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Delta airlines buys refinery

muleman

Gone But Not Forgotten
GOLD Site Supporter
Delta buys Philadelphia-area refinery in bid to cut its fuel bill

By JOSHUA FREED, Associated Press
Daily Record/Sunday News
Updated: 04/30/2012 04:43:46 PM EDT





York, PA - Delta Air Lines said on Monday that it will buy a refinery near Philadelphia in the hope of slicing $300 million a year from its jet fuel bill. Delta said a subsidiary will buy the Trainer, Pa. refinery from Phillips 66, a refining company being spun off from ConocoPhillips. Delta is paying $150 million, including $30 million in job-creation assistance it expects to get from the state of Pennsylvania.
Delta estimates the deal will cut its fuel bill by $300 million a year.
Delta said its subsidiary, called Monroe Energy LLC, will spend $100 million to make changes to the refinery to maximize the production of jet fuel. Even though Delta will make as much jet fuel as possible at the refinery, the oil refining process still produces other products such as gasoline and diesel fuel. Delta said it will exchange those other products for jet fuel, so in effect the Trainer refinery would cover about 80 percent of its U.S. jet fuel needs.
Delta burned almost 3.9 billion gallons of jet fuel last year at a cost of $11.78 billion. Fuel was 36 percent of its operating expense. Fuel has become the biggest operating expense for most airlines over the past few years.
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Vertical Integration. Own all means of your production and supply line. Control your costs. Beat your competition.
 

300 H and H

Bronze Member
GOLD Site Supporter
South West is the only one of the bigger lines that contracts it's fuel ahead. Or so I have read. Makes you wonder why all the airlines were not doing this.

I have to think that doing that relatively easy thing, by prepaying/purchasing, owning a refinery wouldn't be nessary. Delta may have it's hands full with that one. Not to mention the expense. I guess we'll see it they can compete well with South West..

Regards, Kirk
 

FrancSevin

Proudly Deplorable
GOLD Site Supporter
It makes sense except that DELTA is an AIRLINE. Don't they fly all over the place.

So how do they get PA jet fuel to Seattle?
 

waybomb

Well-known member
GOLD Site Supporter
Kirk

When I was in AAI, before LUV bought 'em, they made a ton of money on forward purchase Jet-A and Jet-A anti icing. With all the fuel the majors buy, I have to believe they all purchase out.
 

muleman

Gone But Not Forgotten
GOLD Site Supporter
Contract swaps are also used between major players. Even the oil companies do it.
 
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