SOUTHWEST AIRLINES LAUNCHES RENEWABLE VENTURES SUBSIDIARY TO ADVANCE SUSTAINABLE AVIATION FUEL AND ANNOUNCES INVESTMENT IN LANZAJET

Rhea-AI Summary

Southwest Airlines Co. (LUV) launches Southwest Airlines Renewable Ventures (SARV) to secure sustainable aviation fuel and invests $30 million in LanzaJet, Inc. to achieve net zero carbon emissions by 2050.

Insights

Environmental Sustainability Analyst

Southwest Airlines' establishment of Southwest Airlines Renewable Ventures (SARV) and the subsequent investment in LanzaJet marks a strategic move to secure a sustainable aviation fuel (SAF) supply chain. This initiative is indicative of a broader industry trend towards environmental sustainability and aligns with the International Air Transport Association's (IATA) commitment to reducing aviation's carbon footprint. The creation of SARV is a proactive step in ensuring Southwest Airlines meets its Nonstop to Net Zero plan, which includes a significant reduction in carbon emissions by 2050.

By investing in LanzaJet, Southwest is not only diversifying its fuel supply but also supporting the advancement of ethanol-to-SAF technology. This technology is significant as it leverages existing biofuel processes and agricultural by-products, potentially reducing the reliance on traditional jet fuel and its associated environmental impacts. The partnership with LanzaJet and SAFFiRE Renewables, which focuses on cellulosic ethanol production, demonstrates a commitment to innovation within the biofuels sector, which could have broader implications for the agriculture and energy industries in the U.S.

Energy Sector Financial Analyst

The financial commitment of $30 million from Southwest Airlines into LanzaJet is a strategic investment that signals confidence in the growth potential of the SAF market. The move to secure a scalable source of SAF through SARV could potentially offer Southwest a competitive advantage by mitigating future fuel price volatility and regulatory risks associated with greenhouse gas emissions. Investors may view this as a forward-thinking approach to risk management in an industry that is highly sensitive to fuel costs.

Furthermore, Southwest's alignment with the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) through its partnership with SAFFiRE Renewables could provide additional financial incentives or support, given the government's interest in promoting renewable energy technologies. The long-term potential for cost savings and the possibility of federal subsidies or tax incentives could positively affect Southwest's financial outlook and attractiveness to sustainability-focused investors.

Market Research Analyst

The launch of SARV and the investment in LanzaJet by Southwest Airlines are poised to influence the airline industry's supply chain dynamics. The focus on SAF aligns with consumer trends favoring environmentally responsible companies, which could enhance Southwest's brand reputation and customer loyalty. This strategic move may also prompt competitors to accelerate their own sustainability initiatives, potentially leading to increased demand for SAF and related technologies.

From a market perspective, this could catalyze growth in the SAF production sector, encouraging technological advancements and economies of scale that may reduce SAF costs over time. It is essential to monitor how this investment influences the broader aviation fuel market, including the potential impact on traditional fuel suppliers and the emerging biofuel industry.

DALLAS, Feb. 28, 2024 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) today announces the launch of Southwest Airlines Renewable Ventures (SARV), a wholly-owned subsidiary of Southwest Airlines^® dedicated to creating more opportunities for Southwest to obtain scalable sustainable aviation fuel (SAF), a critical component in the success of the carrier's goal to replace 10% of its total jet fuel consumption with SAF by 2030. The carrier also announces a $30 million investment in LanzaJet, Inc., a SAF technology provider and producer with a patented ethanol-to-SAF technology and the world's first ethanol-to-SAF commercial plant, as part of the SARV investment portfolio.

"Our launch of SARV and our investment in LanzaJet demonstrate that we are not sitting on the sidelines. Rather, we're in the game by taking proactive, disciplined steps toward securing affordable SAF for Southwest, as we continue to march toward our goal of net zero by 2050," said Bob Jordan, President & CEO of Southwest Airlines. "We look forward to working with companies and organizations developing important technology, like LanzaJet, which could help us meet our SAF goals."

Southwest will continue to work with SAF producers to enter into SAF offtake agreements, while SARV will focus on managing Southwest's SAF-related investments, including the carrier's previously announced equity investment in SAFFiRE Renewables (SAFFiRE). SAFFiRE has been working with the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) and has a license agreement and certain exclusivity rights to this technology for the production of cellulosic ethanol. This technology is an important component in converting corn stover, a widely available agricultural residue feedstock in the U.S., to cellulosic ethanol that can then be converted to SAF using LanzaJet's technology.

Additionally, as part of its agreement with Southwest, LanzaJet intends to build an ethanol-to-SAF facility to produce SAF primarily for Southwest. The planned facility includes capabilities to convert SAFFiRE's cellulosic ethanol into SAF, which can produce greater quantities of SAF from SAFFiRE ethanol over time.

"SARV's goal is to help scale SAF through strategic investments, better positioning Southwest to have access to high quality, affordable SAF in accordance with the robust standards of Southwest's SAF policy," said Tom Nealon, President of SARV and CEO of SAFFiRE. "Through SARV's investment in LanzaJet, we're also entering the next phase in the commercialization of SAFFiRE technology, which is designed to support the production of cellulosic ethanol that can be converted to SAF."

"LanzaJet's ethanol-to-SAF technology represents the next generation of sustainable aviation fuel and will transform global aviation's ability to meet its 2050 net zero targets. We're proud to be working with Southwest Airlines to build out this industry as well as working with SAFFiRE Renewables to use ethanol made right here in the U.S.," said Jimmy Samartzis, CEO of LanzaJet. "Southwest's equity investment in LanzaJet will help us continue to grow and scale to meet the demands of the aviation industry, while unlocking the significant potential of the U.S. biofuels industry to benefit local communities and support the agriculture industry."

Securing additional SAF is a key pillar of Southwest's Nonstop to Net Zero plan, which outlines the carrier's approach toward sustainability through the strategic pillars of carbon, circularity¹, and collaboration to achieve a goal of net zero carbon emissions by 2050.

For more on the carrier's environmental sustainability plan, visit southwest.com/planet.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include, without limitation, statements related to (i) the goals and focus areas of Southwest Airlines Renewable Ventures; (ii) the Company's goals with respect to SAF usage; (iii) the Company's expectations regarding the pricing and affordability of SAF; (iv) the Company's environmental sustainability plans, expectations, goals, and projections; (v) the Company's expectations regarding working with companies and organizations to develop technology; (vi) the Company's expectations with respect to SAF offtake agreements; (vii) the Company's expectations regarding SAFFiRE technology; (viii) the Company's expectations with respect to LanzaJet and Lanzajet technology; and (ix) the Company's expectations regarding access to SAF. Forward-looking statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) any negative developments in any phase of SAFFiRE's business development from current concept to commercialization, including limitations on the availability of feedstock, transportation, and refinery availability; (ii) any negative developments in any phase of LanzaJet's business development; (iii) the continuation of government support for SAFFiRE's and LanzaJet's objectives and renewable fuels generally, including SAF; (iv) the Company's dependence on third parties, in particular with respect to fuel supply, environmental sustainability, and the production, transport, storage, blending, and distribution of SAF, and the impact on the Company's goals and plans of any third party delays or non-performance; (v) the Company's ability to timely and effectively prioritize its initiatives and related expenditures, including its ability to implement and maintain the necessary processes to support the utilization of sustainable aviation fuel; (vi) the consequences of competition with other existing and new sources of aviation fuel, whether or not sustainable; (vii) the ability to obtain and protect intellectual property rights relating to the development and commercialization of technology, including with respect to converting corn stover to renewable ethanol and converting ethanol to SAF; (viii) the impact of governmental regulations and other governmental actions on the Company's business plans and operations, including with respect to carbon emissions, SAF, SAF tax credits, environmental compliance requirements, and other sustainability matters; (ix) the impact of fears or actual outbreaks of diseases, extreme or severe weather and natural disasters, actions of competitors, consumer perception, economic conditions, fuel prices, socio-demographic trends, and other factors beyond the Company's control, on the Company's business plans, expectations, and goals; and (x) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Caution should be taken not to place undue reliance on the Company's forward-looking statements, which represent the Company's views only as of the date this release. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

ABOUT SOUTHWEST AIRLINES CO.    
Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 121 airports across 11 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline². Based in Dallas and famous for an Employee-first corporate Culture, Southwest maintains an unprecedented record of no involuntary furloughs or layoffs in its history. By empowering its nearly 75,000³ People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 137 million Customers carried in 2023. That formula for success brought industry-leading prosperity and 47 consecutive years⁴ of profitability for Southwest Shareholders (NYSE: LUV). Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship. As the airline with Heart, Southwest has set a goal to work toward achieving net zero carbon emissions by 2050. Southwest has also set near-term targets and a three-pillar strategy to achieve its environmental goals. Learn more by visiting Southwest.com/planet.  

¹Circularity at Southwest means working toward reducing waste through maximizing the value of resources by keeping products and materials in circulation as long as possible. This can be through reusing, recycling, and considering what happens to a product at the end of its lifecycle from the time that sourcing begins. 
²Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey since Q1 2021
³Fulltime-equivalent active Employees        
⁴1973-2019 annual profitability     

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SOURCE Southwest Airlines Co.

FAQ

What is the purpose of Southwest Airlines Renewable Ventures (SARV)?

SARV aims to secure sustainable aviation fuel (SAF) for Southwest Airlines to replace 10% of its jet fuel consumption with SAF by 2030.

What is the significance of the $30 million investment in LanzaJet, Inc.?

The investment in LanzaJet, Inc. is to support its ethanol-to-SAF technology and commercial plant, helping Southwest Airlines achieve its SAF goals.

How does SAFFiRE contribute to Southwest's SAF goals?

SAFFiRE works with the U.S. Department of Energy's National Renewable Energy Laboratory to produce cellulosic ethanol that can be converted to SAF using LanzaJet's technology.

What is LanzaJet's role in Southwest's sustainability plan?

LanzaJet's ethanol-to-SAF technology is crucial in meeting global aviation's net zero targets, with Southwest Airlines investing to support its growth and scale.

What is Southwest Airlines' goal in terms of carbon emissions?

Southwest aims to achieve net zero carbon emissions by 2050 through initiatives like securing sustainable aviation fuel and investing in innovative technologies.