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

Delta's Refinery - hows that wroking out ?

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

DUBLINFLYER

Well-known member
Joined
Jun 6, 2006
Posts
395
I wonder what the ROI looks like now with oil at a $36/barrel and its projected to go lower, it was probably not Delta's greatest move.
 
Any time an airline gets that far from its core business, it naturally raises eyebrows.
 
I'd say it's safe to say RA is the savviest airline CEO out there. His track record is tough to beat, every move he's made has paid off big time for DAL. Last thing I read on the net is he's strong-arming Boeing for 10 used triple 7's for under 10 mil each. Sharp dude
 
A refinery REFINES the oil. I know oil consumption is down, but the empty tankers were lined up down the river past Wilmington. Somebody is making money.
 
I'd say it's safe to say RA is the savviest airline CEO out there. His track record is tough to beat, every move he's made has paid off big time for DAL. Last thing I read on the net is he's strong-arming Boeing for 10 used triple 7's for under 10 mil each. Sharp dude

Here's an article disputing that $10M figure: http://247wallst.com/aerospace-defense/2015/10/26/how-much-does-a-used-boeing-777-cost/


A refinery REFINES the oil. I know oil consumption is down, but the empty tankers were lined up down the river past Wilmington. Somebody is making money.

The crack spread (a good measure of refinery profitability) has decreased quite a bit since summer. The refinery likely lost money this quarter and will probably lose money again in the first quarter unless there's a large change in the crack spread.

One metric to see how the refinery is working out is to look at fuel costs from the third quarter.
Delta: $1.80/gal
United: $1.87/gal
American: $1.67/gal
Southwest: $1.89/gal (they reported 3 numbers - 'unhedged' of $1.70, $1.89, and 'economic' of $2.29 - I don't know what goes into 'economic fuel costs')

American doesn't hedge fuel so if oil prices keep dropping, they will do the best of the majors.

It looks like Delta did fairly well in the third quarter, but they've had much higher numbers than others in previous quarters. First 9 months of 2015:
Delta: $2.35/gal
United: $2.01/gal
American: $1.80/gal
Southwest: $1.98/gal ('unhedged' of $1.85, $1.98, 'economic' of $2.08)

I'd also have to dig through Delta's numbers closer; they list $1.80 adjusted and $1.89/gal in 3Q.
Delta lists $2.35/gal adjusted and $1.95/gal for the first 9 months of 2015.


The clear 'winner' in the cost of fuel is American. As for everyone else, it all depends on what the accountants add into the cost of fuel.

One thing about Delta's refinery is that it's tuned to produce a much higher percentage of jet fuel than a 'normal' refinery. The larger supply of jet fuel helps lower the fuel costs for all airlines on the east coast. The lower jet fuel cost due to Delta's refinery is not something that can be easily quantified.
 
Last edited:

Latest resources

Back
Top