Otto, along with a few others, flew machines made of wood, wire, canvas and[clarification needed] powered by Daimler aeroengines.

Through their passion for flying machines, they helped transform aviation from a do-it-yourself hobby to an industry vital to the military, especially after the breakout of World War I. Otto founded several companies for the purpose of building aircraft.

Ernst Udet, the second-highest scoring German flying ace of World War I (after Manfred von Richthofen), earned his pilot's license after private training with Otto.

At the start of the war, Otto-Flugzeugwerke was supplying the German Air Force, but the production problems ended up being so great that government agencies urged the company to solve the issues.

[1] The stress of wartime seemed to prove too great a burden for Otto who suffered health issues which led to financial problems with the company: In 1915 he was admitted to a Munich mental hospital for treatment of depression.

Otto therefore no longer had a stake in this company and instead turned his interest to a just previously founded (1 February 1916) independent Otto-Werke Flugzeug- und Maschinenfabrik GmbH.

Franz Joseph Popp, an Austrian military engineer/supervisor who had been sent to the unreliable Rapp Motor Works in Munich to oversee the production of 224 Type IIIa aero engines to the Austro-Daimler design badly needed for the war effort, had re-registered Rapp Motor Works as Bayerische Motoren Werke (BMW) on July 21 1917, in order to gain acceptance for a wholly new and greatly superior aero engine designed by Max Frtiz.

BMW then produced the legendary Max Frtiz designed R32 shaft drive motorcycle, featuring an integrated gearbox, recirculating rather than total loss lubrication and with the cylinder heads poking out for cooling.

In 1926, amid failed attempts at business (caused by various reasons), the death of his wife, and health issues, Otto died by suicide at the age of 43 in Munich.