Gevo Signs Sustainable Aviation Fuel Sales Agreement with American Airlines for 100 Million Gallons Per Year for Five Years
July 22 2022 - 9:00AM
Gevo, Inc. (NASDAQ: GEVO) is pleased to announce a new fuel sales
agreement with American Airlines, Inc. (NASDAQ: AAL). The agreement
sets forth the terms for the sale of 100 million gallons per year
of sustainable aviation fuel (SAF) for five years from Gevo’s
future commercial operations. Gevo’s delivery of SAF under this
agreement is expected to begin in 2026. Gevo estimates that the
agreement 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.
American Airlines is a member of oneworld®
global alliance (oneworld), and this agreement
falls under the purview of memoranda of understanding (MoU) 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.
“The expansion of the global development of the SAF marketplace
has reached an exciting point,” said Dr. Patrick R. Gruber, Gevo’s
Chief Executive Officer. “While there is a tremendous amount of
work to complete to bring all the critical elements of net-zero
carbon SAF to the marketplace, our memoranda of understanding with
oneworld alliance members and this subsequent
commitment from American Airlines demonstrates the important
momentum that is building for these types of products. I’m thrilled
that Gevo is poised to continue to provide leadership for this
product development.”
In September 2020, oneworld became the first
global airline alliance to announce a target of carbon neutrality
by 2050, establishing its commitment to long-term sustainability
for the industry. The alliance followed up that commitment with an
intermediate goal to achieve 10% SAF use across the member airlines
by 2030.
“Today’s announcement is a historic step forward for American
and our industry as we work to reduce our carbon footprint,” said
Jill Blickstein, American’s Vice President of Sustainability. “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.”
Further commenting on the agreement, Dr. Patrick R. Gruber,
Chief Executive Officer of Gevo, 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. We know that by
replacing fossil-based grid electricity with green electricity,
replacing fossil-based natural gas with biogas, producing and using
green hydrogen, and by working with farmers to improve the
production of food while generating raw materials for SAF, we have
a business system where incentives are aligned to improve
sustainability and drive change. These take-or-pay SAF contracts
help us show investors and lenders that this market is real, and
merits investment to build plants for SAF. We are creating a new
business system, one that can generate revenue for Gevo and
attractive investment returns while also solving problems that
impact all of us. By working together, we really can change the
world. With these contracts in place, we hope to accelerate the
journey.”
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. A copy of the
agreement between American Airlines and Gevo will be filed with the
U.S. Securities and Exchange Commission on Form 8-K no later than
Friday, July 22, 2022.
About GevoGevo’s mission is to transform
renewable energy and carbon into energy-dense liquid hydrocarbons.
These liquid hydrocarbons can be used for drop-in transportation
fuels such as gasoline, jet fuel and diesel fuel, that when burned
have potential to yield net-zero greenhouse gas emissions when
measured across the full life cycle of the products. Gevo uses
low-carbon renewable resource-based carbohydrates as raw materials,
and is in an advanced state of developing renewable electricity and
renewable natural gas for use in production processes, resulting in
low-carbon fuels with substantially reduced carbon intensity (the
level of greenhouse gas emissions compared to standard petroleum
fossil-based fuels across their life cycle). Gevo’s products
perform as well or better than traditional fossil-based fuels in
infrastructure and engines, but with substantially reduced
greenhouse gas emissions. In addition to addressing the problems of
fuels, Gevo’s technology also enables certain plastics, such as
polyester, to be made with more sustainable ingredients. Gevo’s
ability to penetrate the growing low-carbon fuels market depends on
the price of oil and the value of abating carbon emissions that
would otherwise increase greenhouse gas emissions. Gevo believes
that its proven, patented technology enabling the use of a variety
of low-carbon sustainable feedstocks to produce price-competitive
low-carbon products such as gasoline components, jet fuel and
diesel fuel yields the potential to generate project and corporate
returns that justify the build-out of a multi-billion-dollar
business. Gevo believes that the Argonne National Laboratory GREET
model is the best available standard of scientific-based
measurement for life cycle inventory or LCI. Learn more at Gevo’s
website: www.gevo.com
About American Airlines GroupTo Care for People
on Life’s Journey®. Shares of American Airlines Group Inc. trade on
Nasdaq under the ticker symbol AAL and the company’s stock is
included in the S&P 500. Learn more about what's happening at
American by visiting news.aa.com and connect with American on
Twitter @AmericanAir and at Facebook.com/AmericanAirlines.
Forward-Looking StatementsCertain statements in
this press release may constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements relate to a variety of
matters, without limitation, including the agreement with American
Airlines, Gevo’s ability to produce SAF, Gevo’s estimate of the
revenue that might be generated from the agreement with American
Airlines, the assumptions used to estimate potential revenue from
the agreement, including, but not limited to future pricing of
commodities and the future values of certain environmental
benefits, Gevo’s technology, Gevo’s ability to develop, finance,
construct and operate production facilities to produce SAF, the
attributes of Gevo’s products, and other statements that are not
purely statements of historical fact. These forward-looking
statements are made on the basis of the current beliefs,
expectations, and assumptions of the management of Gevo and are
subject to significant risks and uncertainty. Investors are
cautioned not to place undue reliance on any such forward-looking
statements. All such forward-looking statements speak only as of
the date they are made, and Gevo undertakes no obligation to update
or revise these statements, whether as a result of new information,
future events or otherwise. Although Gevo believes that the
expectations reflected in these forward-looking statements are
reasonable, these statements involve many risks and uncertainties
that may cause actual results to differ materially from what may be
expressed or implied in these forward-looking statements. For a
further discussion of risks and uncertainties that could cause
actual results to differ from those expressed in these
forward-looking statements, as well as risks relating to the
business of Gevo in general, see the risk disclosures in the Annual
Report on Form 10-K of Gevo for the year ended December 31, 2021,
and in subsequent reports on Forms 10-Q and 8-K and other filings
made with the U.S. Securities and Exchange Commission by Gevo.
Media ContactHeather L.
Manuel+1 303-883-1114IR@gevo.com
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