DL looking at buying an oil refinery?

[WorldTraveler]

The issue is about learning one's place in life - that we really are not the kings of either or our anyone else's universe - that the world doesn't revolve around any of us.

Contrast the following:

Invictus

Out of the night that covers me,
Black as the pit from pole to pole,
I thank whatever God may be,
For my unconquerable soul.

In the fell clutch of circumstance,
I have not cried nor winced aloud,
Under the bludgeoning of chance,
My head is bloody but unbowed.

Beyond this place of wrath and tears
Looms but the horror of the shade,
And yet the menace of the years
Finds and shall find me unafraid.

It matters not how straight the gate,
How charged with punishments the scroll,
I am the captain of my fate,
I am the master of my soul.

William Earnest Henley, 1875

WITH

'if' by rudyard kipling

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream - and not make dreams your master,
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

Rudyard Kipling (1865-1936)
.

Henley and Kipling were contemporaries yet each saw life very differently.

the latter is frequently quoted at graduations, the former was Timothy McVeigh's last statement.
Henley and Kipling were contemporaries but yet saw life very differently.

 

[Kev3188]

The issue is about learning one's place in life

That may be what you want the issue to be, not what this thread's actually about.

No, the issue is about the prospect of an airline buying a refinery, and the pros/cons/thoughts that relate to that. I think I have a pretty good idea of what the topic is about since I started it. "Knowing your place" never crossed my mind. Nor did Kipling or McVeigh...

Stop trying to reengineer to the narrative to fit whatever it is you want it to be.

P.S. That's the 2nd time in recent days you've posted about "knowing your place." Next time, just complete the circle, and add "boy" on the end...

 

[WorldTraveler]

Yet, the reality is that DL has engaged the resources necessary to make the decision and really doesn't care what anyone on the internet thinks about the deal... and will adjust its business plan based on what it believes it needs.
But if it makes someone feel better saying they know someone else's business better than they do, of course I would not want to impede them - but then they shouldn't be surprised if someone points out after the fact should success occur that they were wrong in their assessment.
There are no shortage of people who want to crucify someone else for everything they do even remotely think wrong but can't seem to be able to give credit when they do something right... so very human.
Yet we have plenty of people on here who are happy to take potshots but somehow become senile when reminded of what they previously said when it turns out they were wrong.
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Knowing who will make the decision and be responsible for the repercussions and then owning up to what one says and does, not distracted by the naysayers is exactly what Kipling was talking about.
Try reading Kipling's work again.

 

[Kev3188]

Yet, the reality is that DL has engaged the resources necessary to make the decision and really doesn't care what anyone on the internet thinks about the deal...

I'm willing to bet there's not a single person on here who harbors an illusion of anything different. Doesn't stop people from weighing in anyway, does it?

In other news, we need oxygen to live.

 

[eolesen]

The issue is about learning one's place in life

P.S. That's the 2nd time in recent days you've posted about "knowing your place." Next time, just complete the circle, and add "boy" on the end...

Yep, that pretty much sums up my view on things, too....

 

[TDR1502C]

Running a refinery should be significantly easier than running an IT department, right? Black colored stuff in one end, spin a few valves, straw colored stuff out the other. A re-application of core competencies and rebranding is all that are needed.

 

[WorldTraveler]

Running a refinery should be significantly easier than running an IT department, right? Black colored stuff in one end, spin a few valves, straw colored stuff out the other. A re-application of core competencies and rebranding is all that are needed.

excellent example and completely pertinent to this discussion.
At one time, DL was the laggard of IT in the airline industry - the last to build a CRS which it tried to market to travel agents becoming the smallest in the industry etc...
yet DL managed to acquire the know how and had already moved its IT systems to front of the pack with the implementation of the Delta Nervous System and all of the systems that it connected, including the bar codes, the continuously updating agent sets at the gate connected to the GIDS screens in the gatehouses... etc.
And when DL merged with NW, DL realized that NW had even more capabilities with IT even though NW had not done what DL had done with its res system.... so DL kept the DL platform but largely handed the IT operations over to former NW people. The result of DL's decision was even more clear given that the DL/NW res system transition was virtually flawless. In contrast, UA and US both struggled through massive disruptions..... DL retained its "archaic" CRS based res system and made the transition well while others outsourced and stumbled.....
Companies can not only address their deficiencies but also become masters at something that is not a core competency....
IT has always been a support function for airlines, not the core.
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well said, TDR.

 

[BoeingBoy]

Your assumption that a consumer can't understand the business that its suppliers do just because they don't choose to do that business is flawed, plain and simple.

A fine statement but concerning an assumption I haven't made or said. What I did say is that there are more examples of businesses who let those who already have expertise in a given area do what they do well than of businesses who feel the need to be experts on every facet of the production chain that results in the goods they sell, no matter how much of their expense goes to pay for the products others produce. Those with a demonstrated ability to run an airline well don't need to be experts in producing planes, engines, aluminum, titanium, ceramics, seats, fabric, tires, brakes, fuel, lights, etc to run a good airline.

What I find beyond belief is the assumption by a half dozen people on the internet that they can make the assumption that a company with $30B plus in revenues can't and won't find the right resources to make an informed decision regarding an investment that still amounts to only a couple of percent of what they spend on the product per year and in which none of their competitors have been able to find effective long term cost controls. Not surprisingly, you and the cheering section that think the investment is a bad idea haven't offered any real insight as to alternative solutions - other than DL doing what they do anyway..

I don't think anyone believes that DL isn't capable of making an informed decision. But making an informed decision involves more than just looking at the positives, which is all you've done on this subject. If DL, or it's hired experts, looks at this the way you have I feel it will be making a big mistake. Personally, I see more downside than upside, with no relief from price risk or ability to necessarily produce a needed product cheaper than current suppliers, both of which are given as the supposed benefits of DL purchasing a refinery. (and ironically CNBC is discussing this as I type).

it has to do with admitting that there are people in the world who know more than the rest of us and they bear the responsibility for those decisions; what alot of people here have a hard time admitting is that there are companies and individuals that have pretty strong records based on what they have done.

Again, I don't see that. What I see is people expressing their opinions. If that's bad, what use is this forum? Everyone is entitled to have an opinion without it being denigrated with claims of "You just think you know better than anyone else." Indeed, if you didn't have and express opinions you'd be totally absent from this forum. Does that mean that you think you're smarter than everyone else? (Rhetorical question since "the whole truth" was your signature for so long)

As I've said, there are basically three types of people when it comes to opinions - those who have one and don't mind giving it because they don't mind being wrong, those that have one but prefer to leave themselves an out because they can't accept being wrong, and those that truly don't care enough about a subject to have an opinion. I certainly know which of those boxes I fit into in this case, and believe I know which you fit into...

Jim

 

[WorldTraveler]

and now word that JP Morgan may be partnering with DL..... a very credible combination of resources.

http://www.reuters.com/article/2012/04/11/delta-jpm-refinery-idUSL2E8FBBZU20120411?feedType=RSS&feedName=financialsSector&rpc=43

 

[BoeingBoy]

What's interesting is that the article raises more questions than it answers...

Delta would then buy the jet fuel from JP Morgan at a wholesale rate, and the bank would sell the other products made by the refinery into the market, the report said.

So how does DL get the jet fuel from the refinery into it's plane's tanks - by using the same transportation methods and middlemen as the people that currently buy the fuel at the wholesale rate? If so, where are the savings?

In addition, CNBC said, at least two oil companies have partnered with Delta in a swaps arrangement in which they would give the airline jet fuel in exchange for some of the other fuel produced by the refinery. The report did not identify which oil companies are involved in the swap deal.

So JP Morgan is making money selling the other products produced by the refinery (per the first paragraph) while DL is getting fuel by swapping those same other products to oil companies in exchange for fuel? It seems sorta hard for both JP Morgan and DL to get the benefit from those other products. Nothing like using the same products twice to make it look good - accounting like that would make politicians blush...

Jim

 

[FWAAA]

and now word that JP Morgan may be partnering with DL..... a very credible combination of resources.

http://www.reuters.com/article/2012/04/11/delta-jpm-refinery-idUSL2E8FBBZU20120411?feedType=RSS&feedName=financialsSector&rpc=43

Well, I'm convinced. JP Morgan has never financed a poor idea or partnered with anyone to enable a dumb business decision to proceed.

 

[WorldTraveler]

Obviously all the details aren't public since everything that we know about this deal has been leaked information anyway.
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What the lastest information does say is that this isn't little ol' dumb Delta jumping into something they can't handle... since as many as two oil companies and JP Morgan are involved, it is pretty clear that there are some pretty clear roles - and boundaries being defined for each party in the deal.
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We'll see the business case when the deal is announced, if it is.

 

[BoeingBoy]

And "leaked" information is often about pushing an agenda instead of providing a rational evaluation. Look no further than the leaked info about a US or DL acquisition of AA (and at least one story today threw UA into the mix)....

Jim

 

[BoeingBoy]

BTW, the Reuter's article you linked was later updated and fleshed out. The changes add an interesting perspective to the original...

Jim

Revised Article

 

[WorldTraveler]

Leaked information CAN but not necessarily is meant to push an agenda... there are all kinds of leaks regarding negotiations which are simply people talking who have knowledge about a deal...
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But it also seems to lend credence to what I said several pages of posts ago - that as a producer, DL could have the ability to trade refined products with other producers, something a retail consumer cannot do.
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It also says that JP Morgan would apparently bear alot of the financial responsibility for managing the financial aspects while DL would be left to presumably manage the actual physical aspect of running the plant which is clearly the least risky part of the deal - and DL would be operating under the close eyes of JP Morgan, which isn't an unreasonable expectation if you are doing what are doing correctly.
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Even if the savings for DL amount to just 2%, it could amount to a reduction in fuel costs of hundreds of millions of dollars per year on DL's fuel bill... and it still doesn't stop them from hedging.