http://www.forbes.com/sites/christopherhelman/2015/01/21/how-cheap-oil-has-delta-air-lines-jet-fooled/
someone's head will explode
someone's head will explode
Forbes Article on Trainer
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WorldTraveler
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WorldTraveler
Corn Field
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communists or incompetents, or not, the article is factually wrong.
DL never said that it was being insulated from higher CRUDE prices. It was being insulated from crack spread, which is in fact increasing, not decreasing.
again, DL's CURRENT higher fuel prices are due to hedging losses while the refinery was profitable.
DL never said that it was being insulated from higher CRUDE prices. It was being insulated from crack spread, which is in fact increasing, not decreasing.
again, DL's CURRENT higher fuel prices are due to hedging losses while the refinery was profitable.
WorldTraveler
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no, if they have the facts wrong, they are wrong.
the most notable is that the article says that DL had a 9 cent cost advantage to other airlines before Trainer and still does.
that is categorically false.
second, the author makes no attempt to look solely at fuel hedges vs. the refinery. Every carrier except AA hedges; DL is the only carrier that has a refinery. If you want to look at the benefit or failure of the refinery, you look SOLELY at the refinery's profitability and contributions to DL's bottom line. The author didn't do that.
third, the author incorrectly states a number of things about the movement of prices including crack spreads.
The author thru together an article based on very poor logic and even worse research.
It has nothing to do with DL or any other carrier. it is just a poorly thought out article
the most notable is that the article says that DL had a 9 cent cost advantage to other airlines before Trainer and still does.
that is categorically false.
second, the author makes no attempt to look solely at fuel hedges vs. the refinery. Every carrier except AA hedges; DL is the only carrier that has a refinery. If you want to look at the benefit or failure of the refinery, you look SOLELY at the refinery's profitability and contributions to DL's bottom line. The author didn't do that.
third, the author incorrectly states a number of things about the movement of prices including crack spreads.
The author thru together an article based on very poor logic and even worse research.
It has nothing to do with DL or any other carrier. it is just a poorly thought out article
robbedagain
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WorldTraveler
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The crack spread is a factual number. it is either rising or it is stable or it is stable.
The article says it is falling when it is not.
No, the author is wrong on the facts and doesn't use even halfway decent logic to argue the point.
What Dl gains or loses with the refinery has nothing to do with fuel hedges; he makes no distinction between the two.
The article says it is falling when it is not.
No, the author is wrong on the facts and doesn't use even halfway decent logic to argue the point.
What Dl gains or loses with the refinery has nothing to do with fuel hedges; he makes no distinction between the two.
Dog Wonder
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WorldTraveler
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I don't even have to click on the link to know it is another show of intellect from one of forum's finest.
meanwhile, the author failed to provide any compelling logic that anything other than DL's hedging strategy is the problem.
meanwhile, the author failed to provide any compelling logic that anything other than DL's hedging strategy is the problem.
WorldTraveler said:
WorldTraveler said:
WorldTraveler said:
But these are facts:
DL paid $180 million to purchase the refinery in 2012 and the operation suffered a $63 million loss. Then DL tossed in $52 million in 2014 to result in a $116 million loss. Finally, in 2014 the refinery was marginally profitable, but only after DL sunk in another $40 million.
That is the Whole Truth!
Your garbage in garbage out comment (post #2) is more appropriate to
I don't know why a certain DL fankid on these forums can't admit that a purchase like the refinery was a mistake. Maybe not as colossal mistake as UAL's Allegis business strategy, but certainly not a smart move. Now on the other hand, purchasing more LHR slots via VS is a different story, as the article acknowledges.
WorldTraveler
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actually, you forget that DL spent a couple hundred million to reform the refinery after it bought it but got some state funding to help out.
I'm not sure why you and others can't get thru your heads that the refinery is a long term investment no different than an aircraft.
What people can't accept is that a vertical integration strategy can work... Allegis was a horizontal integration strategy.
and it still doesn't change the article is built around a number of incorrect statements including that DL's fuel savings relative to the refinery is the same as it was before the refinery. DL's hedging strategy is absolutely a part of DL's fuel cost changes and the author managed to write an article right about the time that DL's fuel cost hedges are negative... but he didn't bother to write an article when DL was pulling down fuel cost gains relative to the industry from both the refinery and hedges
The argument that DL cut costs for the competition is bogus. DL never said that its goal was to create a fuel cost advantage that no other carrier would benefit from. Supply and demand laws dictate that if DL added jet fuel to the market, it would force down the crack spread which would help competitors.
DL's fuel prices went down by hundreds of millions of dollars - more than what they have spent on the refinery. Given the strong pricing environment and DL's ability to get a revenue premium to the industry, DL has benefitted including disproportionately because of the revenue environment. The author never bothered to factor any of that in.
DL is going to have to take time to figure how to make the refinery work for DL, including gaining DL exclusive benefits if they can.
I am willing to admit that Trainer was a mistake if it turns out to be. but a couple years into the project is not enough data to know for sure - and certainly if there is no intent to look at all of the factors involved.
Despite what some say, I admit that Song and DL Express were strategic failures from the position of maintaining DL's presence in the NYC to Florida markets
but the refinery has paid for itself in reduced fuel costs for DL.
and given that oil prices are moving higher again today, the hedge losses that were supposed to wreak havoc on DL's balance sheet might not turn out to do that at all.
I'm not sure why you and others can't get thru your heads that the refinery is a long term investment no different than an aircraft.
What people can't accept is that a vertical integration strategy can work... Allegis was a horizontal integration strategy.
and it still doesn't change the article is built around a number of incorrect statements including that DL's fuel savings relative to the refinery is the same as it was before the refinery. DL's hedging strategy is absolutely a part of DL's fuel cost changes and the author managed to write an article right about the time that DL's fuel cost hedges are negative... but he didn't bother to write an article when DL was pulling down fuel cost gains relative to the industry from both the refinery and hedges
The argument that DL cut costs for the competition is bogus. DL never said that its goal was to create a fuel cost advantage that no other carrier would benefit from. Supply and demand laws dictate that if DL added jet fuel to the market, it would force down the crack spread which would help competitors.
DL's fuel prices went down by hundreds of millions of dollars - more than what they have spent on the refinery. Given the strong pricing environment and DL's ability to get a revenue premium to the industry, DL has benefitted including disproportionately because of the revenue environment. The author never bothered to factor any of that in.
DL is going to have to take time to figure how to make the refinery work for DL, including gaining DL exclusive benefits if they can.
I am willing to admit that Trainer was a mistake if it turns out to be. but a couple years into the project is not enough data to know for sure - and certainly if there is no intent to look at all of the factors involved.
Despite what some say, I admit that Song and DL Express were strategic failures from the position of maintaining DL's presence in the NYC to Florida markets
but the refinery has paid for itself in reduced fuel costs for DL.
and given that oil prices are moving higher again today, the hedge losses that were supposed to wreak havoc on DL's balance sheet might not turn out to do that at all.
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