Southwest Airlines and British Airways fuel deals impact Velocys shares by over 40%

Southwest Airlines and British Airways fuel deals impact Velocys shares by over 40%

Highlights:

  • The underlying principle of sustainable aviation fuel is that it may be utilized to minimize an aircraft’s emissions.
  • Discussions around aviation are increasingly centered on how innovations and ideas could cut its environmental footprint.

The Profitable Deal

Velocys, a London-listed fuels technology company, had its stock rise more than 40% on Wednesday after the company announced two partnerships involving the delivery of aviation fuel.

The business claimed in a statement that its subsidiary, Velocys Renewables, had reached an agreement with Southwest Airlines.

Southwest will buy an estimated 219 million gallons of sustainable aviation fuel at a fixed price over a 15-year term from a projected bio-refinery in Mississippi.

“After combining, around 575 million gallons of net-zero SAF will be present,” Velocys stated. The Bayou Fuels bio-refinery is expected to begin commercial fuel delivery as soon as 2026.

Velocys Renewables has inked a memorandum of understanding with the International Consolidated Airlines Group, in addition to the arrangement with Southwest. The deal is linked to the Bayou Fuels project once again.

Contents of the Deal

It “covers the purchase of an expected 73 million gallons of SAF, in aggregate, at a fixed price” by IAG‘s constituent airlines, which include British Airways, Aer Lingus, and Iberia, among others, according to Velocys.

From 2026 through 2026, the purchase contract will be for ten years. Following the blending, 192 million gallons of net-zero SAF will be produced.

IAG’s CEO, Luis Gallego, praised the deal as “another key step toward realizing our goal of 10% sustainable aviation fuel use by 2030” in a statement released accompanying Velocys’ announcement.

Bayou Fuels will produce waste from the paper sectors and lumber defines as “woody biomass forest remains that would otherwise fester on the forest floor or donate to forest fires,” as per Velocys.

The project will leverage carbon capture and storage technology to enable “commercial-scale production of SAF with exceptionally negative carbon intensity,” according to Velocys.

Discussions for sustainability and environment

As concerns about sustainability and the environment grow — the World Wildlife Fund calls air travel “the most carbon-intensive activity an individual can engage in” — discussions about aviation are increasingly centered on how innovations and ideas could reduce the industry’s environmental footprint.

Ryanair CEO Michael O’Leary sounded cautious in a recent discussion with reporters when asked about the prognosis for new and developing technology in the industry.

He remarked, “I don’t see it coming… hydrogen fuels, I don’t see sustainable fuels coming, and I don’t see the electric propulsion systems coming, definitely not before 2030.”

“So it will be after my airline career… but I’m expecting it will arrive before our mortal life ends” he added.

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