United Airlines


UAL

has signed an agreement with Finnish renewable fuel provider, Neste, to purchase sustainable aviation fuel (“SAF”) over the next three years.

Per the agreement, UAL can buy up to 52.5 million gallons of SAF for its flights at Amsterdam’s Schiphol Airport and potentially at other airports as well. The deal advances the carrier’s goal of reducing greenhouse gas emissions by 100% within 2050.

In the first year, Neste will provide United Airlines with 2.5 million gallons of SAF in Amsterdam. The supply will ramp up gradually. In the second year, UAL can purchase up to 20 million gallons of SAF, while in the third year it can take delivery of up to 30 million gallons of SAF.

SAF helps in significantly reducing carbon footprint on a lifecycle basis. The SAF provided by Neste reduces lifecycle greenhouse gas emissions by up to 80% compared to conventional jet fuel.

United Airlines, carrying a Zacks Rank #3 (Hold), has been committed to its sustainability initiatives. In an effort to decarbonize the airline industry in the United States, in December 2021, UAL

flew an aircraft full of passengers using 100% SAF

in one of its two engines for the first time in aviation history. The fuel was supplied by World Energy, North America’s only commercial biofuel producer. You can see


the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here


.

For future flights, United Airlines has agreed to buy 1.5 billion gallons of SAF from Alder Fuels, which is enough to fly 57 million passengers. The carrier can also buy up to 900 million gallons of additional SAF from Fulcrum BioEnergy.

U.S. airlines have lately been working to achieve their carbon-neutral goals by inking SAF deals. This March,

Delta Air Lines


DAL

signed a “take-or-pay” agreement with

Gevo, Inc

.

GEVO

for 75 million gallons of SAF per year for a seven-year term.

The agreement replaces Delta’s existing deal with Gevo that was signed in 2019 to purchase 10 million gallons of SAF per year. It advances DAL’s goal of net-zero aviation. The company has a target to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030. Delta carries a Zacks Rank #3.

DAL said that it is “working to develop the market and a broader understanding of the effectiveness of SAF, which can reduce lifecycle emissions up to 80 percent when used in pure form compared to fossil jet fuels.”

Gevo, carrying a Zacks Rank #4 (Sell), expects the agreement to generate approximately $2.8 billion in revenues over the seven-year period. The company expects to begin production from its first Net-Zero plant in 2025. In response to the higher demand, GEVO intends to build more than one Net-Zero plant.

Gevo has been committed to sustainability initiatives. The company has developed two alcohol-to-jet pathways that can utilize low-carbon feedstocks, which, in turn, can be converted to SAF.

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