference call is being recorded. A recording will be placed on Lilium’s Investor Relations page soon after the event.
As a reminder, after yesterday’s market closing, we posted our shareholder letter on our website. We have also posted the press release on the contract signature with eVolare. We invite you to take a look at it.
Before handing over to our Chief Executive Officer, Klaus Roewe, let me please give a reminder that our presentation will include forward-looking statements within the meaning of the United States Federal Securities laws that are subject to risks, uncertainties and other factors that could cause Lilium’s actual results to differ materially from such statements. Please refer to the cautionary statements and our shareholder letter and the risk factors discussed in our filings with the U.S. Securities and Exchange Commission for more information on these risks.
With us on our call today are our Chief Executive Officer, Klaus Roewe; our Senior Vice President, Commercial, Sebastien Borel.
Let me hand it over to you, Klaus, for some initial words.
Klaus Roewe
Thank you, Geoff, and great to join you all on this call.
Ladies and gentlemen, I’m really excited to share with you our latest achievements. Firstly, we signed our first commercial contract with predelivery deposits. The U.K. operator eVolare has secured deliveries of 10 aircraft with the option to purchase another 10. eVolare will serve the greater London area with it. As part of the agreement, eVolare will make a pre-delivery payment to Lilium to secure aircraft delivery slots. The deal coincides with the formal launch of the Lilium Pioneer edition. Sebastien will give you the details about that in a moment.
Secondly, we signed our first major commercial agreement in the Middle East with SAUDIA. SAUDIA will have the option to purchase up to 100 Lilium Jets and will establish an eVTOL network in Saudi Arabia. With this, we have a total order pipeline of 603 aircrafts. We will continue to convert and will use into binding aircraft purchase agreements in 2023.
As such, we successfully completed our fundraising on November 22. Thanks to further investment from existing shareholders, new investors and strategic partners, we completed a capital raise of $119 million. We also made significant progress towards certification. We have now submitted about 80% of our certification plans to EASA, up from 38% in September. Next week, we will conduct our third Design Organization Approval audit.
Lastly, our flight test campaign is advancing. Flight tests have continued including ground effects, downwash measurements and further high-speed testing up to 120 knots, which is about 222 kilometers per hour. Our second demonstrator aircraft is ready to join the campaign in early 2023.
Let me now hand you over to Sebastien Borel, Senior Vice President, Commercial for a more detailed update on our commercial achievements. Over to you, sir.
Klaus Roewe
Thank you, Klaus.
Earlier this year, we have clearly outlined our commercial strategy with a two-phase approach. The first phase addressing the premium segment including General and Business aviation and a second phase to address the scheduled regional services for the mass market. To support the first phase, Lilium launched a limited series to address sales to private individuals, the Lilium Pioneer Edition. This limited edition comes with a compelling service, tailored support, training packages, as well as exclusive cabin customization. The Lilium Pioneer Edition is limited to a total of 50 aircrafts, all of which we expect to sell by the end of 2023. All of them with predelivery payments of at least 50% of the purchase price prior to delivery.
As Klaus mentioned earlier and in conjunction with the launch of our Pioneer Edition, Lilium has received its first binding contract with predelivery payments from eVolare, a subsidiary of Volare Aviation, one of the U.K.’s largest helicopter and private jet operator. With it’s base in Oxford, eVolare provides access to prime locations around the U.K. including the Greater London area. This partnership includes a firm commitment for 10 Lilium Pioneer Edition Jets including predelivery payments with an option to purchase an additional 10, best is to hear from Volare Aviation directly.
[Video Presentation]
Going back to October, Lilium announced an MOU with SAUDIA with the intent to purchase up to 100 Lilium Jets and to deploy high-speed eVTOL network in the Kingdom. We believe that this partnership is a first of its kind in Middle East and totally aligned with Lilium’s premium launch positioning.
As part of the partnership, SAUDIA will support Lilium with local regulatory approvals. These two agreements, eVolare and SAUDIA bring the total order pipeline to 603 aircrafts. Lilium will continue to convert further with existing commercial MAUs into binding aircraft sales agreements in 2023. Lilium also views predelivery payments as an integral component of our future capital structure.
And with this, more from Geoff, on our finances now. Over to you, Geoff.
Geoff Richardson
Thank you, Seb.
This November, we announced the successful closing of a $119 million capital raise from existing shareholders, new investors and strategic partners. Participants included Aciturri and Honeywell, as well as LGT and its affiliated impact investor Lightrock, Tencent and B. Riley Securities. Lilium’s CEO, Klaus Roewe, as well as three board members, Barry Engle, David Wallerstein and Niklas Zennström, also participated in the capital raise.
We are pleased to have such a high-quality group of supporters in a challenging macro environment. These proceeds will strengthen our balance sheet and allow us to proceed with the assembly and testing of our Type-conforming aircraft, as well as reaching final agreement with EASA on all our Means of Compliance.
As we progress on our development, we are in active discussions to secure additional non-dilutive funding sources to finance our operations until Type Certification of the Lilium Jet. These include grants and subsidies from governmental authorities, as well as pre-delivery payments as discussed earlier in this letter. Additionally, we terminated the equity-line-of-credit facility in November. Overall, Lilium received proceeds of approximately $12.6 million from the ELOC.
Let’s take a look now at the Q3 financial results. Our total cash spend was €69 million in Q3. The increase in cash spend compared to the previous quarter of Q2 €63 million was driven by a ramp-up in one-time supplier payments, which included the e-motor development and battery industrialization with approximately €7 million. This is in line with our target budget of €250 million in 2022.
Our liquidity as of the end of Q3 and prior to the recently completed investment round stood at €160 million at the end of Q2 as €229 million. Looking ahead, given the macro environment, inflationary effects, and market uncertainties, we have initiated significant cost conservation measures at Lilium. We are currently finalizing our budget for 2023 and expect it to be consistent with our 2022 budget.
I’ll hand it over to Klaus for the latest program update.
Klaus Roewe
Thanks Geoff.
As I mentioned before, our certification program is making significant progress. Since our last update, we have submitted to EASA several more of our proposed certification plans, bringing the percentage of requirements recovered to about 80% at the end of November, up to 38% in September.
Lilium’s remaining certification plans are largely graphed and ready for submission. 72% of the Means of Compliance are already agreed with EASA and for the remainder, Lilium submitted its proposals to EASA earlier this year. Detailed discussions with EASA over the past months have led to significant progress on the remaining Means of Compliance. Based on those discussions, we anticipate that the EASA will accept our Means of Compliance in the first half of next year.
In parallel, with the type certification program, Lilium is working towards the Design Organization Approval with EASA. The DOA is a necessary prerequisite for any aerospace company to obtain a type certification of its aircraft. Lilium’s third DOA audit is scheduled to take place next week and the fourth and final audit is targeted for the first half of 2023.
Onto our industrialization, with our first type conforming aircraft due to go into assembly next year, our detailed design and collaboration with suppliers is accelerating. Strong partnership with Tier 1 aerospace suppliers are fundamental to pass our — to our path towards certification and industrialization. All the key subsystems of the aircraft need to meet rigorous aerospace quality standards.
Lilium has agreements in place for aerostructures, avionics, battery cells, energy management system, e-motors, propulsion system, aircraft interior and landing gears amongst others. In total, we have now selected or contracted about 75% of the total expected aircraft bill of material cost. Right now, we are in the process of onboarding additional suppliers for the engine fans and the inceptors, the sidesticks used for maneuvering the Lilium Jet.
Turning now to our flight test activities. Our flight testing continues with a current focus on high-speed maneuvers, ground effects and downwash measurements. Downwash measurements relate to the downward flow of the air from the aircraft and important to validate working of operations. Let’s have a quick look at some highlights since our last call in a little video.
[Video Presentation]
An accomplishment of these latest milestones, the aircraft continue to perform precisely as predicted by our computer-aided flight models, the Phoenix2 demonstrator enables us to verify in a real-world environment of flight physics underpinning our series aircraft, the Lilium Jet and supports our certification program. In addition, demonstrate aircraft called Phoenix3 is in the final stages of integration testing and due to enter flight testing in Q1 next year. Having too demonstrate aircraft that a disposal will give us additional support for testing and learnings before the first flight of type controlling production aircraft.
So let me please conclude with the following summary and outlook. We’ve made significant progress advancing our commercialization efforts in the third quarter with the signing of our first binding aircraft order including pre-delivery deposits and a breakthrough in the Middle East with SAUDIA MoU.
Having successfully completed the latest fundraise, our teams are fully focused on achieving the development and certification of the Lilium Jet and building out our manufacturing and supply chain capabilities. We are confident we have the right technology and the right team to bring this transformational product to the market.
In 2023, we will be working full steam towards signing binding agreements with deposits, securing government loans and subsidies, starting assembly of our type-conforming aircraft, building and testing our first battery packs, further flight testing with both technology demonstrators, receiving the Design Organization Approval, agreeing to full certification plan and Means of Compliance with EASA and last, preparing the manned first flight in 2024 of our Type-conforming aircraft.
And now let me hand you over again to Geoff, who will open the floor for your Q&A. Thank you, Geoff.
Geoff Richardson
Thank you, Klaus.
So now we have some time to take your questions. [Operator Instructions] We will now begin the Q&A session.
Question-and-Answer Session
Operator
Thank you very much. The first question comes from Colin Rusch from Oppenheimer. Please ask your question.
Colin Rusch
Thanks so much guys. Moving from having LOI’s into actual deposits with customers is a pretty important step. And I’m curious about the conversation with those customers. What’s been the key levers? Are you looking at the subsystem testing? Is it around the redundancy, like they mentioned in the video? How are you seeing any folks evaluate the product and decide to get over the hump and start spending some actual cash here?
Klaus Roewe
Seb, you want to take that, please?
Sebastien Borel
Yes, absolutely. We’ve announced very early on this year our partnership with NetJets, and we have engaged with a number of customers, some of which we announced during Farnborough and it became very apparent that some of the unique features of our aircraft became a unique selling point. And we are the only one having a full wing and sturdy engine.
So yes, redundancy in the safety aspect is absolutely a major component compared to conventional helicopters. And so as we progress all service through our own program in engineering and the confidence by which we can really provide everything we need to put into an agreement, which is performance-related and warranties and as we’re also progressing with our supply chain, we were absolutely able to transform all of the work we’ve done this year with the first phase segment, which is really right now the General and Business Aviation segment into a contract with deposits having binding terms on both end. Did I hopefully answers your question.
Colin Rusch
Okay. I’ll take it offline and dig into a little bit further. And then, Geoff, as you look at funding this business, obviously augmenting the balance sheet was an important step here. Could you talk a little bit about the key spend areas that you see over the next two years to really get ready for full commercialization and demonstration of the platform as you look through some of these non-dilutive opportunities? Obviously, project finance is one element, but — in the customer deposits, but just trying to get a sense of the overall magnitude of the capital that you’re looking for and where that would go from a business development perspective?
Geoff Richardson
Yes, great question, Colin. I think the headcount is stable, so that we don’t really need to add additional headcount. The main spend that we’ll be looking to add is really related to ramping up the supplier base and moving towards assembling the type-conforming aircraft for the flight campaign and then the working capital ultimately that will need to assemble the aircraft. And so if you look at CapEx, you look at manufacturer and you look at green jobs and you look at producing a product that customers want, that’s why we’re really focused on the subsidies and non-dilutive pieces from the pre-delivery payments that Seb and his team have been working on to government loans and subsidies and capital allows you to potentially add leverage as well.
So, the contracts are also quite important, Colin as we look to that. And so next year we’re really trying to hold the budget consistent with what we did this year, we’re taking money out in the corporate but also focusing a bit on ramping up the supplier base with nonrecurring costs to get the supplier base going Colin.
Colin Rusch
Great, thanks so much guys.
Geoff Richardson
Thanks.
Operator
Thank you. We will take our next question. The next question comes from Alex Potter from Piper Sandler. Please ask your question.
Alex Potter
Great, thanks very much. So, Geoff just to put a finer point on that, you mentioned you want to keep the budget consistent in 2022, it was a cash spend budget of €250 million and you’re targeting the same number in 2023. Did I understand that correctly?
Geoff Richardson
That’s — we’re in the process of finalizing Colin, sorry, Alex. But I guess I would say is, we’re looking at cost savings on the company and we’re looking at the supplier side, so that is consistent. That’s a good assumption for now the exact number, we’ll give you guidance in our next call. But we’re kind of looking at cost savings versus the supplier side right now.
Alex Potter
Okay, thank you. Very good. All right so then wanted to get an update on in how battery testing. I believe that you are in the process of establishing maybe some of your own facilities to conduct those battery test in-house. But my understanding is that it takes a while to get things like that permitted in Germany. So just wondering how long it will take until those facilities are completed. And then once they are how is your battery testing going to change versus what you’re currently doing with third-party labs.
Klaus Roewe
Yes, I’ll take it. Hi Alex, good to talk to you again. Klaus speaking. So it’s not that we have limitations here on in Germany if you do those testing is not at all. We have our own test lab that we are using, by the way, since a couple of years and we are using it to test out new battery recipes but also cycling batteries and this is ongoing and it takes a long because you can run the battery about 8x per day.
So if you would want to get into meaningful numbers of battery size, it always takes two months. So, but we are doing it internally, but we are also using external apps like energy assurance, which is I think a renowned app in the U.S. and you can see the results of our battery block which confirms that we have the energy density but also the power density that we need for our missions.
And secondly, we have also started external testing of our batteries with another laboratory, the Idaho National, which is a very renowned laboratory also in the U.S., doing basically the same. So we would want to have two independent sources of test wise for sure. We are conducting our internal tests and also iron blocks, which you formally known as ZenLabs, for sure in ZenLabs also conducting tests.
Alex Potter
Okay. Great. So another question that I had, you mentioned that you’ve got your second test aircraft coming Phoenix3. How is Phoenix3 going to differ from Phoenix2 in terms of its capabilities? I’m just trying to understand if you’re going to be able to do different kinds of tests with Phoenix3? Or is it more or less a carbon copy of Phoenix2 and you’re just going to be able to do, I guess, test that twice as quickly now? Or is it a different kind of capabilities that are coming with Phoenix3?
Klaus Roewe
Yes, that’s exactly the right view. So Phoenix2 and Phoenix3 are really identical. And there was no need to change Phoenix3 compared to Phoenix2 because Phoenix2 is already capable of basically performing all maneuvers that we would want to perform with such an aircraft, be it high-speed testing, transition flights, downwash, ground effects, what you saw on the video. And Phoenix3 is basically giving us additional capacity. So we also have additional flight crews so that we can intensify the testing in 2023.
Alex Potter
Okay. Great. Then maybe one last one, then I’ll turn it on. So I’ll pass it on. You mentioned that you’ve got your third EASA audit coming up here next week. I’m interested in knowing the extent to which that upcoming audit is going to differ from the previous two or the final one. Is there one out of these four audits that’s more stringent or more difficult than any of the others? Are they all more or less the same in terms of hurdles that you’re trying to clear. Just anything you can say about that upcoming audit would be helpful.
Klaus Roewe
Yes. Thank you. That’s a great question. No, they are building upon each other. And so it’s kind of a continuous journey. Basically, the third audit will attest that we really have the capabilities to design an aircraft and the fourth audit, but to get the DOA only with the fourth and conclusive audit is basically related more to things that you need to be able to do when you’re in service period.
So content-wise we are done to a large extent for the development part with the third audit. The fourth audit will be more for cost activities, continued awareness and so on. And for sure, we’ll be a conclusive one which enables us to be granted to former DOA from the EASA.
Alex Potter
Okay. Very good. Good luck. Thanks.
Klaus Roewe
Thank you.
Operator
Thank you. We will take our next question. The next question comes from Bill Peterson from JPMorgan. Please ask your question.
Bill Peterson
Yes. Hi, good afternoon. Thanks for taking my question. I’d like to follow up on batteries. Just to clarify, I don’t want to miss it. So is the battery chemistry fixed? Or I guess, are you still doing more process optimization? And if so, what is the timing sufficing the process? And I guess, secondarily, the types of tests you’re doing or whether internally or externally, what is the status of, I guess, performance, repeatability, thermal characteristics, charging, speed, thermal runway, cycle life, especially cycle life what kind of levels are you able to achieve now?
Klaus Roewe
Yes. Also a great question. Thank you for that. So yes, I would say we are in the process of fine-tuning our battery recipe. We have contract internally, but also externally, we have the energy density, which is essential for getting the range of the aircraft, there’s the power density that we need to lift up and lend the aircraft. We also have got confirmation that we get enough battery cycle life to enable our, I would say, extraordinary good cost position that we will have when flying the aircraft.
So we are doing these tests in a repeated way. The test results are very consistent between our internal ones between the ones of energy assurance. And with the Idaho National Lab, we are about 25% through the test program, which is going to be completed in early next year from what we see from the first 25% of the test program, they are absolutely coherent with what we have seen internally and also with the energy assurance lab.
Bill Peterson
Okay. Thanks for that color. I wanted to get the latest thinking from Lilium on, I guess, its own network, the Lilium Network. It seems like, obviously, you’ve gotten a lot of preorders, 600 MoUs. Is this still, I guess, critical to the business? And if so, like what should we think in terms of timing? Will this be two, three years after additional sales? Or how is the team thinking about this?
Klaus Roewe
Yes, it’s certainly not off the table. So we intend to pursue this, but our first intention and all our energy has been put together today in getting our aircraft certified. And then for the first one to two years, for sure, we are largely serving the premium segment. We want to then honor our MoUs and agreements we have with a more kind of general aviation type of customers like SAUDIA and afterwards difficult to give a timeline, but I would say not in the first three years, we also think about opening our own network. That’s still the plan, but it has been really pushed behind the other two.
Geoff Richardson
And if I may add on this one. I think what’s important to understand is that the premium actually segment is helping us tremendously as we are talking to authorities, as we’re looking at the lending sites, for all of those premium customers, it’s actually helping us as well, paving the way for the network. So it’s definitely something we want to do, but it’s actually good to start with another segment, which helps us developing it.
Bill Peterson
Okay. If I could sneak one more in. One thing we haven’t heard of recently is related to what Lilium is doing in terms of infrastructure development. I think in the past, you talked about Ferrovial. What are you doing with your commercial partners in terms of infrastructure? And I guess you have a lot of agreements to private individuals. Will these use existing airports or heliports like any specific infrastructure requirements for these applications?
Klaus Roewe
Excellent question. Thank you. We are still actively working with our partners on the infrastructure. We’re actually looking at a few others in different regions of the world to accelerate. But this is exactly what we just discussed. And if you look at Florida and other places where we like to have a scheduled service with a higher network, it takes some time to get some of the permitting to get some of the land agreement in place.
So we are actively working with them. However, as you just mentioned as well for the private individuals, much easier. You’re looking at private estates, you’re looking at luxury resorts, golf clubs. We have actually been talks with many, many, I would say, tourism industry and luxury industry players that have existing helipads where we can upgrade them into a vertiport really with a charging station on top and looking at some of the ground side.
But it’s much easier to go from a private general segment than it is to go from a commercialization segment. So yes, it’s absolutely right. We will work with them and they have with us sharing their locations with us and we’re working on it.
Bill Peterson
Thanks for the color.
Operator
Thank you. We will take our next question. Next question comes from Adam Forsyth from Longspur Capital. Please ask your question.
Adam Forsyth
Good morning. Just on the Pioneer Limited edition, great to see that launched, obviously. In terms of sales going forward, are we likely to see these as single aircraft sales? Or are we going to see something more similar to the Volare deal numbers of aircraft being filled through a kind of dealership-type structure?
Klaus Roewe
Good question. We’re looking at both, to be honest with you. We do have direct sales discussion, and we have also a reseller type of people that can look into aircraft and have it in a specific location. And what’s important for us is we have the right ecosystem around our end customer to make sure they have the maintenance that they have people to fly the aircraft, et cetera, et cetera. So you always have — most of the time, you always have someone helping us out with the end customer, but we do have interest going directly to us.
Adam Forsyth
Okay. And just a slightly technical one, just you mentioned ground effect issues in terms of the testing that’s been going on with [technical difficulty] have been an issue around ground effect. And I wondered if it has any particular advantages in that area and within your design.
Klaus Roewe
Well, on the aircraft side, first of all, we have what is called a devalue, which is a diameter of the aircraft, really, of 14 meters. So we can actually use most of what’s called it [indiscernible]. So most of the helipads in Europe have at least 14 meters of a diameter. And so we can use them.
Now then we have to look at the ground effect and the downwash. And there are ways for us to actually look from a trajectory perspective to look on how we can accommodate this with its specific terrain. So we’re doing a lot of analysis right now on some of the vertiports or helipad upgrade to fit our aircraft. It’s something which we can manage, like I said, from a trajectory perspective, and that we’re not that too concerned about.
Adam Forsyth
Great, thanks very much.
Klaus Roewe
Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from the line of David Zazula from Barclays. Please ask your question.
David Zazula
Hi, afternoon, and thanks for taking my question. Just first one is around the means of compliance and the band of first half. It seems a little bit on the wide side, not to make a light of it a significant challenge and uncertainty that’s going on there. Just wondering what are the key drivers or levers that could cause it to go one side or the other as you’re working what they asked on that?
Klaus Roewe
Yes. It’s basically the workload. So as I said, we have submitted our proposals. They are at the EASA, and we are discussing them. It’s basically working through the pile of documents. So I’m not foreseeing any technical, I would say, surprise or uncertainty. It’s just getting the work done. And as you can see, we have also progressed significantly on the certification plans. So it’s the two, which we are working through for the moment. And we have decided, together with EASA to keep this pace. We are in permanent exchange with them and vis-à-vis also with FAA. So it’s just getting the work done and balancing out the completion of the MLCs and also certification plans.
David Zazula
That’s helpful. And then looking at the flight demonstration, it seems like it’s not designed as a range flight, but with the advent of Phoenix 3, could you just discuss what you’ve gone as far as range on the flight so far and what the plan is to convert to maybe a little bit more range testing in 2023?
Klaus Roewe
Yes. We haven’t done a lot of range testing, and Phoenix — the both Phoenixes are demonstrate the aircraft. They don’t have the batteries that we are using now on our test facilities, and we are going to use in Pegasus. So we would not be able to take a one-hour flight with them. But it’s also technically, it’s kind of meaningless to do is because we don’t learn anything by flying straight away. We are rather spending our time on making maneuvers like the ground effect, which as people in from the vertical take on landing business, no, it’s a very delicate business.
We could be flying some 15 to 20 minutes with this aircraft, given the batteries to drive in style. We may do it at one point in time, but we feel from a technical learning perspective, it gives us nothing whilst what we are doing now, tuning our flight control laws and the likes what we have seen on the video for us is much more fruitful. So we have preferred to do this. We may do longer and we may also do much faster flights in next year when we have the second aircraft available so that we have more capacity and bandwidth.
David Zazula
Helpful. And then for Geoff, you did disclose in your most recent filing that there’s significant capital and I appreciate the discussion on how you plan to fill it. I guess I’m wondering why you would choose to terminate the ELOC though, given that, that was an option, what the thinking was behind that?
Geoff Richardson
Yes. I think given the size of this offering, we wanted to let the market settle and send the message that we were planning on utilizing that. So that’s one. We also found that an ELOC is something that you put in place before your seasoned issuer. So some of the mechanics were a bit suboptimal. So we then get out of it as much as we could from a mechanical perspective, but we really want to let the market settle given the most recent deal is the main reason.
David Zazula
Okay. Thanks, much appreciate it.
Operator
Thank you. We will take our next question. And the question comes from the line of Savanthi Syth from Raymond James. Please ask your question.
Savanthi Syth
Thank you, and good afternoon. Can you talk a little bit about the PDPs, like how Pioneer just — the 50% is timing of those? Like when you expect those to start flowing in or how the agreements will be done?
Klaus Roewe
Yes. I mean they are very much in line with industry standard, whereby we have the first deposit in a schedule until delivery of the aircraft. And you can imagine the kind of milestones we’re going to have in between the time of delivery and the first deposits. So it’s a spread PDP schedule. Based on some of the milestones and like I said earlier, we’re going to be getting more than 50% of the aircraft purchase price prior to delivery.
Savanthi Syth
Does that mean to be seeing some kind of PDPs coming in 2023? Or is that more of a 2024 event?
Klaus Roewe
There are definitely deposits coming into ’23, correct.
Savanthi Syth
Got it. And then I thought the service support and training package being included was interesting with the Pioneer Jet. And I was wondering if you could provide a little bit more color on how that’s set up in terms of — are you doing that a lot of that in-house or if you’re going to have partners of it and just how you might have gone around kind of setting pricing around that, given all the uncertainties around training and things like that still?
Klaus Roewe
Yes, absolutely. So first of all, the Pioneer, the Lilium Pioneer edition has a comprehensive service package to make sure that we can take care of everything A to Z type of solution, right? So it’s talking about maintenance, we’re talking about flight training and so on.
We do have like, I would say, two different packages depending on the type of partner we’re going to have if they are certified for maintenance and flight operations, obviously, they can do things on aero.
Going back to flight training, we do have an agreement with Lufthansa aviation training, and we have an MOU with FlightSafety International. I’m not able to comment more on this, but we do have partner working on the flight training side so we can provide trainings to the crew, but also to the mechanics and so on.
So it’s really — the Pioneer edition comes with training package, tailored services and maintenance services along with, of course, cabin — quite a bit exclusive cabin and customization options.
Savanthi Syth
That’s helpful. And if I might just ask a quick follow-up question. Just can you talk about the cost savings that you’re kind of looking to do. Could you describe a little bit more about kind of where that’s coming from?
Klaus Roewe
Cost savings for the company, I think we reviewed all external spend, reviewed all necessary activities. So I think a lot of it is really as the program has progressed really defining what really needs to be happening and eliminating anything that is a nice to have. So it’s spending a lot of time really sharpening the goals and reducing any kind of extraneous spend as the best way I could describe it.
Savanthi Syth
Got it. Thank you, everyone.
Operator
Thank you. At the moment, there are no more questions on the line. Therefore, I give back to Geoff.
Geoff Richardson
Okay. With that, I think we’ve come to the end of our Q3 2022 business update. Thank you once again for joining us. We look forward to speaking with you again next year. Everyone have a great break and a great start to the New Year. Cheers.
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