Boeing reports first loss since 1997 as MAX costs rise to $18.6 bn

Yahoo – AFP, John BIERS, January 29, 2020

Boeing reported its first annual loss in more than two decades as the lengthy
grounding of the 737 MAX weighed on revenues and added to costs (AFP Photo/
Jason Redmond)

New York (AFP) - Boeing reported its first annual loss in more than two decades Wednesday as the lengthy grounding of the 737 MAX undercut the company's revenues and exploded costs.

The aerospace giant reported a $1.0 billion loss in the fourth-quarter and a loss of $636 million for all of 2019, the company's first year in the red since 1997.

Newly-installed Chief Executive David Calhoun, who took the reins this month to stabilize the situation, pledged to turn the company around even as Boeing disclosed $9.2 billion in additional costs connected to the MAX, essentially doubling the bill from the disaster.

Some analysts had expected new costs twice as high, and despite the hefty charges, Boeing shares advanced Wednesday.

The MAX has been grounded since March following two crashes that killed 346 people that opened the doors to intense scrutiny of Boeing's safety practices, as well bruising congressional investigations which have revealed a troublesome culture at the aviation giant.

"We are committed to transparency and excellence in everything we do," Calhoun said in a statement. "Safety will underwrite every decision, every action and every step we take as we move forward."

Calhoun has been at the helm of Boeing only since January 13 after Dennis Muilenburg was ousted in December following criticism of his handling of the crisis, and immediately after a damning series of internal communications were released.

Calhoun is targeting mid-2020 to win approval from aviation regulators to resume flights on the MAX, which is seen as a realistic timeframe after Muilenburg repeatedly pushed a more optimistic schedule.

Calhoun told CNBC that he was "confident as a CEO can be" of the current timetable, adding that "we put together a schedule we think we can make."

Higher costs

The grounding of the MAX dented Boeing's earnings in multiple ways, among the most damaging of which was a halt in deliveries of new planes to customers, a major source of revenue.

Boeing revenues in the fourth quarter plunged 36.8 percent to $17.9 billion, while revenues for all of 2019 dropped 24.3 percent to $76.6 billion.

The crisis also prompted the manufacturer to first reduce and then halt production of the MAX.

Boeing said Wednesday the changes in the production schedule added $2.6 billion in costs connected to airplane deliveries, plus another $4 billion in "abnormal production costs," which are primarily in 2020 and associated with the suspension of the MAX plus a "gradual resumption" of production.

Chief Financial Officer Greg Smith said MAX production will be at "low rates" in 2020, with increases "over the next few years."

The company set aside $2.6 billion to compensate airlines that have been forced to cancel thousands of flights due to grounded MAX planes and undelivered aircraft.

With these costs and expenses disclosed previously, the total impact on Boeing is $18.6 billion.

Ripple effects

The MAX crisis has also weighed on numerous suppliers, such as Spirit AeroSystems, which announced earlier this month that it would lay off 2,800 employees in Kansas due to the production stoppage.

And General Electric, which builds engines for the MAX, said the crisis lowered cash flow by $1.4 billion for 2019.

Boeing also announced Wednesday that it would again cut back production of the 787 Dreamliner, a top-selling plane that has supported revenues during the protracted 737 MAX grounding.

The aerospace giant plans to trim production to 10 airplanes a month in early 2021 through 2023 based on the "near-term market outlook," Boeing said.

The company in October had dropped production to 12 a month from 14 due to lower orders from China.

A note from JPMorgan Chase said Boeing's charges on the MAX were "less than feared," although the company was expending cash at a faster rate than expected. Boeing has reportedly lined up $12 billion in loans, but "balance sheet management" in 2020 will be an area for questions, the note said.

In another non-MAX development, Boeing set aside $410 million to cover costs of an additional uncrewed mission after the December NASA flight did not reach the International Space Station.

"NASA is evaluating the data received during the December 2019 mission to determine if another uncrewed mission is required," Boeing said.

Boeing shares rose 2.2 percent to $323.66 in early-afternoon trading.

Boeing's new 777X airliner takes off on first flight

Yahoo – AFP, Jason REDMOND, with Christophe VOGT in Washington, January 25, 2020

The snow-covered Olympic Mountains are pictured in the background as a
Boeing 777X airplane takes off on its inaugural flight at Paine Field in Everett,
Washington in the United States on January 25, 2020 (AFP Photo/Jason Redmond)

Everett (United States) (AFP) - Boeing's new long-haul 777X airliner made its first flight on Saturday, a step forward for the company whose broader prospects remain clouded by the 737 MAX crisis.

The plane took off from a rain-slicked runway a few minutes after 10:00 am local time (1800 GMT), at Paine Field in Everett, Washington, home to Boeing's manufacturing site in the northwestern United States.

Weather conditions had already twice delayed the inaugural takeoff of the plane, which sports blue and white company colors and is emblazoned with the Boeing name.

High winds led to its postponement on Friday, and the company blamed weather for an earlier delay on Thursday, which was rainy.

"Yes!" shouted Boeing spokesman Josh Green as the plane's wheels finally lifted off the tarmac as its two powerful engines sent up huge clouds of mist.

Minutes earlier, the pilots had deployed the plane's winglets -- folding wing tips -- designed to improve the craft's fuel efficiency and make it possible for the plane, with the widest wing span ever from Boeing, to be accommodated at more airports.

A Boeing 777X airplane taxis before taking off on its inaugural flight at Paine 

Field in Everett, Washington in the United States on January 25, 2020 (AFP Photo/

Jason Redmond)

The 777X quickly disappeared into the clouds; after a flight lasting several hours, it was to land later at Boeing Field in a Seattle suburb, some 30 miles (50 kilometers) to the south.

The 777X was originally to take to the skies for the first time in mid-2019, but that was postponed due to problems with the new engine, manufactured by General Electric, and difficulties with the wings and software.

Saturday's flight was to be the first of a series of in-flight tests. If they go well, Boeing will officially file for approval from the Federal Aviation Administration (FAA).

With Boeing facing a crisis over its top-selling 737 MAX following two deadly crashes, the 777X is supposed to compete in the long-haul aircraft market with the A350 made by rival European aircraft manufacturer Airbus.

Major airlines including Emirates, Lufthansa, Cathay Pacific, Singapore Airlines and Qatar Airways have placed some 340 orders for the 777X.

The first deliveries of the new model, with maximum capacities of 384 to 426 passengers depending on the configuration, are not expected before early 2021, instead of mid-2020 as initially planned.

Boeing employees and others watch as a Boeing 777X airplane taxis before taking 

off on its inaugural flight at Paine Field in Everett, Washington in the United States 

on January 25, 2020 (AFP Photo/Jason Redmond)

The aircraft encountered significant problems during pressurization tests in September.

Business down

Boeing's business has also been weakened by a lack of firm orders from Chinese airlines for its 787 Dreamliner, which is expected to see production cuts.

The 777X has a range of 16,200 to 13,500 kilometers depending on its configuration and the number of passengers aboard, according to the Boeing website. It is also extremely fuel-efficient, an important consideration at a time when passengers are increasingly concerned about carbon emissions.

Its list price is between $410 million to $442 million, though customers often negotiate discounts.

US air safety regulators could clear the 737 MAX to return to service before mid-year, a person close to the process said Friday.

A pilot gives a thumbs up as he taxis a Boeing 777X airplane before taking off on 

its inaugural flight at Paine Field in Everett, Washington in the United States on 

January 25, 2020 (AFP Photo/Jason Redmond)

The plane has been grounded since March following two deadly crashes, in Ethiopia and Indonesia. On Tuesday, Boeing announced that it did not expect to win regulatory approval until mid-2020.

Boeing suspended production of the MAX this month but Chief Executive David Calhoun said this week the company plans to begin ramping up production of the model in anticipation of winning regulatory approval to restart service.

Calhoun began as CEO earlier in January following the ouster of Dennis Muilenburg, who tenure was rocked by the MAX crisis which led to deteriorating relations between the company and the FAA.

Calhoun aims to turn the company around, and has highlighted restoring Boeing's reputation with regulators, customers and other stakeholders as an imperative.

Tesla value hits $100 bn, triggering payout plan for Musk

Yahoo – AFP, January 22, 2020

Tesla chief Elon Musk, during the delivery ceremony for the firm's China-made
Model 3 in Shanghai in January 2020 (AFP Photo/STR)

New York (AFP) - Tesla's market value hit $100 billion for the first time Wednesday, triggering a payout plan that could be worth billions for Elon Musk, founder and chief of the electric carmaker.

Shares in Tesla rose some 4.8 percent in opening trade to extend the gains in the value of the fast-growing maker of electric vehicles.

Under a compensation plan approved by Telsa's board in 2018, Musk is to be paid in stock awards based on the value of the company, which could be worth as much as $50 billion if Tesla reaches $650 billion.

Musk agreed to the plan, which would pay him nothing until Tesla's value reached $100 billion.

The package, using shares which "vest" based on certain criteria, gives Musk stock worth around one percent of the company for each of 12 milestones over a 10-year period.

For achieving the first milestone, Musk will get shares worth $346 million if Tesla shares hold above $100 billion over six months, based on the formula.

In announcing the plan in March 2018, the company said Musk "would receive no guaranteed compensation of any kind -- no salary, no cash bonuses, and no equity that vests simply by the passage of time" without the rise in value.

In 2019, Tesla sold some 367,000 vehicles, a rise of 50 percent from the prior year.

That is a fraction of the 10 million sold by leading global automakers Toyota and Volkswagen, but investors have pushed up Tesla's value in the expectation that it is changing the industry.

Tesla has begun manufacturing in China and has announced a new plant in Germany that could start production by 2021.

The Tesla Model 3 electric car is designed to be more affordable than its earlier models -- around half the cost of the $70,000 models -- and is fueling expectations of stronger growth.

Analyst Dan Ives of Wedbush Securities offered an upbeat view of Tesla in a research note Wednesday.

"In our opinion, the company has the most impressive product roadmap out of any technology/auto vendor around (which the market cap reflects vs. its traditional auto competitors) and will be a 'game changing' driving force for the EV (electric vehicle) transformation over the next decade with Model 3 front and center," Ives said.

Anger and grief as Canada remembers Iran plane crash victims

Yahoo – AFP, January 13, 2020

A woman cries during a ceremony in Toronto for the 57 Canadians killed when a
Ukrainian airliner crashed in Iran (AFP Photo/Geoff Robins)

Toronto (Canada) (AFP) - Thousands of people attended vigils Sunday in Canada for the 57 Canadian victims of the Ukrainian airliner crash in Iran, most of them from the Iranian community.

Prime Minister Justin Trudeau told a memorial event in Edmonton that "this tragedy struck our Iranian-Canadian community, leaving cities like Edmonton reeling, but this was truly a Canadian tragedy."

"We want to assure all families and all Canadians that we will not rest until there are answers," he said. "We will not rest until there is justice and accountability."

Six university students were killed when the Ukraine International Airlines flight crashed on January 8, shortly after takeoff from Tehran's airport.

All 176 people aboard were killed, 57 of whom were Canadian, many of them dual Iranian nationals.

A woman weeps during a memorial service at the University of Toronto (AFP 

Photo/Geoff Robins)

Iran has since admitted the airliner was mistakenly shot down by Iranian missiles.

At a ceremony at the University of Toronto, many of those who had been close to the victims expressed their grief and anger.

"It's a story that resonates with the people, these immigrants with a lot of hopes and dreams. They worked super hard, they were high achievers and they get here only to be shot down in the middle of the air," said Ali Esnaashani.

"I'm angry, I'm sad," the 30-year-old told AFP. "But I also feel inspired to see the community come together like this."

On stage, Mehrdad Ariannejad, head of the Canadian-Iranian cultural dialogue nonprofit Tirgan, began to cry during his speech.

"Shock has given way to grief and increasingly anger," he said.

Deputy Prime Minister Chrystia Freeland speaks during a memorial ceremony in 

Toronto for the Canadian victims of the Ukraine International Airlines crash (AFP 

Photo/Geoff Robins)

"We must demand justice from the Islamic Republic authorities and demand answers and compensation for the negligence and lack of regard for human life that has led to this tragedy."

Canada is home to a major Iranian diaspora. In 2016, 210,000 Canadians claimed Iranian origins, according to official figures.

Half of them live in Toronto, which has one of the most significant Iranian communities in North America after Los Angeles.

Hola, 50, who knew one of the victims, could not hold back her tears. "I'm happy that the Canadian government promised to follow through and find justice for these people, for the families and loved ones," she said.

"Nothing will ever replace these brilliant lives that have been cut short," said Deputy Prime Minister Chrystia Freeland in Toronto. "We will always bear these scars."

Canada voices concern over Iran's arrest of British ambassador

Yahoo – AFP, January 12, 2020

Canadian Prime Minister Justin Trudeau (AFP Photo/Dave Chan)

Ottawa (AFP) - Canada and several other countries with nationals killed in the shootdown of a civilian airliner called on Tehran Sunday to abide by its international commitments after Iranian authorities briefly arrested the British ambassador.

"We call on Iran to uphold the Vienna Convention," Canada's foreign ministry said, referring to a 1961 international treaty that sets out protections from harassment for foreign diplomats.

Canada issued the statement after a call among representatives of countries whose citizens were among the 176 people killed when a Ukrainian airliner was hit by an Iranian missile January 8.

The group formed by Canada in the wake of the disaster includes Britain, Ukraine, Sweden and Afghanistan.

"All countries on the call noted their concern that the British ambassador to Tehran was temporarily detained by Iranian officials following his attendance at a vigil for the victims of flight PS752," the statement said.

Iran earlier Sunday confirmed it briefly arrested Rob Macaire, the British ambassador, for attending an "illegal gathering" -- a charge he has denied.

The European Union and France criticized Tehran for the arrest as well.

On Saturday, Canadian Prime Minister Justin Trudeau said he was "outraged and furious" over the shootdown, demanding a full investigation and for Tehran to assume responsibility for the tragedy, including financial compensation.

Iran's leaders admitted on Saturday that Iranian forces accidentally shot down the airliner after mistaking it for a cruise missile.

Trudeau is expected in Edmonton, Alberta Sunday to attend a memorial service for the 57 Canadian victims of the disaster. About a dozen were from Edmonton.

The prime minister, who will be accompanied by Foreign Minister Francois-Philippe Champagne, is expected to speak at the event.

Another ceremony has been scheduled Sunday at the University of Toronto. The city is home to the largest Iranian community in Canada.

Numerous funerals have been held across the country in recent days as Canadians grieve the deaths.

Iran's 'catastrophic mistake': Speculation, pressure, then admission

Yahoo – AFP, Stuart WILLIAMS, January 11, 2020

An Iranian holds a newspaper with a picture of the debris of the Ukrainian plane
that crashed in Tehran on January 8, 2020, outside a news stand in the Islamic
republic's capital (AFP Photo/ATTA KENARE)

Paris (AFP) - When a Boeing passenger jet crashed in Iran early on January 8, speculation immediately swirled that the only plausible explanation was that it had been shot down by Iran.

The crash of the Ukraine International Airlines (UIA) flight came hours after Tehran had launched a barrage of missiles at bases housing American troops in Iraq, retaliating for the killing of commander Qasem Soleimani in a US strike.

Immediately, theories multiplied arguing that Tehran's air defence system, on high alert for possible US retaliation, may have been triggered by accident.

Western leaders cited intelligence pointing to an accidental strike by Iran. Verified video images later emerged showing a missile striking a plane.

From Wednesday to Friday, Iranian officials repeatedly insisted that the plane had not been shot down. Early on Saturday however, the Islamic republic admitted that the plane had been hit by a short-range missile in what President Hassan Rouhani described as a "catastrophic mistake".

Ukrainian passenger jet crash in Iran (AFP Photo)

What happened on January 8?

The Boeing 737-800NG for UIA's flight PS752 between Tehran and Kiev took off from Imam Khomeini International Airport at 6:12 am local time.

Although there was no distress message from the pilot, the plane had begun to turn back for the airport before crashing at 6:18 am, said the Iranian Civil Aviation Organization. The aircraft came down near Sabashahr on the outskirts of Tehran.

There were 10 departures from Tehran airport that day before flight PS752, according to the Flight Radar 24 monitoring site. That raised questions as to why air traffic had not been halted given the situation.

All 176 people on board the flight PS752 -- mainly Iranians and Canadians, including dual nationals, but also Ukrainians, Afghans, Britons and Swedes -- were killed.

Canadian Prime Minister Justin Trudeau was the first major leader to publicly 

state Iran could be to blame for the plane crash (AFP Photo/Dave Chan)

How did pressure grow?

Prime Minister Justin Trudeau was the first major leader to publicly state Iran could be to blame. He said Canada had intelligence from multiple sources "including our allies and our own intelligence" that indicated "the plane was shot down by an Iranian surface-to-air missile."

"This may well have been unintentional," Trudeau added.

His language was echoed by other Western leaders including Dutch Premier Mark Rutte, NATO chief Jens Stoltenberg and British Prime Minister Boris Johnson.

US President Donald Trump said he had "suspicions" as "somebody could have made a mistake", and US Secretary of State Mike Pompeo then said the United States believed it was "likely" that an Iranian missile downed the airliner.

The New York Times also said it had verified a video appearing to show a missile hitting a plane at night above the Tehran suburb of Parand, west of the airport.

What did Iran initially say?

For three days, Iranian officials refused to countenance any suggestion that one of its missiles had brought down the plane.

The country's civil aviation chief Ali Abedzadeh said that one "thing is for certain, this airplane was not hit by a missile", arguing that it would have exploded immediately if hit by a missile.

Experts questioned that claim, arguing that such missiles explode before coming into contact with the target.

This handout photograph taken and released on January 11, 2019, by The 

National Security and Defense Council of Ukraine, shows people analysing 

the remains of the Ukraine International Airlines plane Boeing 737-800 that

crashed outside Tehran (AFP Photo/STR)

What does Iran now admit?

In an announcement early Saturday that took many experts by surprise, Iran admitted it had "unintentionally" shot down the jet after a missile operator mistook the plane for a cruise missile.

Tehran said its systems had been on high alert for American retaliation in the hours after the Iranian strikes on bases housing US troops in Iran.

"He had 10 seconds to decide," the aerospace commander of Iran's Revolutionary Guards Brigadier General Amirali Hajizadeh said of the operator, who he insisted had "acted alone".

"He could have decided to strike or not to strike and under such circumstances he took the wrong decision."

Rouhani called it an "unforgivable mistake", vowed that compensation would be paid to the families while those responsible would be prosecuted.

What kind of missile was used?

Unverified images posted on social media show the remains of a Russian-made Tor M-1 missile but Tehran has yet to give details on the kind of weaponry used.

Tehran received 29 such air defence systems from Moscow under a $700 million contract signed in 2005, a deal that caused considerable unease in the West.

The Bellingcat open-source analytics website has said the origin of the images is yet to be determined, and the people who captured the images have not come forward.

Ukraine's President Volodymyr Zelensky, pictured on January 9, 2020 in a 

presidential press handout photo placing flowers at a memorial for the victims 

of the Ukraine International Airlines crash in Tehran, has toughened his stance 

on Iran (AFP Photo/HO)

What does Ukraine want now?

Ukrainian President Volodymyr Zelensky, initially wary of blaming Tehran, has toughened his line since Tehran's admission.

After Zelensky spoke to Rouhani later Saturday, the Ukrainian presidency said that Zelensky asked Tehran to allow the bodies of the 11 Ukrainian victims to be repatriated "by January 19".

He added that Ukrainian diplomats had produced a list of steps to be taken to "resolve the compensation issue".

Despite the three days of denial from Tehran, some have compared its reaction favourably to that from Moscow over the crash of the Malaysia Airlines flight shot down over eastern Ukraine in 2014.

Although the Dutch-led Joint Investigation Team says a Russian-made BUK missile fired by pro-Russian separatists was to blame, Russia still denies any involvement.

Iranian police dispersed students chanting "radical" slogans during a gathering in Tehran to honour the 176 people killed when an airliner was mistakenly shot down, Fars news agency reported https://t.co/jtSIrcZiX1

— AFP news agency (@AFP) January 11, 2020

Ukraine plane crash another challenge for Boeing

Yahoo – AFP, John BIERS, January 8, 2020

Rescue teams work amidst debris after a Ukrainian plane carrying 176 passengers
crashed near Imam Khomeini airport in the Iranian capital Tehran early in the morning
on January 8, 2020, killing everyone on board (AFP Photo)

New York (AFP) - The latest tragic plane crash involving another Boeing aircraft adds to the travails facing the company after its 737 MAX was grounded nearly a year ago following two deadly crashes.

Details were limited Wednesday about the crash of a Ukraine International Airlines plane, a Boeing 737-800, near Tehran that killed 176 people.

Yet the latest bad news involving a Boeing plane weighed on company shares, which were down 1.3 percent at $332.77 in early-afternoon trading.

The incident could hardly have come at a worse time for Boeing, which is still reeling from two MAX crashes that killed 346 people, causing its best-selling plane to be grounded worldwide, and exposing the company to withering criticism over its handling of the crisis.

Paul Njoroge of Canada, who lost his family in the Ethiopian Airlines MAX crash, said the UIA crash "brought a chill in my entire body" as he recalled the MAX crash.

"The 737-800, the predecessor to the 737-MAX... has been seen to be reliable over the years," Njoroge said in a statement released by his law firm.

"However, any in-built technical issues cannot be tolerated. Could the crash be tied to the crippled culture within Boeing? That is a hypothesis that should be analyzed."

The latest tragic plane crash involving a Boeing model different from the grounded 

MAX adds to the travails facing the company after two deadly crashes (AFP Photo/

MANDEL NGAN)

Cause of crash unknown

However, aviation analysts stressed that the two planes are different models and the crashes should be considered separately.

Richard Aboulafia of the Teal Group, a research consultancy focused on aviation and defense, said the UIA crash is "tragic and the optics aren't good" for Boeing, but the 737-800 model has an excellent record.

The airline said the aircraft involved in the crash was built in 2016 and had been checked only two days before the accident. It was Kiev-based UIA's first fatal crash.

There was no immediate indication of foul play and Ukrainian President Volodymyr Zelensky warned against "speculating" on the cause of the disaster.

A statement posted on the website of the Ukrainian embassy in Iran initially said the crash was caused by an engine malfunction and ruled out an act of terror, but it was later edited to say that all information will now be provided by an official commission.

Aboulafia said early statements blaming the crash on technical difficulties reflected "an unbelievable degree of unprofessionalism" since they did not have access to the plane's black box or pilot communications.

Scott Hamilton of Leeham News said reports linking the UIA crash to the MAX crisis "are irresponsible," adding that the 737-800 model is "a highly reliable aircraft with thousands in service around the world."

Hamilton said crash investigations routinely include studying the possibility of pilot error, maintenance error, technical error, outside factors such as weather and terrorism and foreign object ingestion.

Citing a 2018 Southwest Airlines incident in which an engine exploded, killing a passenger, Hamilton said the plane's engine "has a history of uncontained failures that must be considered."

Analsyts say it is irresponsible to link the crash of a Ukraine International Airline 

Boeing 737-800 to the 737 MAX accidents (AFP Photo/INA FASSBENDER)

Investigation faces roadblocks

Hostilities between Washington and Tehran could impede the probe, which comes as President Donald Trump vowed additional sanctions on Iran following Iranian missile strikes on US troop bases in Iraq, which was in retaliation for Washington's killing of an Iranian general.

Under a protocol governing international aviation investigations, Iran should lead the review, but the country that manufactured the aircraft and the country of the airline that operated the plane also should have representatives involved in the probe.

Normally the US National Transportation Safety Board, the body charged with investigating air accidents, would be involved as Boeing is based in the United States, and likely would rely on experts from the manufacturer.

The NTSB is monitoring developments around the crash and "following its standard procedures for international aviation accident investigations, including long-standing restrictions under the country embargoes," an NTSB spokesman said.

"As part of its usual procedures, the NTSB is working with the State Department and other agencies to determine the best course of action."

Boeing called the crash a "tragic event" on Twitter and said, "we are ready to assist in any way needed."

A US official said, "the US would have to be invited by the Iranians to participate."

The head of Iran Civil Aviation Organisation, Ali Abedzadeh, said while the Ukrainians were free to participate in the probe into the crash, "we will not give the black boxes to the manufacturer (Boeing) and the Americans," according to the Mehr news agency.

Hyundai to make flying cars for Uber air taxis

Yahoo – AFP, January 7, 2020

A model of the S-A1 electric vertical takeoff and landing (eVTOL) aircraft is shown at
the Hyundai news event where Hyundai announced its partnership with Uber to create
an air taxi network, during the 2020 Consumer Electronics Show (CES) in Las Vegas
(AFP Photo/DAVID MCNEW)

Las Vegas (AFP) - Hyundai announced Monday it would mass produce flying cars for Uber's aerial rideshare network set to deploy in 2023.

The South Korean manufacturer said it would produce the four-passenger electric "vertical take-off and landing vehicles" at "automotive scale," without offering details.

The deal announced at the Consumer Electronics Show in Las Vegas could help Uber, which is working with other aircraft manufacturers, to achieve its goal of deploying air taxi service in a handful of cities by 2023.

Jaiwon Shin, head of Hyundai's urban air mobility division, said he expects the large-scale manufacturing to keep costs affordable for the aerial systems.

"We know how to mass produce high quality vehicles," Shin told a news conference at CES.

Eric Allison (L), Head of Uber Elevate, and Jaiwon Shin, Head of Urban Air Mobility 

at Hyundai, talk about their companies' partnership to create an air taxi network, 

during the 2020 Consumer Electronics Show (CES) in Las Vegas (AFP Photo/

DAVID MCNEW)

He said he expected the partnership to allow for the short-range air taxis to be "affordable for everyone."

Eric Allison, head of Uber Elevate, appeared at the CES event with Hyundai to discuss the partnership.

"By taking transportation out of the two dimensional grid on the ground and moving it into the sky, we can offer significant time savings to our riders," Allison said.

He said that because of its other app-based transport options, "only Uber can seamlessly connect riders from cars, trains and even bikes to aircraft."

People take photos of a model of Hyundai's S-A1 electric vertical takeoff and 

landing (eVTOL) aircraft built in partnership with Uber to create an air taxi network,

during the 2020 Consumer Electronics Show (CES) in Las Vegas (AFP Photo/

DAVID MCNEW)

Uber has announced it had selected Melbourne to join Dallas and Los Angeles in becoming the first cities to offer Uber Air flights, with the goal of beginning demonstrator flights in 2020 and commercial operations in 2023.

Hyundai is using CES to show the S-A1 model aircraft with a cruising speed up to 180 miles (290 km) per hour.

The aircraft utilizes "distributed electric propulsion," designed with multiple rotors that can keep it in the air if one of them fails.

The smaller rotors also help reduce noise, which the companies said is important to cities.

The Hyundai vehicle will be piloted initially but over time will become autonomous, the company said.