ARLINGTON, Va. - Boeing (NYSE:BA) [NYSE: BA], the aerospace giant, has announced its largest annual purchase of sustainable aviation fuel (SAF) to date, aiming to reduce carbon emissions for its 2024 U.S. commercial operations. The company has committed to buying 9.4 million gallons of SAF, a blend that includes 30% biofuel derived from waste by-products and 70% conventional jet fuel. This purchase represents a more than 60% increase from the previous year's acquisition of SAF.
The SAF will be used in Boeing's ecoDemonstrator program and for other commercial operational flights across the United States.
Ryan Faucett, Boeing's vice president of environmental sustainability, emphasized the company's dedication to sustainability, noting that SAF is crucial for the aviation industry's decarbonization efforts. Faucett revealed that about 20% of Boeing's fuel usage is currently a SAF blend, with plans to further increase utilization to stimulate the SAF industry's growth.
Boeing's initiative also includes purchasing the CO2 emissions reductions associated with 5.4 million gallons of blended SAF through a process known as book-and-claim. This system allows Boeing to buy SAF certificates, offsetting the use of conventional jet fuel at nearby airports by airlines and other carriers.
The blended SAF for Boeing's operations will be sourced from EPIC Fuels and Avfuel, with contributions of 2.5 million and 1.5 million gallons from Neste, respectively. Additionally, EPIC Fuels and World Fuel Services (NYSE:WKC) will supply SAF for Boeing's book-and-claim purchases.
The use of neat SAF can potentially reduce carbon emissions by up to 85% over the fuel's life cycle, making it the most significant contributor to the commercial aviation industry's climate impact reduction over the next three decades.
The information is based on a press release statement.
InvestingPro Insights
In the wake of Boeing's [NYSE: BA] announcement about its significant investment in sustainable aviation fuel (SAF), the financial metrics and analyst insights from InvestingPro paint a detailed picture of the company's current market position. With a market capitalization of $102.61 billion and a notable revenue growth of 16.79% over the last twelve months as of Q4 2023, Boeing is making strides in its commercial operations despite facing challenges in profitability and market volatility.
InvestingPro Tips indicate that while Boeing is a prominent player in the Aerospace & Defense industry, analysts are cautious about its near-term earnings potential, with 14 analysts having revised their earnings downwards for the upcoming period. This aligns with the company's current negative P/E ratio of -45.73 and an even more substantial negative adjusted P/E ratio of -107.85 for the same period. Moreover, Boeing is trading near its 52-week low and does not pay a dividend to shareholders, reflecting concerns about its immediate financial resilience.
However, the commitment to SAF could be a long-term strategic move that may align with environmental sustainability goals and potentially improve Boeing's market perception. The InvestingPro platform offers an additional 10 tips for investors looking to delve deeper into Boeing's financial health and future prospects. For those interested in a comprehensive analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/BA.
Lastly, the gross profit margin of 11.89% alongside an operating income margin of 1.66% for the last twelve months as of Q4 2023, signals Boeing's current operational efficiency challenges, which may be a focal point for investors monitoring the company's performance in light of its sustainability initiatives.
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