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Boeing (BA) Teams Up With Alder to Scale Up SAF Production

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The Boeing Company (BA - Free Report) recently joined forces with Alder Fuels to scale up the production of sustainable aviation fuel (“SAF”) amid the rising awareness of a carbon-free future. The partnership framework aims to boost the usage of renewable-based fuel in the aerospace market worldwide.

Rationale Behind the Agreement

As the civil aviation industry aims to achieve net-zero carbon emissions by 2050, the alliance between the two companies will boost the replacement of traditional energy fuel with next-generation jet fuel, SAF. As part of the deal, Boeing will provide its airplanes for testing SAF manufactured by Alder, thus supporting the rapid certification of Alder’s SAF and its availability for commercial use.

The latest partnership comes in sync with BA’s pledge to deliver 100% SAF-capable airplanes by 2030. Hence, such an agreement will gradually increase the adoption and availability of SAF to power jets in the long haul, thus contributing to the aviation industry’s commitment to decarbonizing the fleet.

Significance of SAF & Boeing’s Initiatives

As nations are transitioning to a carbon-free environment, SAF is acting as a catalyst to achieve the decarbonization goal, mainly due to its biodegradable features that can reduce the carbon emission by almost 80% compared with conventional fuel. SAF is produced using feedstocks, waste oils from animals and plants and waste from homes and services.

Hence, it is imperative to mention that the abundance of forests and agricultural residues in the United States could produce enough SAF to replace as much as 75% of U.S. aviation fuel consumption, per the U.S. Department of Energy.

Against this backdrop, Boeing has been consistently working to boost the adoption of SAF to power jets. In 2008, Boeing had conducted biofuel test flights and received the nod for commercial use in 2011. Also, BA, in its ecoDemonstrator flight test program, made available the world’s first commercial airplane flight that was based on 100% sustainable fuels.

The recent agreement takes Boeing a step ahead in its aim to fortify the adaptability of SAF in its family of fleet in this green energy era.

Peer Moves

In the green energy revolution, companies that have been encouraging the usage of SAF in place of conventional fuel to neutralize the carbon footprint are as follows:

Airbus (EADSY - Free Report) aims to achieve the certification of 100% SAF by 2030 for commercial aircraft and helicopters. In June 2022, H225 performed the first-ever helicopter flight with 100% SAF powering both Safran’s Makila 2 engines.

The long-term earnings growth rate of Airbus is pegged at 12.4%. Shares of EADSY have appreciated 6% in the past month.

Embraer (ERJ - Free Report) aims to achieve carbon neutrality in its operations by 2040. In June 2022, it signed a Letter of Intent with Raizen to stimulate the development of the SAF production ecosystem, reinforcing the sustainability agenda of both companies.

Embraer boasts a long-term earnings growth rate of 17%. The Zacks Consensus Estimate for ERJ’s sales suggests a growth rate of 14.5% from the prior-year period.

In March 2022, Textron (TXT - Free Report) announced a collaboration initiative with Safran Helicopter Engines to explore the technical performance and the economic impacts of SAF on the Arrius 2R-powered Bell 505. A single, dedicated Bell 505 aircraft will conduct flights solely with the use of blended SAF.

The long-term earnings growth rate of Textron is pegged at 12.7%. Shares of TXT have returned 2.2% in the past month.

Price Performance

Shares of Boeing have rallied 8% in the past month compared with the industry’s rise of 2.3%.

Zacks Investment Research
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Zacks Rank

Boeing carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.