Good CNBC video clip of possible deal between Delta and JP Morgan and Refinery

[On Your Six]

Click here: Inside Delta, JPMorgan Deal


Any comments from SWA GUY or Redflyer?



Godspeed!


The OYSter

 

[madjack]

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."

 

[On Your Six]

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."

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

 

[madjack]

OYS,

The "industry Experts" made the comment...also CNBC clip you attached states that JPMorgan will assume most of the risk...could be a smart move on DAL's part in the long run...clip also states that DAL stock was hammered after the initial announcement...

Good Luck...out

 

[DieselDragRacer]

Click here: Inside Delta, JPMorgan Deal


Any comments from SWA GUY or Redflyer?



Godspeed!


The OYSter

Sounds like something Leo Mullin would do.

 

[On Your Six]

Sounds like something Leo Mullin would do.

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]

Are we boned?

 

[On Your Six]

OYS,

The "industry Experts" made the comment...also CNBC clip you attached states that JPMorgan will assume most of the risk...could be a smart move on DAL's part in the long run...clip also states that DAL stock was hammered after the initial announcement...

Good Luck...out

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]

Are we boned?

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]

I'd like to also suggest that we buy Boeing.