Forbes Article on Trainer

[WorldTraveler]

The article is about Trainer. Do you have any evidence that DL's strategy is not working including its labor relations there?

 

[FrugalFlyerv2.0]

The article is about Trainer. Do you have any evidence that DL's strategy is not working including its labor relations there?

Specific to Trainer operationallly, here you go:
 
It did moderate jet fuel prices for Delta–but also for every other airline flying out of New York and Philly. For that altruistic move, maybe Delta ought to pass the hat: In 2012 Delta invested $180 million to modernize the plant–which generated a $63 million loss. In 2013 it added $52 million in fresh cap ex–with a $116 million loss. Late that year company president Ed Bastian said the refinery had experienced some “teething pains.”"
 
With respect to labor relations:  don't know / don't care.

 

[robbedagain]

so DL spent money yet Trainer still LOST  

 

[WorldTraveler]

nope.

on an CAPITAL basis, DL has not recovered the cost of the Trainer upgrades.

but neither has AA or any other airline for its aircraft.

Do you know how long aircraft are amortized for US airlines, robbed?

look up the answer and let us know, please.

it ain't two years.

Specific to Trainer operationallly, here you go:
 
It did moderate jet fuel prices for Delta

that's all you need to say.

DL's reduced fuel costs exceed the cost of what they have spent on Trainer.

 

[topDawg]

The article is about Trainer. Do you have any evidence that DL's strategy is not working including its labor relations there?

It can be about rainbows and puppies. 
 
it doesn't matter. Once again you say something that isn't close to being right because you have no grasp on how labor laws work and then you are called out on it only to tell me im OT. 
 
 
Which is ironic because you are the friggin king of taking things OT. 

 

[WorldTraveler]

If you would like to tell me what I am wrong about with the labor refinery, feel free to do so.

but don't make some blind "you are wrong" statement.

and specific to the labor contract at Trainer, I don't see anything that says that DL is in any worse position than any other refinery operator.

 

[WorldTraveler]

btw, United Steelworkers members walked off the job today at the nation's largest refinery joining workers at a number of other refineries, although production continues.

http://www.marketwatch.com/story/workers-at-largest-us-refinery-walk-off-job-2015-02-21-141032523

The article shows that my statement is correct that negotiations with the USW are led by one company, Shell. DL with Trainer is a follower of what goes on WRT refinery pay.

 

[WorldTraveler]

here is one of the best explanations that a non-DL person has written about why DL bought Trainer, why it has wor
ked and not worked, and why the prospects for its success are far more than just about DL.


---
In its most recent quarter, Delta demonstrated the wisdom of its refinery strategy, as the operation paid off for investors. Like other airlines, Delta manages the risk of some of its fuel-cost exposure through traditional hedging strategies; when the price of crude oil plunged in the fourth quarter of 2014, those hedging strategies backfired for players in the airline industry. At Delta alone, hedging losses added up to $180 million during the quarter, wiping out a portion of the airline's anticipated cost savings from cheaper fuel prices.

Yet falling domestic oil prices helped boost the crack spread at Delta's refinery, and that produced huge profit for the facility. During the quarter, Delta reported a $105 million profit, which itself reversed more than half of Delta's hedging losses. Moreover, with conditions remaining favorable during early 2015, Delta could continue to see big profits from its refinery operations.

Some still believe that Delta's refinery remains a distraction from its airline business, and that the company would be better off using regular hedging strategies. Yet that criticism assumes an efficient, open market that simply doesn't exist under current U.S. regulations. And as long as spreads between domestic and global oil prices persist, Delta will have a chance to take advantage of the situation thanks to its in-house refining operations.

Delta Air Lines has soared largely on the health of the airline industry. Yet its astute move to capture some cost savings has turned out quite well, and as long as the domestic oil market looks like it does now, Delta has a chance to keep profiting nicely throughout 2015.

http://www.investopedia.com/articles/markets/030215/how-delta-air-lines-move-sent-profits-soaring.asp?partner=YahooSA

 

[WorldTraveler]

notice that DL says it has restructured its hedge book which means it will take a $300M loss on hedges in the 1st quarter, spread some risk into 2016, but be at the same level as other carriers on prices by the summer.

 

[WorldTraveler]

notice that DL says it has restructured its hedge book which means it will take a $300M loss on hedges in the 1st quarter, spread some risk into 2016, but be at the same level as other carriers on prices by the summer.

http://ir.delta.com/files/Conferences/2015/03.03%20JPM/JPM-Transportation-Conference-20150303_v001_e572u5.pdf

 

[FWAAA]

Total hedge losses for the 1Q now estimated at $1.050 billion, comprised of the earlier estimate of $750 million hedging loss plus the $300 million from the restructured hedges.

 

[FrugalFlyerv2.0]

Total hedge losses for the 1Q now estimated at $1.050 billion, comprised of the earlier estimate of $750 million hedging loss plus the $300 million from the restructured hedges.

 
That's called the WholeTruth.

 

[WorldTraveler]

Total hedge losses for the 1Q now estimated at $1.050 billion, comprised of the earlier estimate of $750 million hedging loss plus the $300 million from the restructured hedges.

that is correct and right from page 25 of the presentation.

bonus points if you can tell us DL's ACTUAL hedge losses in 2014... but I believe it was less than $500M.

if so, the total hedge losses appear to be about $1.5 billion....

no one wants to lose $1.5 billion

but

plz tell me what percentage of DL's ~$40 billion in annual revenues this $1.5B represents.

less than 4%.

now can you tell me the difference in RASM performance that AA and DL had in 2014?

now add in the $650 million in potentially impaired currency that AA holds...

and you will see why I have repeatedly said that revenue performance is more than capable of offsetting the fuel hedge losses

AND

AA's own currency loss issues combined with revenue underperformance continue to be larger than what DL is suffering in hedge losses.

No airline is pure here - in the sense of no hedge losses and best in class revenue generation

I know that this board is all about seeing who can find the other guy's Achilles Heel first but no one is completely free of guilt or in danger of being hung.

 

[FWAAA]

That's called the WholeTruth.

Know what the freakin' hilarious part is? The way my simple factual sentence about Delta (here in the Delta forum) prompted the usual lengthy repetitious diatribe about how much better off DL is than its Fort Worth based competitor.

A thread in the AA forum results, inevitably, in the same recycled bullshit about Delta and its superiority over AA. A discussion in the Delta forum about Delta Air Lines results, inevitably, in the same recycled bullshit. The whole truth apparently requires saying the same thing over and over and over and over again.

WT: We heard you the first time. When you say it for the umpteenth time, you come off sounding like a jerk, not someone who knows everything about the airline industry. It's not what you say. It's the manner of delivery.

 

[WorldTraveler]

I'll tell you why I have repeatedly connected DL's fuel hedge losses with AA's revenue performance issues and the Venezuela currency issue and it is because neither the media or you or anyone on this forum has bothered to admit that neither AA or DL is exempt from their own issues and that the sheer size of either one of these issues is easily offset by others.

If you or anyone else would have bothered to say that, I wouldn't have to.

whether you like it or not, revenue performance in the industry is a far bigger determinant of profitability than any single cost issue.

and it is also why AAL stock was downgraded based on their own admission of revenue weakness due to Latin America and DAL/DFW pricing.