On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
Welcome to Flightinfo.com
- Register now and join the discussion
- Friendliest aviation Ccmmunity on the web
- Modern site for PC's, Phones, Tablets - no 3rd party apps required
- Ask questions, help others, promote aviation
- Share the passion for aviation
- Invite everyone to Flightinfo.com and let's have fun
Good CNBC video clip of possible deal between Delta and JP Morgan and Refinery
- Thread starter On Your Six
- Start date
- Watchers 4
Welcome to Flightinfo.com
- Register now and join the discussion
- Modern secure site, no 3rd party apps required
- Invite your friends
- Share the passion of aviation
- Friendliest aviation community on the web
But why?:
"And with Delta’s junk-level credit rating, the cost of using bank loans to finance futures trades — and the prospect of huge cash margin calls during a crude-market spike — is greater than it would be for a higher-rated company. So that may be another argument in favor of buying a refinery rather than making paper hedges, say industry experts."
"And with Delta’s junk-level credit rating, the cost of using bank loans to finance futures trades — and the prospect of huge cash margin calls during a crude-market spike — is greater than it would be for a higher-rated company. So that may be another argument in favor of buying a refinery rather than making paper hedges, say industry experts."
On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
Of course you look at the only potential negative, and Delta's debt has been lowered from $18 billion in 2009 to $10 billion by next year. Delta is making billions per year (last year $1 billion profit while also paying down $2 billion in debt last year alone), while others aren't even close, even your SWA.
Face it, you probably aren't smarter than the people running Delta. It appears the days of SWA and their hedges running the fares may be over.
Godspeed!
The OYSter
DieselDragRacer
Well-known member
- Joined
- Apr 30, 2006
- Posts
- 11,056
On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
Mullin was a banker. RA is an airline guy, and a very good one. He is thinking outside the box, and has figured out how to potentially get Jet A for wholesale on the East Coast, effectively cutting out the middleman. If this deal is correct, he put most of the risk on a bank (JP Morgan), and also has deals with 2 other oil companies to trade their Jet A for the leftovers that JP Morgan doesn't want. He also has an "oil guy" who worked at the same company (Connoco), who is familiar with the operation and the people who work at the parent company. If this all happens, it could be a "game changer", like the guys on CNBC said last week. But, Redflyer and a few others don't want to see it.
Godspeed!
The OYSter
Hamfighter
Well-known member
- Joined
- May 20, 2007
- Posts
- 232
On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
You're right, the stock was hit last week, before the other info was leaked today. Going alone into something outside of your "specialty" could be considered risky. Some analysts don't want airlines to mess with refineries, probably because they have fat cat friends in the refinery business who make a lot of money off the airlines. Since oil/gas is the number one expense now for all airlines, going after that and trying to reduce it is pretty smart. If it happens, it MAY be a great thing, and having someone like JP Morgan take a big chunk of the risk, could even be better.
Godspeed!
The OYSter
On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
Assuming you are a DL guy, I would say NO. Anything that could help with potential profits, that could lead us to better pay and benefits would probably be a good thing. Maybe saving on gas prices could lead to that someday.
Godspeed!
The OYSter
Hamfighter
Well-known member
- Joined
- May 20, 2007
- Posts
- 232
Stifler's Mom
MILF...MILF...MILF
- Joined
- Oct 12, 2003
- Posts
- 5,125
Interesting concept at helping the balance sheet. I also noticed the piece said DAL has a former Conoco exec working for them now.
It also might be worthwhile buying the manufacturer of MD-88 nosewheels too. You can probably save a few bucks by buying them at wholesale instead of retail.
It also might be worthwhile buying the manufacturer of MD-88 nosewheels too. You can probably save a few bucks by buying them at wholesale instead of retail.
Last edited:
BILL LUMBERG
Well-known member
- Joined
- Apr 10, 2005
- Posts
- 2,074
On Your Six
Well-known member
- Joined
- Mar 8, 2004
- Posts
- 4,507
Delta Said to Seek 10% Fuel Savings With ConocoPhillips Refinery
By Mary Jane Credeur and Edward Klump - Apr 11, 2012 3:12 PM MT Bloomberg.net
Delta Airlines, whose daily 2011 fuel bill was $32 million, may buy a ConocoPhillips refinery to help save 10 percent on a significant portion of its fuel needs, a person familiar with the matter said.
The companies are in talks over an idled facility in Trainer, Pennsylvania, said two people who declined to be identified because the discussions are private. Delta would get fuel from Trainer and from other refiners in exchange for products made there that Delta doesn’t use, one person said.
ConocoPhillips, squeezed by tighter profit margins at East Coast refineries, has said it will shut the Trainer operation unless it can find a buyer by the end of May. For Atlanta-based Delta, a deal would help shave annual fuel costs that reached $11.8 billion last year for its main jet operations and regional partners, or 36 percent of all spending.
“If Delta can get it for a good price and figure out how to use the rest to lower its costs on a certain number of gallons of fuel, then it’s a good idea,” said Michael Derchin, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
Delta seeks to save 10 percent on fuel tied to the Trainer deal, according to the person familiar with the airline’s strategy. Fuel from that refinery and others linked to the agreement would cover some but not all of the needs at the world’s second-largest carrier, said the person, who didn’t have specifics.
Bank’s Role?
JPMorgan Chase & Co. would help finance the fuel and handle sales of the other products, CNBC reported earlier today, without naming its sources. Jennifer Zuccarelli, a spokeswoman for the New York-based bank, declined to comment, as did Eric Torbenson, a spokesman for Delta, and Rich Johnson, a Conoco Philips spokesman.
“The sales process for the Trainer refinery is confidential and I’m not able to discuss any of the details,”Johnson said in a telephone interview today. “We are still in the process of seeking a buyer for the refinery.”
Johnson reiterated Houston-based ConocoPhillips’s intent to reach a deal by the end of next month.
The Trainer facility, in suburban Philadelphia, has the capacity to refine 185,000 barrels of crude per day according to ConocoPhillips. Gasoline accounted for more than half of the plant’s production capacity as of last year, the company said.
Delta uses about 3.9 billion gallons of jet fuel a year, which translates to about 254,000 barrels a day. A 1-cent a gallon price increase equals $40 million more in costs on an annualized basis. Jet fuelfor immediate delivery in New York Harbor has averaged $3.12 a gallon in the past 12 months. Five years ago today, the trailing 12-month average was $1.94.
Refinery Pressure
Buying the plant may help insulate Delta as ConocoPhillips, Sunoco, Valero Energy, Petro Plus AG and Hess Corp.close or plan to sell refineries along the U.S. East Coast, in Europe and the US Virgin Islands in response to rising crude prices and waning demand.
The plants are disadvantaged because they pay more for imported crude than other U.S. refiners with better access to growing supplies of oil from shale fields in North Dakotaand Texas. Profitability at East Coast refineries fell in 2011 to the lowest point in nine years, according to data compiled by Bloomberg.
Closing all the refineries under pressure in the region would erase more than 51 percent of U.S. East Coast refining capacity, according to data compiled by Bloomberg.
Delta’s interest in the Trainer plant also may stem from a desire to secure access to supply and blunt cost increases that may come with any shutdowns, said Sandar Cohen, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts.
“They may save some money on their fuel costs, but the question is whether the stress and costs of running a refinery is outweighed by having your own boutique jet-fuel provider,”Cohan said in a telephone interview today.
To contact the reporters on this story: Mary Jane Credeur in Atlanta Edward Klump in Houston To contact the editors responsible for this story: Ed Dufner at Bloomberg.net; Susan Warren at Bloomberg.net.
Godspeed!
The OYSter
By Mary Jane Credeur and Edward Klump - Apr 11, 2012 3:12 PM MT Bloomberg.net
Delta Airlines, whose daily 2011 fuel bill was $32 million, may buy a ConocoPhillips refinery to help save 10 percent on a significant portion of its fuel needs, a person familiar with the matter said.
The companies are in talks over an idled facility in Trainer, Pennsylvania, said two people who declined to be identified because the discussions are private. Delta would get fuel from Trainer and from other refiners in exchange for products made there that Delta doesn’t use, one person said.
ConocoPhillips, squeezed by tighter profit margins at East Coast refineries, has said it will shut the Trainer operation unless it can find a buyer by the end of May. For Atlanta-based Delta, a deal would help shave annual fuel costs that reached $11.8 billion last year for its main jet operations and regional partners, or 36 percent of all spending.
“If Delta can get it for a good price and figure out how to use the rest to lower its costs on a certain number of gallons of fuel, then it’s a good idea,” said Michael Derchin, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
Delta seeks to save 10 percent on fuel tied to the Trainer deal, according to the person familiar with the airline’s strategy. Fuel from that refinery and others linked to the agreement would cover some but not all of the needs at the world’s second-largest carrier, said the person, who didn’t have specifics.
Bank’s Role?
JPMorgan Chase & Co. would help finance the fuel and handle sales of the other products, CNBC reported earlier today, without naming its sources. Jennifer Zuccarelli, a spokeswoman for the New York-based bank, declined to comment, as did Eric Torbenson, a spokesman for Delta, and Rich Johnson, a Conoco Philips spokesman.
“The sales process for the Trainer refinery is confidential and I’m not able to discuss any of the details,”Johnson said in a telephone interview today. “We are still in the process of seeking a buyer for the refinery.”
Johnson reiterated Houston-based ConocoPhillips’s intent to reach a deal by the end of next month.
The Trainer facility, in suburban Philadelphia, has the capacity to refine 185,000 barrels of crude per day according to ConocoPhillips. Gasoline accounted for more than half of the plant’s production capacity as of last year, the company said.
Delta uses about 3.9 billion gallons of jet fuel a year, which translates to about 254,000 barrels a day. A 1-cent a gallon price increase equals $40 million more in costs on an annualized basis. Jet fuelfor immediate delivery in New York Harbor has averaged $3.12 a gallon in the past 12 months. Five years ago today, the trailing 12-month average was $1.94.
Refinery Pressure
Buying the plant may help insulate Delta as ConocoPhillips, Sunoco, Valero Energy, Petro Plus AG and Hess Corp.close or plan to sell refineries along the U.S. East Coast, in Europe and the US Virgin Islands in response to rising crude prices and waning demand.
The plants are disadvantaged because they pay more for imported crude than other U.S. refiners with better access to growing supplies of oil from shale fields in North Dakotaand Texas. Profitability at East Coast refineries fell in 2011 to the lowest point in nine years, according to data compiled by Bloomberg.
Closing all the refineries under pressure in the region would erase more than 51 percent of U.S. East Coast refining capacity, according to data compiled by Bloomberg.
Delta’s interest in the Trainer plant also may stem from a desire to secure access to supply and blunt cost increases that may come with any shutdowns, said Sandar Cohen, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts.
“They may save some money on their fuel costs, but the question is whether the stress and costs of running a refinery is outweighed by having your own boutique jet-fuel provider,”Cohan said in a telephone interview today.
To contact the reporters on this story: Mary Jane Credeur in Atlanta Edward Klump in Houston To contact the editors responsible for this story: Ed Dufner at Bloomberg.net; Susan Warren at Bloomberg.net.
Godspeed!
The OYSter
Stifler's Mom
MILF...MILF...MILF
- Joined
- Oct 12, 2003
- Posts
- 5,125
Scoot 11
Well-known member
- Joined
- Aug 12, 2011
- Posts
- 567
The childish behavior around here is deplorable.
But...I gotta say, that one was pretty funny!:laugh:
180ToTheMarker
12 months of October
- Joined
- Feb 18, 2003
- Posts
- 658
Captain Morgan
Well-known member
- Joined
- May 3, 2004
- Posts
- 1,279
Share this page
Latest resources
-
-
-
-
-
AC 90-89C - Amateur-Built Aircraft and Ultralight Flight Testing HandbookAmateur-Built Aircraft and Ultralight Flight Testing Handbook
- Neal
- Updated:
