Airlines to buy synthetic fuel from Rentech

Delta Air Lines Inc., AMR Corp.’s American Airlines and six other U.S. carriers agreed to buy as much as 1.5 million gallons a year of Rentech Inc.’s diesel fuel made from plant waste.

The synthetic fuel will be used starting in late 2012 for ground-service equipment at Los Angeles International Airport, Rentech and the Air Transport Association, the carriers’ trade group, said in statements today. Rentech rose 86 percent in NYSE Amex trading to its highest in almost a year.

The agreement, the first of its kind with multiple airlines, will help the carriers reduce emissions of so-called greenhouse gases blamed for global warming. Rentech plans to produce the fuel from sources such as yard clippings at a plant in Rialto, California, slated to open in 2012.

“This transaction promises to be the first of many such green fuel purchase agreements by the commercial aviation industry,” said Glenn Tilton, the trade group’s chairman and the chief executive officer of United Airlines parent UAL Corp.

The vehicles using the diesel fuel “will be among the cleanest and greenest of their kind,” said Rentech CEO D. Hunt Ramsbottom in the Los Angeles-based company’s statement.

The accord also includes Continental Airlines Inc., Southwest Airlines Co., US Airways Group Inc., Alaska Air Group Inc.’s Alaska Airlines and United Parcel Service Inc. The agreement is with Aircraft Services International Group, which provides fueling services at the Los Angeles airport. Other airlines can join the contract later.

Synthetic Jet Fuel

“We expect this agreement to serve as a model for future supply relationships at other airports and for other fuels, including Rentech’s synthetic jet fuel, which was recently approved for commercial airline use,” Ramsbottom said.

The company said its RenDiesel exceeds applicable fuel standards, is biodegradable and almost free of particulates and can be used in existing engines and pipelines.