Gevo Inc (NASDAQ:GEVO) has announced a new fuel sales agreement with American Airlines Inc for the sale of 100 million gallons of sustainable aviation fuel (SAF) per year for a five-year period, from its future commercial operations.
Delivery under the agreement is expected to begin in 2026 and Gevo estimates that it should generate approximately $2.75 billion of revenue over the five-year term, inclusive of the value of environmental benefits.
The agreement with American Airlines is the single, largest fuel sales agreement ever entered into by Gevo with a customer.
READ: Gevo inks five year sustainable aviation fuel sales deal with IAG subsidiary Aer Lingus
“Today’s announcement is a historic step forward for American and our industry as we work to reduce our carbon footprint,” Jill Blickstein, American Airlines’ vice president of sustainability, said in statement.
“The use of SAF is a cornerstone of our strategy to decarbonize air travel. While this landmark investment represents meaningful action by American Airlines, driving progress at the scale and pace we need requires critical policy action in Washington and at the state level. Alongside our oneworld partners, we’re proud to lead the way in the shift to SAF and make progress toward our shared climate goals," he added.
American Airlines is a member of the oneworld global alliance and the current agreement falls under the purview of the memoranda of understanding that oneworld members and Gevo signed earlier in 2022, laying the groundwork for the 14 world-class airlines in the alliance to purchase 200 million gallons of SAF per year, from Gevo’s future commercial operations.
This SAF purchase agreement expands the list of committed airline partners and supports Gevo’s pursuit of its stated goal of producing and commercializing a billion gallons of SAF by 2030.
In September 2020, oneworld became the first global airline alliance to announce a target of carbon neutrality by 2050. The alliance followed up that commitment with an intermediate goal to achieve 10% SAF use across the member airlines by 2030.
Gevo CEO Dr. Patrick R. Gruber said: “We are on a mission to drive greenhouse gasses out of the fuel supply chain with practical technology that can be scaled. In order to drive the GHG gasses out, we need renewable carbon and de-fossilized energy to power our production facilities. We know how to produce SAF.”
The agreement with American Airlines is subject to certain conditions precedent, including Gevo developing, financing, constructing and operating one or more production facilities to produce the SAF contemplated by the agreement.
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons.
Contact the author at jon.hopkins@proactiveinvestors.com