Velocys announces sustainable aviation fuel (SAF) offtake agreements with southwest airlines and IAG

Panmure Gordon’s corporate client Velocys announces sustainable aviation fuel (SAF) offtake agreements with southwest airlines and IAG

The SAF pathway pioneered by Velocys has received its most important commercial validation to date with a 15-year fixed-price offtake agreement with Southwest Airlines, the largest US domestic airline and 11th largest globally in revenue passenger kilometres (RPK).

This combined with a ten-year fixed price offtake MoU with International Airlines Group, the 5th largest worldwide in RPKs, should attract investment from third parties into the Bayou Fuels project; the minimum guaranteed price payable for greenhouse gas (GHG) credits derisks potential revenues and increases certainty on returns to the project.

While the offtake agreements are subject to certain customary conditions, they should send a strong signal to legislators that airlines are committed to putting money where their mouth is.

Henrik Wareborn, CEO of Velocys, said:

“Today’s announcement is a major milestone for the Bayou Fuels reference project and further strengthens our conviction in the important role sustainable fuel will play in the future of the aviation industry.

“It is very encouraging to see Southwest make such a strong commitment to using fossil-free fuel as part of its environmental sustainability plan and to see Velocys technology performing a central role in making this possible.

“This agreement shows that commercial-scale demand for SAF can be satisfied already by the middle of this decade and that Velocys plays a pivotal role in enabling this.”

Further reading on the announcements for Southwest Airlines and IAG.