Delta interested in buying an oil refinery?

[DieselDragRacer]

Good info General. Proves my point. They are going to over the road and barge it down the river for a proposed 20 dollar savings. Moving that much crude by truck/train etc. is going to be a killer. Wrong refinery in the wrong place. Just saw Boone Pickens laughing about this in an interview. I'd say he knows a little about crude. Good luck. Your 'hopefull' pay increases might be getting ready to go up one of the refineries gas flares.

You were hard pressed to find an analyst on CNBC yesterday that said this was a good idea.

 

[jynxyjericho]

You were hard pressed to find an analyst on CNBC yesterday that said this was a good idea.

Oil is a tough industry. Hope Delta isn't being naive.

 

[outerlimits]

Looks like a pay cut for river boat captains. Maybe they can outsource their jobs to the duck boat tour captains.

It's all good, they are use to out sourcing .

 

[General Lee]

Oil is a tough industry. Hope Delta isn't being naive.

Delta is only getting the Jet A, not keeping any of the oil.(other parts of the barrel) They have swap contracts around the NE to trade the oil products they don't need in PA with Jet A in other places. 80% of the domestic needs at lower prices than others are paying. I think that sounds like a good idea.


Bye Bye---General Lee

 

[Scoot 11]

The immaturity level here is unbelievable, but the entertainment value is priceless. You kids keep it up.

 

[DTW320]

You were hard pressed to find an analyst on CNBC yesterday that said this was a good idea.

In that case, I feel a WHOLE lot better about this deal...

 

[General Lee]

From Seeking Alpha

Delta Refinery Deal All About Southwest

May 1, 2012 by: Dana Blankenhorn



Delta Airlines' agreement to buy a ConocoPhilipsrefinery in Pennsylvania is all about Southwest Air.


Delta's ongoing battle with Southwest is about costs. Delta's hub-and-spoke system is inherently less efficient than Southwest's network of short flights that just go back-and-forth. But because Southwest has now been around for a generation and accepted unions, while Delta has always pushed back against workers, it may actually have an advantage in labor costs.

The deal is for a refinery near Philadelphia, plus pipelines and other assets that reach its New York hubs. There are $30 million in government incentives on the deal, and Delta has already made deals with BP and Phillips for sourcing oil and selling products other than jet fuel.
Delta figures it can handle 80% of its U.S. jet fuel needs through the deal,saving up to $300 million per year. Put those savings onto its bottom line and profits rise 15%.

While the bet carries risks, the bigger risk may have been not pulling the trigger. There were no other bidders on the property, which could have shut down, meaning a net increase in Delta's fuel costs. Now, in theory, it has the kind of cost advantage on profitable East Coast routes.

Quietly, Delta has been on kind of a tear in its growing competition with Southwest, which entered Delta's home market of Atlanta just this year. Since the start of the year the stock is up by a third, while LUV is flat. Last year Delta had a net income of $854 million on revenues of $31.28 billion, against net of $178 million on $14.87 billion in revenue for Southwest. So a few more pennies on each dollar are already flowing to Delta's bottom line than its rival's.

There remains one big problem for Delta. Its fleet averages 15.9 years in age, against 12.1 years for Southwest. The two airliners' fleets are becoming increasingly similar, however. Southwest flies Boeing 737s almost exclusively, and Delta ordered 100 of those same planes to replace it's aging DC9s, among the oldest planes in the air.

So Delta has competitive labor costs, lower fuel costs, and a compatible fleet. I have to head to Houston next week, and even with the single bag charge Delta's price is slightly below the Southwest "gotta get away" fare.

This just got interesting.




Bye Bye---General Lee

 

[SplitBar]

You were hard pressed to find an analyst on CNBC yesterday that said this was a good idea.

Thats why DAL stock is up about 10% in the last 3 days :beer: