Lufthansa and the HCS Group have signed a Letter of Intent (LoI) on the production and supply of Sustainable Aviation Fuel (SAF). The production process is scheduled to start in 2026 and comprise a volume of annually 60,000 tons. Benefitting from the deal are all member airlines of the Lufthansa Group, including its Cargo arm.
Above all, however, the climate benefits because SAF powered turbines emit 80% less CO2 compared to fossil kerosene. Hence, Sustainable Aviation Fuel is a key contributor to greener flying and
thus for the decarbonization of aviation.
According to provider HCS, the SAF production, based on biogenic residues from agriculture and forestry, will start in 2026 at its plant in Speyer, Southwest Germany, which is run by its partner Haltermann Carless.
600 roundtrips FRA-JFK-FRA
Lufthansa Cargo pilots told CargoForwarder Global that a fully loaded Boeing 777 freighter aircraft would burn roughly 100 tons of fuel on a roundtrip FRA-JFK-FRA. Therefore, statistically the 60,000 tons supplied by the HCS Group would suffice to energize roughly 600 B777F flights on the above sector.
Currently, the SAF share of Lufthansa’s fuel consumption is still marginal, as LH spokesperson Anne Hahn confirms. “In 2022, SAF contributed 13,000 tons to the entire fuel demand of the Lufthansa Group.” That was less than 0.2% of the total energy needed by the airline Group to power its jetliner’s engines and equals roughly 5% of the SAF volume available worldwide.
Scaling up SAF use
The deal with the HCS Group underpins the Lufthansa Group's goal of driving forward the market ramp-up and use of Sustainable Aviation Fuels as a core element of its sustainability strategy. Today, the Lufthansa Group is investing up to USD 250 million in the procurement of SAF for the coming years. In addition, the Lufthansa Group is working on numerous projects worldwide to increase SAF availability and is continuously examining further options for long-term purchase agreements, reads the carrier’s press release,
Last year, for example, the Lufthansa Group signed letters of intent (LoI) for purchasing SAF with Shell (up to 1.8 million tons of SAF) and OMV (more than 800,000 tons of SAF). In FEB23, another LoI was agreed with VARO Energy regarding the possible purchase of large quantities of SAF starting in 2026. These steps are welcome by many shippers and forwarders since it gives them planning security for the investments.
Next step are next gen fuels
Simultaneously, LH is pushing ahead with the introduction of sustainable next-generation aviation fuels from non-biogenic feedstocks. A particular focus is on the forward-looking power-to-liquid (PtL) and sun-to-liquid (StL) technologies. However, the market price for available SAF from biogenic residues is three to five times higher than the price for fossil kerosene. And next-generation SAF is currently still up to ten times more expensive than Jet A-1 aviation fuel. But if shippers and forwarders want to reduce their environmental footprint, they will increasingly have to opt for SAF when booking the air transport of their shipments. This is increasingly becoming a question of credibility and social acceptance.
Come 2030, the Lufthansa Group wants to halve its net CO₂ emissions compared to 2019 through reduction and compensation measures. The reduction goal for 2030 was validated by the independent Science Based Targets initiative (SBTi) in August 2022. In a release, the Lufthansa Group emphasizes that it was the first airline group in Europe with a science-based CO₂ reduction target in line with the goals of the 2015 Paris Climate Accord. In addition to using SAF, the Group focuses in particular on accelerated fleet modernization, the continuous optimization of flight operations, and offers for its private travelers and corporate customers to make a flight or the transport of cargo more sustainable.
Record quarterly result
The carrier also made positive headlines in other respects last week. It presented its best financial result for a second quarter ever.
The group member’s achieved sales of 9.4 billion euros, up 17% on the previous year. The operating result (Adjusted EBIT) increased to 1.1 billion euros and thus almost tripled (previous year: 392 million euros). This corresponds to an operating margin of 11.6% and is a new record for a second quarter result at the Lufthansa Group. Net income also marked a new high of 881 million euros (previous year: 259 million euros).
Outperforming the market
Despite declining transport volumes on the global markets combined with rates going south, LH Cargo also presented a quarterly result that must have pleased CEO Ashwin Bhat and his management. Average yields remained 40% above the pre-crisis level of 2019, meaning that Lufthansa Cargo again outperformed the market as a whole in the second quarter. Freight capacity in the second quarter was 6% up on the previous year, mainly due to the recovery in passenger flight operations leading to higher belly hold transport capacity.
Lufthansa Cargo thus gained market share in the second quarter. However, Lufthansa Cargo's Adjusted EBIT decreased to 37 million euros (previous year: 482 million euros) but still remained significantly above the result achieved in 2019.
In the first half-year, Adjusted EBIT amounted to 188 million euros (previous year: 977 million euros).
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