I haven't been to FI in quite a while. I see things haven't changed much; still a junior high cafeteria food fight.
I haven't taken a look at the details of Delta's numbers, but I know that they had significant futures contracts signed for Bakken crude which, at the time, was FAR lower than WTI and Brent. The current spot on Bakken crude is around $65/bbl, about $12/bbl below WTI. The rail transport costs for the crude are about half the price differential, and the Bakken crude is easy for Delta's refinery to process.
Delta's refinery is old/finicky and requires high quality light sweet- due to the fracking procedures used, Bakken crude is a fantastic substitute for other sources of light sweet. And other sources of light sweet carry a fairly high price premium - this is why Delta's plant was being shut down.
I am betting that a large portion of those hedging writedowns were due to Delta's forward purchases of Bakken when it was in the mid-$70s (they bought a ton of contracts at that price - it was, if I recall correctly, about a $20 discount on WTI).
So while Delta may be reporting hedging 'losses', in this case, it's in comparison to buying oil on the spot market. If a few Middle Eastern oilfields got blown up this last summer, they would probably be reporting a hedging profit.
I initially had my doubts on Delta's refinery plan, but after a cursory glance of the (important) numbers, I think that the refinery was a great acquisition by Delta. For those who look at a hedging 'loss', the hedging 'loss' is merely a bookkeeping line to balance the books.
Personally, I think the real beauty of Delta's refinery is that it lowers the cost of jet fuel on the east coast to all airlines. Since Delta has extensive east coast operations, they benefit significantly from the refinery.
