American Airlines Group recently made a non-refundable deal with Boom to purchase twenty Overture supersonic jets. Similarly, United Airlines agreed to buy fifteen of Boom’s Overture jets last year. Boom, a supersonic jet startup, is developing planes capable of traveling faster than the speed of sound, around 761 miles per hour. Boom designed Overture to carry sixty-five to eighty passengers at Mach 1.7 over water, or 1.7 times the speed of sound – about twice as fast as commercial planes can fly today.

American Airlines faces fierce competition and pressures and need to get an edge in the airline industry after dropping by more than 60% in value since 2015. In pursuit of survival and to alleviate their $15.6 billion in debt, they want to reopen a market that died nearly twenty years ago. But there is a problem with this endeavor—the sonic plane market was an impossible market to survive in and will ultimately lead to failure…unless Overture overcomes the errors of the Concorde.

What is Concorde:

On January 21, 1976, developers and manufacturers—Sud Aviation (later Aérospatiale) and the British Aircraft Corporation (BAC)—introduced the Concorde to the world, the first supersonic commercial plane. The airliner could maintain a supercruise up to Mach 2.04 or 1550 miles per hour at an altitude of 60,000 ft. Supersonic travel made the flight twice as fast. But its sonic booms caused severe damage to the ground, commonly shattering windows, so they were forced to only fly the jets over water. Jets were This new method of the commercial flight was supposed to be the future of travel for the whole world, but Air France and British Airways remained the main customers for the Concorde.

Then, on July 25, 2000, Air France Flight 4590 ran over debris on its take-off run and crashed with all 109 occupants and four on the ground killed; the only fatal incident involving Concorde. Commercial service was suspended until November 2001, and partially due to the events of September 11, 2001, Concorde aircraft were retired in 2003. The Concorde was also very expensive to use and had an incredibly high fuel consumption, causing hefty prices and high maintenance costs.

The Return of Commercial Supersonic:

Supersonic air travel ran for nearly 27 years and there seemed to be no return for this dead market until United and American Airlines invested, for commercial use in 2029. Boom Supersonic plans to have a cleaner and more fuel-efficient plane than Concorde and engineering designers from NASA are developing a way to make sonic booms less violent, in hopes that they can be flown over land.

This news appears positive, yet it is still unclear as to if Boom’s planes are going to work or elicit profit for their investors. Boom Supersonic is only a startup company, with its only success in having the first independently developed supersonic jet since the Concorde was developed. Also, Boom Supersonic has had no legitimate successes with its independently developed jets and does not even have the Overture model design finalized. Furthermore,  the jets will not be available for commercial use until 2029. Boom Supersonic, in the last week, split off from Rolls Royce after deciding that their engine design is not what they intended for their jet. In need of a new partner, their deadline will most likely be extended past 2029. In addition, Boom plans to engineer Overture to fly silently so it can travel over land, but NASA’s development of silent supersonic air travel has not arrived, causing even longer wait times for the jet’s development.

In addition, while Boom partnered to make clean fuel, and is claiming a more energy-efficient jet than Concorde, they are still developing their product. Prometheus, a 2019 startup that wants to make carbon-neutral fuels, is partnered with Boom Supersonic to make Overture a carbon-neutral jet and change the air travel market. While Prometheus has a value of $1.5 billion, they face problems of its own. They are missing claims and promises like becoming carbon neutral by 2020 and they are facing skepticism for their high costs of $16.80 a gallon of their clean fuel. Prometheus is making slow moves in development, but growth could prove to drop the cost down to $6.40 in the next decade and $3.60 by 2050.

Should I Invest In Airlines, Boom, or Both?

Investing in airlines is one of the riskier investments in the market since there are so many factors to their business: fierce competition, changing prices for fuel, transforming laws and regulations, altering employment standards and wages, and the management and care for planes and airline gates. It is even riskier to invest in flight technology that proved dangerous in the past and is now developed by startups, not Airbus or Boeing which have been engineering and building planes for decades.

Boom Supersonic Overture jets could be worth it for United Airlines and American Airlines, if Boom resolves several issues: making the jet more energy efficient, finding success in their partnership with Prometheus Fuels to use cleaner fuel for flying, engineering their planes to fly quieter, and making a plane that does not have as high maintenance hours or costs as Concorde. With more environmental activism than ever, Prometheus Fuels could eventually convert the energy and transportation sectors of our global market with its product and help clear the atmosphere of carbon at the same time. If any company wants to turn profits, they are going to have to meet goals and not lose to a large number of obstacles, but with lots of growth, time, and funds, these companies could find success.

With more people flying privately than ever due to new easy access services through our smartphones and the pandemic creating some necessity for travel privacy, more people want to fly fancy and exclusive. There is seriously a market for Boom Supersonic to take over but they need to establish themselves as safe and better than regular flights due to supersonic travel’s bad track record. We need to see how advanced these jets are from the Concorde since they have had so many problems in the past with efficiency, reliability, and profitability. As an individual investor, I would speculate about startups because of the rising costs and supply chain problems.

*Not a financial advisor. All investment strategies and investments involve risk of loss. Nothing contained in this article should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. The opinions expressed in this article are the author’s own. The Harriton Banner does not endorse nor support views, opinions or conclusions drawn in this article and are not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.*