How Delta Bought A Refinery And Saved Its Rivals A Ton Of Cash

[FWAAA]

Delta credits the Trainer refinery with reducing the crack spread in the jet fuel market since Delta's purchase of the facility.   UA and AA, of course, share in market-price reductions, although perhaps not as much as DL.   Obviously, the competitors don't have to buy, refurbish and operate a refinery to get some benefit from lower fuel prices caused by the refinery.   
 

Delta made the acquisition in April of 2012 through subsidiary Monroe Energy. Since then, the Pennsylvania refinery has expanded production of jet fuel to supply Delta's operations in New York and Boston.
 
But here's where things get interesting.
 
The refinery has been useful for Delta. But it's also caused the price of jet fuel to fall throughout the airline industry, according to Vinay Bhaskara, a senior aviation analyst at Airchive.com.
 
It's simple supply and demand: by focusing production of the former Phillips 66 refinery on jet fuel, Delta has flooded the marketplace with supply it would otherwise have purchased, helping its competition to save money on fuel.

http://www.businessinsider.com/delta-airlines-fuel-prices-2014-8#ixzz3CITaEFSa
 
I hope Smisek and Parker remember Anderson around the holidays!

 

[Force Majeure]

http://www.airlineforums.com/topic/57595-delta-helps-other-airlines/

Already being discussed here.

 

[WorldTraveler]

Delta credits the Trainer refinery with reducing the crack spread in the jet fuel market since Delta's purchase of the facility.   UA and AA, of course, share in market-price reductions, although perhaps not as much as DL.   Obviously, the competitors don't have to buy, refurbish and operate a refinery to get some benefit from lower fuel prices caused by the refinery.

DL also has a hedging policy which you-know-who decided wasn't worth pursuing any longer.

It is interesting that DL even with its refinery believes that hedging is still necessary.

again, no one seems to want to consider what is going to happen to the jet fuel market because of the increased production of jet fuel and how each carrier will be affected including an airline that is both a consumer and a producer of jet fuel.

 

[FWAAA]

http://www.airlineforums.com/topic/57595-delta-helps-other-airlines/

Already being discussed here.

My apologies.   The topic title of that other thread (Delta helps other airlines) was just too uninspiring for me to even click, and thus I didn't look in that thread.   Sorry about that.
 
Key words are fuel and refinery, and that other thread didn't clue the reader in to either of them.  

 

[Force Majeure]

Your thead (this one) captures the essence of the article and of the majority of industry analyst's. I prefer to have the moderators keep this one.

Maybe they will combine them?