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Oil prices are down, so why is United Airlines buying into biofuels? Symbolic or sound strategy?

Analysis

United Airlines has announced a USD30 million equity investment in alternative fuels developer Fulcrum BioEnergy. The company is pioneering the development and commercialisation of low-cost sustainable aviation biofuel.

The buy-in is the single largest investment by a US airline in alternative fuels and marks United as a leader in the US aviation industry in advancing low-cost aviation biofuels and greenhouse gas emissions reduction.

Under the long-term agreement with Fulcrum, United will have the opportunity to purchase at least 90 million gallons p/a of sustainable aviation fuel, for a minimum of 10 years. There is also a secondary agreement, which could see United and Fulcrum jointly develop up to five biofuels projects located near major United hubs. This is expected to have the potential to produce up to 180 million gallons of fuel p/a.

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