Boeing Traders in for Big Seat at Table with Archer Aviation Partnership

Boeing, the aerospace giant behind commercial jets and defense systems, has made a significant move in the electric aviation space by partnering with Archer Aviation. The two companies have agreed to combine three of Boeing's assets, Wisk Aero, Insitu, and SkyGrid, into Archer Aviation in exchange for a 19.75% stake in the company, subject to adjustments.

The deal is not a simple sale, but rather a strategic move by Boeing to give Archer Aviation the resources it needs to push these businesses forward while maintaining meaningful exposure to any potential upside. Wisk Aero is working on autonomous electric flight, Insitu generates over $200 million in annual revenue from unmanned aircraft systems sold to defense and government customers, and SkyGrid provides the software layer needed to manage autonomous aviation.

Boeing will also receive warrants to buy up to another $200 million of Archer Aviation equity, the right to appoint a director to the company's board, and continued access to Wisk technology through a collaboration agreement. This partnership gives Archer Aviation Boeing's aerospace muscle, while providing Boeing with optionality without having to bankroll every dollar of the next chapter itself.

The valuation of Boeing stock is currently 11.76% above its GuruFocus GF Value of $210.81, suggesting that the market already expects a better future for the company. However, investors should keep their feet on the ground as the deal's success depends on getting it through regulators and proving that the combined entity is worth more than the assets Boeing gave up.