Hello, and good morning, everyone. This is Conner Walters with the Jefferies Aerospace and Defense Equity Research Team. Welcome to the third annual Jefferies ESG Summit. Today, we're lucky enough to have Nancy Young from FLYHT joining us. FLYHT has been operating since 1998 as FLYHT Aerospace Solutions and is headquartered in Calgary, Canada, with offices in the U.S. and Germany. FLYHT has a global footprint with sales and installation support in China, Southeast Asia, the United States, and Europe. The company provides the airline industry with innovative data solutions to enable its partners to make smart decisions based on actionable intelligence to improve operational efficiency, sustainability, and profitability through extensive hardware, software, weather solutions, and services. Nancy is a FLYHT board member and also the Chief Sustainability Officer of Gevo, Inc. Ms. Young is a globally recognized sustainability and environmental attorney and advisor for over 30 years of experience in climate change, aviation environmental matters, environmental social justice, and sustainable aviation fuels. She currently is Chief Sustainability Officer at Gevo, as mentioned, leading the company's sustainability, environmental, and scientific affairs as the company commercializes the next generation of bio-based renewable fuels. She previously served as the Chief Sustainability Officer of Alder Renewables, where she established a startup bio-crude company's environmental and sustainability legal policy and regulatory programs. Before joining Alder, Ms. Young served for 14 years as the VP of Environmental Affairs at Airlines for America. From 2015 through 2016, she served on the U.N. Secretary-General's high-level advisory group for sustainable transport. Prior to joining A4A, Ms. Young was a director and partner at the law firm of Beveridge & Diamond, P.C. Ms. Young currently serves on the board for FLYHT Aerospace Solutions. With that, thank you so much for joining us, Nancy. I'm sure you could provide a better overview for FLYHT and their role within the transition to a sustainable future for aviation. If you could just touch on that, as well as your background and experience, I think that'd be a great place to start off. Well, thank you so much, Conner. I'm delighted to be here as a board member of FLYHT Aerospace Solutions, as you really captured the good highlights there. It's really focused on actionable intelligence to the aviation community. One of the things I'm very excited about, about being an ESG expert, I suppose, or practitioner, it may be a better way of putting it, is really throughout my career, the focus has been on win-win solutions. That's what an ESG is really all about. A lot of people focus on ESG as if it's, let's just look at risk. It's really looking at opportunity. That's what FLYHT does. Today, we're talking about really one aspect of FLYHT's offerings, of which there are many. It's basically an actionable data provider, hardware, software, provides sensors, aircraft-based observations. But today, we're talking about the environmental offerings. That is an array. Basically, for a long time, FLYHT has provided real-time weather observations that have helped meteorological organizations and all of us in the aviation community. That also provides sort of a historic look back at climate impacts. FLYHT has aircraft health monitoring services, which we're talking a bit here already about climate and how we address climate change. The healthier your aircraft is, the more efficient it is. And having those services to show in real time, again, how your aircraft is doing allows you to tune it to what you need for the environment. But also, there's an emerging and exciting area of FLYHT, which is contrail detection and avoidance. And I think we're going to get into that a little bit further today. But a lot of people think about aviation climate impacts as carbon dioxide impacts. And those are very significant. But the research community has increasingly shown that the creation of contrails has a warming effect. And FLYHT is right in there with its actionable intelligence services, being able to help with those detection services and ultimately avoidance. There are other services as well, like fuel reporting and also compliance with things like the European Union Emissions Trading System and the International Civil Aviation Organization's Carbon Offsetting and Reduction Scheme for International Aviation. So really bringing those actionable intelligence services together to provide that array of ESG, environment, and good for our planet and people kinds of services. That's great. That's a super helpful overview and a great place to start. And so maybe we'll dive into the market and where FLYHT is operating today. Given your experience, it'd be helpful to provide some context on how we've come to this seemingly pivotal point in the industry for sustainability in aviation, maybe over the past five or 10 years. What would you say are some of the two or three key breakthroughs that have pushed us in the direction of now pursuing net zero by 2050? Yeah, you almost have to start by looking backwards. The aviation community has had significant climate goals for really since about 2010. Those were adopted on the international community by the International Civil Aviation Organization. But to your point, Conner, really in the last few years, it's kicked into a much higher gear. What you saw coming out of COVID, or actually during COVID, was an array of airlines, like Airlines for America, the association that I used to run the environment and sustainability team for. A4A in 2021 announced net zero by 2050 goals. Some of the airlines were already beginning to do that as well. That was the first kind of real push. The International Civil Aviation Organization did it on a global basis. The International Civil Aviation Organization, the United Nations body that regulates aviation, did it in 2022. So you have those events, but what triggered that? I would say it's an understanding of the science and the importance of the contribution that aviation makes to climate impacts, and really an understanding of the technologies that you could use to address that. So kick it into high gear and put in the more significant climate goals. Another thing, and that's part of my day job actually at Gevo, which is the ability to change the fuel. Starting back in 2006, the Commercial Aviation Alternative Fuels Initiative, CAAFI, of which A4A and I were a part of creating way back then, charted a way forward on sustainable aviation fuel. So fast forward to the commercialization of that, you can then really put that into your climate goals and say, where can we go with this? How hard can we push it? I think really relevant to this conversation, though, too, it's investors and the flying public. It's the awareness of the importance of addressing these issues. Again, that it's good business to address these issues. It's not just a cost center. You get these synergies of savings and synergies of having a sustainable business, not just sustainable environment, by doing the right thing. I think we will talk again more about contrails, but that's one of the emerging things. That's getting a lot of attention now as kind of the next thing. That's great. Speaking about the next thing, but still keeping it focused on the market as a whole, as we look forward, what do you see as some of the bigger challenges for sustainability in the aviation industry as it relates to this transition to a truly sustainable future? Well, I think it's clear to almost all of us, and certainly those of us in the community, that there's a great thing about aircraft in that they last a long time. And they're really expensive to buy and to run. So it's good that they last a long time, but that itself is a challenge to sustainability. Each generation of aircraft can be more fuel efficient, and some new technologies can come into play. But if you have a 30-year lifespan on an aircraft, it's hard to really make that huge evolution revolution in one leap. And so it's time. And that actually is part of the reason why sustainable aviation fuel will be such a significant opportunity, because you're not going to have the Star Trek kind of generation aircraft anytime soon. So you've got to be able to change the fuel and be able to move that forward. The next thing I would say that is an obstacle or challenge is obviously the costs. We saw during the COVID time how difficult that was for the world, and certainly for aviation as well, as we really curtailed flying by a tremendous amount. That left the airlines in a much more difficult financial situation. They've been starting to make money again in the last couple of years. But being able to invest is really critical. One last thing I would mention is aviation. We think about it sometimes as on our domestic flights, but we also think about it on our international flights. They all connect together. So you've got to deal with that policy on an international level. Different countries are in different places in terms of what they can or will do in terms of supporting new innovations, sustainable aviation fuel, and the like. That's super helpful. Maybe to continue on the theme of sustainable aviation fuels, given your role as the CSO at Gevo, can you provide a little context for what SAF is and its importance in driving down emissions and how that might compare to what's being used in aircraft today? And yeah, certainly. I mean, it actually sounds complicated, but it's pretty simple, right? Which is throughout time, we've had petroleum-based fuel, jet fuel. And that means that we're taking out of the ground carbon that's been sequestered there for millions of years. And so the switch to sustainable aviation fuel is essentially using technologies to get that same energy power out of biomass today. What does that mean? Biomass today is pulling out of the air carbon dioxide that has been put in there previously. And so if you can then use that as the basis for your fuel, you're essentially creating a closed-loop system where you're sucking carbon dioxide out of the air, you turn it into fuel, and then you drop it into your aircraft, and then you create more biomass. And so you're not adding new CO2. If I may give one example from my company, Gevo, we produce sustainable aviation fuel. We've done it in a pilot facility for many years. Now we're building our first major commercial facility. What we do there is we work with farmers to do regenerative agriculture to create low-carbon sustainable biomass. We bring it to our facility. We have a wind farm. We have renewable natural gas. We have carbon capture and sequestration and other methods so that our own production of sustainable aviation fuel doesn't add significant emissions. In fact, it's a net zero facility that we're building. One last point I think important for the audience, it's completely safe. Going back, as I said, to 2006, the Commercial Aviation Alternative Fuels Initiative in the United States plotted a way forward to say, if we're going to use biomass and these technologies, they have to meet the same jet fuel specification as the petroleum jet fuel would. And so we drove sustainable aviation fuel to meet that specification. We now have eight technology and feedstock pathways approved under that specification, with more to come. And they can bring up to 80% or more carbon dioxide emissions reduction. And they also have to have sustainability certifications as well. That's what makes them truly sustainable. That's great. And I think the 80% reduction really speaks for itself there. But from what we're hearing from some other participants in the summit today, SAF is still very much in the early innings of its eventual ramp-up curve. I was wondering if you could provide a little update on the current state of supply and demand for SAF, and what are the drivers and some of the challenges on both sides there? Yeah, well, the demand is certainly there. If you look at any of the analyses of how the aviation community meets its climate goals, you're looking at at least 65% of the emissions savings has to come from SAF. So there's a demand signal there. I think you are absolutely right, though. The supply is very nascent. By way of example, in the United States, we burn about 20 billion gal of jet fuel a year. And in 2023, we only had about 25 million gal of sustainable aviation fuel. So there really does need to be a ramp-up of that. What you need is this proven technology like ours, feedstock affordability. You need to be able to demonstrate scalability and low carbon intensity and sustainability overall. But I think part of the point, Conner, that folks have been probably making in the discussion today is that ramp-up is really difficult. You're taking on a whole petroleum infrastructure and starting to create a whole new infrastructure. So what you need is stable investment community. And you also need solid and stable and continued public policy that supports sustainable aviation fuel. And we've been slowly getting there, but we're not quite there yet. And so that's why I'm kind of excited about our facility that we will have online within a couple of years, 65 million gal of sustainable aviation fuel a year. And that's our first major commercial facility with many more to come. So it's really a ramp-up situation that we need over the next many years. Yeah, and it's great to hear that there's some early momentum with building that out. But understanding that the path for scaled commercialization of SAF is likely a long process to come, how can airlines improve their sustainability more in the short term? Is it all about SAF and that adoption, or are there more feasible short-term steps that can help get to their goals over the longer term? Well, as I noted, sustainable aviation fuel will be the most significant over the next 30+ years. But your question is right on, actually, because the airlines are very driven to be fuel efficient because fuel can be one of their largest costs. Business aviation is also driven to be fuel efficient as well. So what can they do with that? Well, services like what FLYHT Aerospace Solutions provides with our monitoring, reporting kind of systems, as well as flight efficiency systems, even a couple percentage points here or there can make a huge difference both on the climate side, but certainly on the operating cost side for an airline. So another thing that is kind of out of the control of a lot of us is better air traffic control. As you likely know and others in this have noted, there has been a transition to satellite-based air traffic management over the last many years. And again, FLYHT is one of the participants in that by providing its SATCOM kind of services and other tracking services. But we need the air traffic management providers around the world to work together to create, in Europe, a Single European Sky. I would say also the business aviation community is really starting with a lot of the innovation that will help with everybody, things like hybrid electric aircraft that you can do on a smaller aircraft. And that'll be scaled up over time to the larger aircraft. So I think that there are those types of innovations that are going to help in the short run in addition to sustainable aviation fuel. That's great. You touched on FLYHT's role, especially with air traffic control. I would love to get back to some of their core competencies and something you touched on earlier, which is contrails. Can you discuss contrails and their impact on the environment, and more specifically, how FLYHT Solutions helps detection and avoidance of these? Yeah, absolutely. I mean, contrails is an unknown term to a lot of people. It just means the condensation trail that's behind an aircraft. It's the water vapor that comes out as a process of combustion in the engine. And a contrail is formed in certain atmospheric conditions where the aircraft is going through it, and it's basically almost creating a man-made cloud behind the aircraft that we've all seen. Well, the challenge with that is the science has shown that it is net global warming forcing. In fact, it's estimated now the best science is saying about 35%-50% of the impact from aviation climate is coming from contrails. So what FLYHT has been doing is really taking what has been years of innovative on-aircraft weather observations and further maturing that to help identify and help folks respond to contrails. And what does that mean? FLYHT has a system called the Water Vapor Sensing System II, WVSS-II, which is an on-aircraft sensor that provides a lot of actionable intelligence. But one of the parameters, one of the many parameters, is humidity. And that is fed into meteorological organizations to help with weather observations and weather prediction. Well, you take that WVSS-II and you put it together with an algorithm that FLYHT has developed with another partner called ShadowCast. And we're able to take real-time weather information and be able to predict the kind of atmospheric conditions behind an aircraft that would create that contrail. What does that do to you? That allows you then to be able to find a way to avoid going through those types of areas. Right now, it's mainly a scientific endeavor to research this and see what you can do with it. But it is also maturing into quite a commercial endeavor as the regulatory entities are more and more interested in how you address this, as are the airlines, sorry. Understood. And building off of that, can you touch on how consumer appetite has been for FLYHT Solutions thus far? Is there a strong level of demand today, or is it something that you really see inflecting higher over the years to come? And then maybe off of that, what kind of advantages are provided to some of those early movers in this technology? Yeah, no, really good question. I mean, so FLYHT has very well-established automated flight information reporting. We have what's called an Edge product that has 5G connectivity. I've mentioned the WVSS-II and MRO services. Those are all really expanding in the marketplace. We just released our Edge with 5G connectivity and have the certificates to be able to start putting that on aircraft. And that's critical. But when we talk about the ShadowCast system and what we're trying to do with contrail detection and avoidance, we're just now launching that. And we do see it as an area of ramp-up. For example, in Europe, the European Commission has directed that there be in 2025 a report on how you deal with contrails. And by 2027, they intend to regulate aircraft contrails for their climate warming impacts. So to be able to have a system like the ShadowCast system that FLYHT is offering is going to be quite significant. So we're going to go from research to actual application. In fact, the airlines now have multiple kind of projects going to figure out how they're going to address this because they realize that it is somewhat an unknown area. We know how to deal with CO2, but now we need services that are emerging like water vapor detection and something like ShadowCast to be able to determine what we're going to do about contrails into the future. That's very helpful. Maybe as we think about this on a global level for FLYHT, but also for the broader transition for sustainability, are there any specific customers or regions where you see are gaining the most traction or would be considered leaders in the space in supporting this transition? Well, I think what you see is, for example, FLYHT's a Canadian company. So you have Canada, and they have a really significant sustainability climate plan for aviation. The United States does as well. You have Europe with what's called a Horizon Europe program, as well as the array of regulatory systems that they have, including their European emissions trading scheme. And we have on the international level the Carbon Offsetting and Reduction Scheme for International Aviation. So you see a lot of that coming together. I think you also see Japan with a pretty sophisticated system now, the UK as well. So I think there are lots of developments. I I think a very important thing is continuing to work. Aviation is international, so working across borders. And an example, FLYHT has operations in Europe. We work with airlines around the world with the services that we provide. But also my sustainable aviation fuel company, Gevo, we work in different countries as well and have had partnerships in India and other places. It really takes that integration to be able to move things forward. Absolutely. It's definitely encouraging to hear that progress is being made on a global level and it's not overly concentrated. But as we think about the aviation's broader target, the aviation industry's broader target to reach the goal of being net zero by 2050, we've touched on some of the obstacles for SAF adoption, but curious if there are any other primary obstacles to get there, being SAF is one of many levers to help facilitate that transition. Yeah, first, I would say we can get there. And I think, but there are challenges and there are obstacles. So one thing is we're very focused as an aviation community broadly, I include all of us, on 2050. But we have to have some pretty serious midterm types of goals to be able to make sure that we're going to meet that 2050 target. So that's a critical thing. And we're not seeing as much of that necessarily in different flight paths as we would for sustainability. So I mentioned before, you really need sustained policy support to be able to have stable and sustained policy where the government says, yes, we believe in sustainable aviation fuel. Yes, we believe in contrail research, detection, and avoidance. And we have seen some flip-flops over time in some of those policy things. I think also we talked about SAF, but it really is an integration, and I hate to overuse that word, but it's an integration issue. So companies like FLYHT that are able to do actionable intelligence that integrate what's going on with the aircraft, what's going on with the atmosphere, what's going on elsewhere, I think we obviously need more of that. And there's no silver bullet, right? So you need to be able to take these things and put them together. You need technology. You need operations. You need infrastructure. You need sustainable aviation fuel. And there is a role for market-based measures like carbon offsets and emissions trading and other things to help backstop what otherwise is significant progress. That's great. And we only have a few minutes left, so I want to just keep my questions to one last one. But maybe to wrap things up, what would you point to? What are three things that you want investors to walk away from this discussion, taking away thinking about the transition to a sustainable aviation future? So one of FLYHT's main kind of themes is actionable intelligence. And so I would say that's number one. You kind of have to know what's going on, and you need to be able to figure out then from what's going on, what are you going to do about it? And so I believe that's very much the array of services that FLYHT provides. I think thinking about aviation much more broadly, that is also an understanding that it's not just one thing. I would also like to highlight what I said at the beginning, I think, about ESG, which is it's interesting that ESG sometimes has become a political football for various folks saying, oh, why are we focusing on ESG? If you really think about ESG, as I said before, it is to assess risks and be able to address those. But as much or more is how do you address opportunities? How do you understand the opportunities that you have to participate in environment, social governance to move the business forward? And that's a philosophy that we on the FLYHT board have, as does the management. And I think that's very critical. I think one last thing is aviation is increasingly sustainable, needs to be sustainable to have a license to exist, and certainly a license to grow. And I should have mentioned from the beginning, I mean, it's great working with the OEMs, with the fuel providers, with companies like FLYHT, with governments. I haven't meant to be critical of them. I just want more consistency there. It really does take a village. And I think that's what aviation sustainability is all about. That's perfect. I think it's a great place to leave off. Nancy, thank you so much for joining us. Thank you for everybody that tuned into the call. We will see you on the next session. Thanks so much, Nancy. Thank you, Conner.