Virgin’s SAF-Fueled Transatlantic Flight Affirms Strong Demand Potential, but Supply Challenges Remain

The first 100% Sustainable Aviation Fuel (SAF)-powered transatlantic flight operated by Virgin Atlantic using a widebody Boeing 787 Dreamliner completed its journey to New York from London. DBRS Morningstar believes the successful long-haul flight using 100% SAF is an important development in the aviation sector’s pursuit to increase SAF usage to 10% by 2030 and ultimately achieve net zero targets by 2050.

Key Highlights:

-- The 100% SAF-powered flight could pave the way for an increase in the SAF blend from its current maximum of 50% to a possible 100%, which would increase the scope of emissions reductions.

-- This could eliminate the need for additional investments by airlines, which might otherwise would have been required to upgrade their fleets to materially increase SAF usage.

-- High costs and significant production ramp-up requirements are two of the key challenges of achieving a meaningful surge in SAF adoption.

“Potential credit implication for airlines will depend on the impact of the higher cost of SAFs on air travel demand, pricing leverage, and airlines’ margins. Regulators are also likely to play an important role in determining the pace and cost of decarbonization,” said Rohit Kumar, Assistant Vice President, Diversified Industries.