Merlin Clears a Certification Hurdle for AI in the Cockpit

Few obstacles in autonomous flight have proved more stubborn than persuading regulators to accept artificial intelligence in a safety-critical role. Merlin now says New Zealand’s civil aviation authority has settled on how the company must prove that its AI systems are safe, representing a significant milestone on the path to certification. Quarterly results Merlin reported on August 13, however, show a start-up still far from turning its technological progress into a profitable business.

Boston-based Merlin announced on August 6 that it reached the Stage of Involvement (SOI) 3 milestone with the Civil Aviation Authority of New Zealand (CAANZ) for two components of its Merlin Pilot autonomous flight system: the flight control computer and the automated communication system. Reaching SOI 3 means the regulator has reviewed and accepted the testing evidence for those two components, one stage short of final compliance. The CAANZ conducted the work in coordination with the FAA under a bilateral agreement; the two agencies jointly approved Merlin’s certification basis in 2021. 

Separately, Merlin said it closed an issue paper covering machine-learning-based natural language processing within the CAANZ certification program—the capability that lets Merlin Pilot hold a voice conversation with air traffic control.

“This is significant as we’re not building experimental AI, but rather aviation-grade autonomy that performs full phase autonomy from takeoff to touchdown,” said Merlin chief technology officer Tim Burns.

The New Zealand program runs under Part 23, the rule covering smaller airplanes, and Merlin’s certification testbed is a Cessna 208B Grand Caravan. The company has flown commercial cargo in the country since early 2024 and won a Part 145 maintenance approval in April 2025. An experimental airworthiness certificate the following month cleared Merlin to begin certification flight testing there.

Condor, the product family Merlin introduced in May, targets Part 25 transport-category airplanes such as the Boeing and Airbus airframes that Israel Aerospace Industries (IAI) converts into freighters. Merlin and IAI signed a memorandum of understanding in July to pursue autonomous conversions for those aircraft types. 

On an August 13 earnings call, founder and CEO Matt George said reaching SOI 3 was, to Merlin’s knowledge, “a first for large aircraft autonomy,” though the company has not explained how testing done on a Part 23 airplane would count toward a Part 25 approval.

Meanwhile, Merlin competitor Reliable Robotics has been pursuing a Part 23 supplemental type certificate (STC) for its own autonomous Caravan system since the FAA accepted its certification basis in 2022, and the California start-up is targeting approval in 2028. Its system keeps the autopilot engaged throughout a flight but leaves radio calls to an operator on the ground—the task Merlin wants to hand to AI software.

Merlin’s latest quarterly report shows a company with plenty of cash and meager business. Second-quarter revenue amounted to $2.2 million, down 29% from a year earlier, and nearly all of it came from the U.S. government. Delivering that work cost slightly more than Merlin earned on it.

The company spent $27.3 million over the three months and ended June with $183.9 million in hand and no debt—largely proceeds from going public in March through a merger with a special purpose acquisition company and an $80 million private investment in public equity (PIPE) in May. That is enough, chief financial officer Ryan Carrithers said, to fund operations into fiscal 2028.

On June 30, Merlin had $593,000 of contracted work left to deliver, down from $1.1 million three months earlier. Carrithers told analysts to expect $4 million to $6 million of revenue in the second half, most of which would have to come from orders U.S. Special Operations Command (USSOCOM) has not yet placed under an indefinite-delivery, indefinite-quantity contract worth up to $105 million. George declined to say when those orders might arrive.

Merlin also added a warning to its filing that did not appear three months earlier: putting its software on any airplane requires technical data, avionics specifications, and sometimes source code that only the manufacturer holds. That access could be limited or withdrawn, the company said, if a manufacturer “views our autonomy capabilities as competitive with its own current or future offerings.”

The C-130J Merlin Pilot system passed a critical design review in June and moved into integration, and the company is adapting it for the Boeing KC-135 Stratotanker. Merlin’s Form 10-Q SEC filing anticipates initial deliveries under the USSOCOM contract within a year and a first operational Merlin Pilot—military or commercial—within three. The company has not said when it expects to obtain the system’s first STC.