Agreement valued at approximately $2.75 billion over five years
ENGLEWOOD, Colo., July 22, 2022 (GLOBE NEWSWIRE) -- 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.
Gevo’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 Group
To 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.
Certain 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.
Heather L. Manuel