Delta (DAL) Inks Deal With Gevo for 75M Gallons of SAF Per Year

Delta Air Lines DAL has signed a “take-or-pay” agreement with Gevo, Inc. GEVO for 75 million gallons of sustainable aviation fuel (“SAF”) per year for a seven-year term.

The agreement replaces Delta’s existing deal with Gevo, signed in 2019, to purchase 10 million gallons of SAF per year. It advances DAL’s goal of net-zero aviation. The company has a target to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030. Delta carries a Zacks Rank #5 (Strong Sell).

Gevo, carrying a Zacks Rank #3 (Hold), expects the agreement to generate approximately $2.8 billion in revenues over the seven-year period. The company expects to begin production from its first Net-Zero plant in 2025. In response to the higher demand, GEVO intends to build more than one Net-Zero plant.

Delta Air Lines, Inc. Price

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Gevo has been committed to sustainability initiatives. The company has  developed two alcohol-to-jet pathways that can utilize low-carbon feedstocks, which in turn can be converted to SAF.

Regarding the agreement, Delta said that it is “working to develop the market and a broader understanding of the effectiveness of SAF, which can reduce lifecycle emissions up to 80 percent when used in pure form compared to fossil jet fuels.”

Key Picks

Some better-ranked stocks within the broader Transportation sector are as follows:

USA Truck USAK sports a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average surprise being 64.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of USA Truck have rallied more than 51% in the past six months.

GATX Corporation GATX carries a Zacks Rank #2 (Buy). The company has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 27.7%.

Shares of GATX have appreciated more than 38% in the past six months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.