Universal Hydrogen, the pioneering company that flew a partially hydrogen-powered flight out of Moses Lake, Washington, in March last year, has burned through the $100 million it raised from investors and gone bust.
The company was one of a few aiming to replace fossil-fuel powered flight with more sustainable, emissions-free technology, in this case using hydrogen to power the engines instead of jet fuel.
Its achievement of a first flight at Moses Lake was celebrated by Washington Gov. Jay Inslee as one of Washington state’s clean energy breakthroughs.
In March, Fast Company magazine put Universal on its list of “Most innovative companies of 2024.” Last month, trade magazine Aviation Week reported that “behind the scenes, the zero-emissions startup is busy preparing to take propulsion-system testing to the next level” and was prepping 10 new flight tests.
But in a letter to shareholders Thursday, Universal Hydrogen Chairman and CEO Mark Cousin wrote that the board has formally decided to wind up the company after efforts to raise further financing from new investors failed.
“We were unable to secure sufficient equity or debt financing to continue operations and similarly were unable to secure an actionable offer for a sale of the business or similar strategic exit transaction,” Cousin wrote
He said the company recently approached existing investors to participate in a rights offering but found insufficient interest.
“We are deeply proud of the work the team has done to create the first commercially viable hydrogen aviation ecosystem,” Cousin’s letter concluded. “It is our sincere hope that these efforts will live on as part of a future entity.”
Barriers to success
Universal Hydrogen was founded by Paul Eremenko, a clean-energy visionary who formerly worked as chief technology officer at Airbus, on the basis of his belief that climate change concerns create an existential crisis for air transport in the decades ahead.
His charisma and technical expertise bolstered the company’s startup phase fundraising in Silicon Valley. Eremenko is still listed as CEO on the company website, but via email he said he left at the end of April.
He said private equity firms eventually cooled to the concept due to higher interest rates and constant fears of an impending recession.
An additional headwind was the nearing U.S. election. “If (Donald) Trump were to win, investors saw a significant risk that the massive green hydrogen subsidy enacted as part of the Biden Inflation Reduction Act would disappear,” Eremenko wrote.
Documents viewed by The Seattle Times show that negotiations for $20 million in funding from a Saudi investment fund fell through.
In a last-ditch attempt to save the company, Eremenko said management attempted to merge with a regional airline that would retrofit its planes with hydrogen power.
The documents show that airline was Florida-based Silver Airways. Silver has been losing money for the past year and funding its ongoing operations with debt, the documents state.
“I am sad to hear that the merger did not come to fruition and Universal Hydrogen is now liquidating,” Eremenko said.
The letter to shareholders is signed by Cousin, Universal’s former chief technology officer, in the CEO role. He was not immediately reachable Saturday.
The barriers to Universal’s success were always immense.
The Los Angeles-based company had to both engineer a hydrogen-powered propulsion system and create from scratch a new logistics infrastructure that could deliver the hydrogen fuel at airports.
It also had to deal with the reality that hydrogen fuel takes up a lot more space on the airplane than jet fuel, reducing room for passengers.
Another huge barrier is that Universal’s project depended on a large, reliable supply of what’s known as “green hydrogen.”
Green hydrogen has to be produced using electricity from renewable sources such as wind or solar to make the process emission-free. Most of the hydrogen used today is produced from natural gas in a process high in carbon-dioxide emissions.
Very little green hydrogen is currently produced, and scaling it up will take large investments.
Universal’s team designed its hydrogen-powered propulsion system so it could be retrofitted on regional airplanes. And it worked on developing an ecosystem at airports whereby hydrogen would be delivered by trucks in large cylindrical modules that could be loaded directly onto the planes.
In March 2023 at Moses Lake, a small crowd of investors and press watched a De Havilland Canada Dash 8-300 turboprop retrofitted by Universal Hydrogen take off in a brief pioneering flight aimed at proving the technology viable.
On that flight, one engine was powered by a hydrogen fuel cell, the other by regular jet fuel.
Universal later that year moved its flight operations to Mojave, Calif.
Meanwhile, across the Atlantic in Toulouse, France, Universal was retrofitting a larger regional airplane, the ATR 72, to develop the removable modules of liquid hydrogen that could be transported by truck.
The idea was that this would create the infrastructure necessary to deliver hydrogen to airports around the world.
Cousin’s letter told shareholders that the French unit of the company will also be liquidated.
Eremenko said he is proud that while Universal fell short it accomplished “extraordinary technical feats on an insanely aggressive timeline.”
“I hope that our efforts form the foundation for the future of carbon-free flight,” he wrote.
While Airbus is working to develop an all-new hydrogen-powered plane for the 2030s, the demise of Universal leaves just one other major startup aiming to retrofit existing planes with hydrogen power: ZeroAvia.
Also headquartered in California, ZeroAvia has a research and development facility at Paine Field in Everett, Washington, where a team of about 40 people is working on producing the hydrogen propulsion system.
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