Gevo (NASDAQ:GEVO) stock is on many investors’ radar after the company announced that it had agreed to supply sustainable aviation fuel, or SAF, to Aer Lingus, an Irish airline. The transaction is expected to generate $173 million of revenue for Gevo.
Under the deal, the SAF maker will supply the airline with 6.3 million gallons per year for five years. Aer Lingus anticipates that it will begin utilizing the SAF, which is expected to be generated by plants that Gevo intends to build, in 2026.
“Aer Lingus has pledged to achieve net-zero carbon emissions by 2050 and has committed to powering 10% of its flights using … (SAF) by 2030,” Gevo stated.
The SAF maker plans to sell 1 billion gallons of SAF by 2030. It also intends “to reduce greenhouse-gas emissions to net-zero over the entire lifecycle of each gallon of advanced renewable fuel, including its SAF.”
“Because our fuel is fungible and drop-in ready, it’s expected to have an immediate impact to help our partner airlines achieve their sustainability targets ahead of schedule,” Gevo CEO Patrick Gruber said in a statement.
Last month, the company agreed to supply Finland’s Finnair with 7 million gallons annually over five years. Also in June, Japan Airlines (OTCMKTS:JAPSY) committed to buying 5.3 million gallons of SAF annually from Gevo for five years. Finally, in March, Delta (NYSE:DAL) agreed to purchase 75 million gallons of SAF annually from Gevo through 2028.
The Bottom Line on GEVO Stock
In an April 21 column, reacting to the expansion of the deal between Delta and Gevo, I wrote that “I believe that investors looking for a means to play the energy transformation can consider buying a relatively small amount of GEVO stock.” I added that “Delta’s decision to increase the amount of SAF that it’s purchasing from Gevo represents a tremendous vote of confidence in Gevo and its SAF.”
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.