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Can US airlines sustainably grow fleets with SAF and fleet renewal?

IBA's explores how 4 major US airlines could use Sustainable Aviation Fuels, carbon offset and fleet renewal to grow their fleets whilst avoiding an increase in overall CO2 emissions.

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Data from our InsightIQ Carbon Emissions Calculator has revealed that a combination of Sustainable Aviation Fuels 'SAF', carbon offset, and carbon removal credit schemes could allow American Airlines, Delta Air Lines, United Airlines and Southwest Airlines to grow their active fleets without growing their net CO2 emissions.


Insight from our recent aviation Carbon Index also revealed that CO2 emissions at the 4 largest airlines in the US (also the 4 largest airlines globally) will reduce significantly over the next 3 years thanks to fleet renewal strategies.


All of these airlines face significant challenges in meeting their carbon emissions targets in the United Nations 'Race to Zero' global campaign. America, Delta, United and Southwest have set out midterm and long-term roadmaps which outline the tools at their disposal to meet this challenge, whilst simultaneously ensuring growth and profitability for the airlines. Carbon offset, and Carbon removal credit schemes will form the backbone of these airline decarbonisation strategies, coupled with an increase in the usage of SAF. The US administration has set out a plan to produce 3 billion gallons of SAF annually by 2030, and has proposed a $1.25-per-gallon-tax credit for SAF that reduces emission by at least 50% compared to traditional Jet-A1. This is expected to come into effect in 2023, bolstering the uptake of SAF in the United States.

How are airlines in the United States adopting Sustainable Aviation Fuels?

Forecasted growth in fleet size at the 4 largest American airlines

Forecasted CO2 outputs at major American operators


United Airlines

  • United is leading the charge, having reached an agreement in partnership with Honeywell for a multi-million-dollar investment in Alder fuels. This guarantees a total of 1.5 billion gallons of SAF over 20 years, which is 1.5 times the size of the rest of the world's airlines publicly announced SAF commitments combined. The technology being developed by Alder Fuels would allow the fuel to be a 100% drop in replacement using forestry residues as the main feedstock for the fuel.

  • In addition to the investment into Alder Fuels; United has also invested $40 million in sustainable aviation fuels and agreed a multi-million-dollar investment in Direct Air Carbon Capture company 1PointFive, which is projected to sequester 1 million tonnes of CO2 a year.

Delta Air Lines

  • Delta was an early adopter of SAF, and has agreements in place with producers including Aemetis, GEVO and SG Preston. According to Delta's 2020 sustainability report, the offtake agreements will total 70 million US Gallons of SAF by 2025.

  • According to IBA's Carbon Emissions Calculator, this would equate to 2.2% of Delta's annual fuel requirements for 2025, but contribute towards a reduction in emissions of -2% on a lifecycle basis. This figure is likely to be higher with the most recent agreement between Delta and Aemetis, totally 250 million gallons over the next 10 years, however the initial amount due to be delivered is currently unclear.

  • The use of sustainable fuels, coupled with an average improved yearly fleet-wide efficiency of 1.5% through the introduction of new aircraft, will help drive down Delta's overall emissions intensity whilst still allowing the airline to grow.

American Airlines

  • American Airlines has committed to the use of a projected 10 million gallons of SAF in 2025 from producer Prometheus Fuels, and an additional 16 million gallons of SAF from Aemetis starting in 2024.

  • The bulk of the SAF feedstock is being used is produced from a variety of feedstocks, and represents 0.7% of American Airlines' fuel requirements in 2025, which will contribute towards a -0.5% reduction in lifecycle emissions.

  • It is likely we will see further commitments from American Airlines going forwards which coupled with the sizeable orderbook of Boeing 737 MAX 8's Boeing 787-9's and Airbus A321neo's will help American meet its targets whilst guaranteeing growth and future proofing the airline's position in the years to come.


Southwest Airlines

  • Southwest Airlines has followed a similar trend to its US counterparts and committed to 219 million gallons of SAF as a fixed price over a fifteen-year term, with deliveries expected to start in 2026.

  • The fuel is expected to be true 'net-zero' due to the fuel having a carbon intensity of 0 gCO2e/MJ through the application of biogenic feedstock, renewable power and carbon capture and storage. Southwest's total CO2 emissions will gradually begin to ratchet down as it begins to bring the fuel online in the coming decade, and the introduction of the Boeing 737 MAX 7 into the fleet will further reduce emissions intensity.

Fleet renewal - what's happening at Delta, United, Southwest and American?

Delta Air Lines have retired 40% of their Boeing 717-200 aircraft and 53% of their Boeing 767-300ER aircraft as of early 2022, with both types earmarked for full retirement by 2025. Delta relies on an older fleet approaching the end of its useful economic life. Airline fleet data from InsightIQ reveals Delta operates a number of older Boeing 757 and Airbus A319ceo aircraft, which are 24.5 years and 19.9 years old on average. Delta have committed to replacing these aircraft with new Airbus A220 and Airbus A320neo family aircraft.


American Airlines has a sizeable orderbook of Boeing 737 MAX 8, Boeing 787-9, and Airbus A321neo variants. Covid-19 has accelerated the retirement of a number of Airbus A330-200/300 aircraft at American Airlines. Mass retirements of types including the McDonnell Douglas MD-80, Embraer E190 and Boeing 767 and 737-800 continue, and a blend of Airbus A321-200 and Boeing 757-200 aircraft are being placed into long term storage.


An American Airlines Airbus A330 aircraft

An accelerated exit - The Coronavirus pandemic has seen the exit of a selection of A330 types at American Airlines


Whilst United Airlines has made no firm public commitments to retire older portions of its mainline fleet, they have announced the order of 200 737 MAX jets and 70 Airbus A321neo in July 2021. We expect United will retire a selection of stored 777-200/ER, Boeing 757-200, Airbus A319-100ceo and Airbus A320-200ceo types in the coming years.


Southwest Airlines is preparing to take delivery of the new Boeing 737 MAX 7 jets from 2022, and is retiring older Boeing 737-700 aircraft. IBA expects that to continue over the coming years. We expect Southwest's fleet of over 200 Boeing 737-800 aircraft to remain in the fleet long term thanks their low average age of 6.5 years (and thus their utilisation of the CFM56-7B27E engines, giving them a competitive advantage over older NG aircraft).


What impact would fleet renewal have on CO2 emissions at the world's largest 4 airlines?

IBA predicts the top four largest airlines in the United States will experience a significant downward shift in carbon intensity over the next 3 years.


Based on fleet renewal alone, the 4 major US carriers are forecasted to see a dramatic reduction in CO2 emissions


Note: IBA has forecasted two scenarios at United Airlines, mapping out likely performance both with and without major mainline fleet retirements. This does not include recent retirements at United Express.


IBA's InsightIQ analysis platform flexibly illustrates multiple asset, fleet and market positions, actual and potential, to inform client choices and identify acquisition opportunities. Immediate access to crucial aircraft, engine, lease rate and fleet data eases appreciation of historic and future aircraft concentrations and operator profiles.

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For further question or comment on this analysis, please contact Tim Boon.

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