Hydrogen plane company Universal Hydrogen shuts down

After raising $100 million through investors, it has run out of funds and is closing up shop

Universal Hydrogen, the pioneering hydrogen plane company that last year flew a partially H2-powered craft out of Moses Lake, has spent the $100 million its investors brought in and is now shutting down.

The company was among the more notable H2 flight-focused players

The business was focused on the design and development of hydrogen plane technology for more sustainable, emission-free flights using H2 to power engines instead of conventional jet fuel.

Last year in March, one of its designs took off from Moses Lake, and was celebrated in Washington State, including by its Governor Jay Inslee, as a major clean energy breakthrough.

In March 2024, Universal Hydrogen was still receiving the praise, as Fast Company magazine had named it one of its “Most innovative companies of 2024.”  Aviation Week said that the company’s “behind the scenes, the zero-emissions startup is busy preparing to take propulsion-system testing to the next level,” in May, adding that Universal Hydrogen was getting ready for another 10 test flights.

The hydrogen plane technology company has issued a letter to its shareholders

Shareholders recently received a letter from Universal Hydrogen CEO and Chair Mark Cousin. In the letter, Cousin explained that the board had come to a formal decision to shutter the company following unsuccessful efforts to bring in more investment dollars.

“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,” said the letter from Cousin.

He added that the hydrogen plane company had recently spoken with exiting investors regarding participation in a rights offering, but interest in this move was inadequate.

Proud of what they accomplished

According to the letter from Cousin to investors, the company is proud of what they were able to achieve, and of what the team was able to bring to the world. 

“We are deeply proud of the work the team has done to create the first commercially viable hydrogen aviation ecosystem,” said the close of Cousin’s letter. “It is our sincere hope that these efforts will live on as part of a future entity.”

The challenges to the hydrogen plane company were too great

Paul Eremenko first founded Universal Hydrogen in 2020.  Eremenko had previously worked as Airbus Chief Technology Officer and had a focus on clean energy.  He founded the company to establish important progress in advance of what he predicted was an existential crisis in air transportation in coming decades as the climate crisis worsens and countries and companies seek to decarbonize.

The company did well during its startup phase fundraising, as Eremenko’s style and technical expertise had high appeal in Silicon Valley.  That said, he explained in his letter that over time, private equity firms lost some of their enthusiasm about the concept because of the looming recession risk and ongoing high interest rates.

The election barrier

Another major barrier to the hydrogen plane company’s ability to bring in more investment funds has to do with uncertainty regarding the upcoming US 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,” said Eremenko in his letter.

Eremenko had tried to salvage the company with a final effort to merge Universal Hydrogen with a regional airline in order to retrofit the existing aircraft fleet to be powered by H2. Media reports indicated that it had looked into such a merger with Silver Airways out of Florida. However, “the merger did not come to fruition and Universal Hydrogen is now liquidating,” said Eremenko.