Boeing Sells eVTOL Businesses to Archer Aviation in $55 Million Deal

Boeing recently announced it will sell three of its aerospace and electric vertical takeoff and landing (eVTOL) businesses to Archer Aviation. The deal, which also includes a $55 million equity investment in Archer, could eventually produce billions of dollars in value for Boeing. However, the company's market cap is $170 billion, making this windfall relatively small.

The three businesses being sold are Wisk, a eVTOL builder; Insitu, a drone maker; and SkyGrid, an air-traffic software company. By merging these companies into Archer, Boeing is turning what would be routine divestitures into opportunities for growth. The deal includes a provision that allows Boeing to use Wisk's autonomous flight technology in its commercial and defense aircraft products.

Boeing retains nearly 20% ownership of Archer Aviation after the deal closes, pending regulatory approval. This gives the company a stake in the eVTOL market and potential future profits. However, the upside from this turnaround is already reflected in Boeing's stock price, which trades at around 77 times trailing-12-month earnings.

While Boeing has made progress in getting its commercial aircraft business back on track, including receiving FAA approval for its 737 MAX 7, its defense aircraft business remains a concern. The company aims to reach $10 billion in annual free cash flow, but this is below its pre-grounding levels of $14 billion.