Delta Virtual Airlines Water Cooler - Delta getting into the oil business

Delta Virtual Airlines Water Cooler | Airline Operations | Delta getting into the oil business

DVA596
Assistant Chief Pilot, A330-300
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"Have you ever been in a Turkish prison??"
Plano, TX

628 legs, 1,607.6 hours
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625 legs, 1,601.2 hours ACARS
18 legs, 55.9 hours event

Posted onPost created on May 01 2012 01:03 ET by Gary Price

http://www.foxbusiness.com/industries/2012/04/30/delta-to-buy-us-refinery-for-150m/

Very interesting business move. Could save Delta a ton of money....

Gary

Gary Price

Assistant Chief Pilot, A330-300

DVA4180
Senior Captain, MD-88
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Joined on March 08 2007
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Van Buren Charter Township, MI

351 legs, 783.1 hours
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340 legs, 759.3 hours ACARS
20 legs, 41.0 hours event

Posted onPost created on May 03 2012 14:27 ET by Joseph Schwab

It will produce around 80% of our needed capacity!

Joseph Schwab (DVA4180)

DVA3952
Captain, MD-88

Joined on September 07 2006
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"Airbus, Mcdonnell Douglas"
Chicago, IL USA

85 legs, 161.3 hours
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Posted onPost created on May 03 2012 17:10 ET by Alex Jevdic

The fuel won't be free, they still have to buy the oil.

Alex Jevdic (DVA3952)

DVA1038
Captain, B737-800
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Joined on January 12 2003
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Summerville, SC USA

169 legs, 1,008.2 hours
56 legs, 288.5 hours online
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1 legs, 5.0 hours event

Posted onPost created on May 03 2012 17:12 ET by Kevin Cornish

And buy fuel at airports not served by this refinery. From how I read it, this refinery will primarily serve JFK and La Guardia.

Kevin Cornish

Captain, B737-800

Posted onPost created on May 03 2012 22:09 ET by Joseph Schwab

Kevin Cornish wrote:

And buy fuel at airports not served by this refinery. From how I read it, this refinery will primarily serve JFK and La Guardia.

Crude can be traded. It will NOT have to be supplied from just this location....

Joseph Schwab (DVA4180)

DVA7670
First Officer, B777-200

Joined on August 14 2009
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"Any landing you can walk away from..."
Sharpsburg, GA USA

77 legs, 354.3 hours
75 legs, 349.5 hours ACARS

Posted onPost created on May 05 2012 17:49 ET by Dustin Thames

The savings we expect to realize will come from not having to pay the crack spread markup that refineries charge to buy their products. This premium is THE driving factor behind this move as the crack spread has been increasing at a much faster rate than the price of oil or jet fuel.

The presentation the corporate office put out for this announcement stated that of the $12B spent on jet fuel in 2011, $2.2B was due to the crack price markup. By owning the refinery outright, Delta will be able to pass that savings on directly to the airline.

Dustin Thames

First Officer, B777-200

Posted onPost created on May 05 2012 18:49 ET by Kevin Cornish

Joseph, correct me if I'm wrong, but how I understood the article, it said the the fuel produced by this factory would primarily be sent to JFK and LGA. As there is already a pipeline in place from Trainer to NYC. I have no idea where they are getting the crude from. Though I also read that Delta would trade the other fuels produced (gasoline and diesel) to Connoco Phillips (i think thats who it was) for an equal amount of Jet A. I just think its funny that alot of people are bashing Delta for this thinking they will never turn a profit on the refinery and lamenting how it will affect total capacity without taking a moment to realize that this is all about Delta cutting a major cost to give them an advantage, not about selling the finished product for a proffit. Though I'm sure they will if the opportunity presents itself. Any way you cut it, Delta will almost always have a lower fuel bill than any other airline around. I think this a great move for them!

Kevin Cornish

Captain, B737-800

Posted onPost created on May 06 2012 00:56 ET by Dustin Thames

Kevin Cornish wrote:

Joseph, correct me if I'm wrong, but how I understood the article, it said the the fuel produced by this factory would primarily be sent to JFK and LGA. As there is already a pipeline in place from Trainer to NYC. I have no idea where they are getting the crude from. Though I also read that Delta would trade the other fuels produced (gasoline and diesel) to Connoco Phillips (i think thats who it was) for an equal amount of Jet A. I just think its funny that alot of people are bashing Delta for this thinking they will never turn a profit on the refinery and lamenting how it will affect total capacity without taking a moment to realize that this is all about Delta cutting a major cost to give them an advantage, not about selling the finished product for a proffit. Though I'm sure they will if the opportunity presents itself. Any way you cut it, Delta will almost always have a lower fuel bill than any other airline around. I think this a great move for them!

You are right that the pipeline from Trainer can only serve the New York market, but since Delta won't utilize all of the Trainer supply at JFK/LGA, they'll be able to trade Jet-A in New York for Jet-A at other stations in the U.S.

And yes, the bashing from so-called oil 'experts' is quite comical. They seem to have absolutely no idea what we're trying to do.

Dustin Thames

First Officer, B777-200

Posted onPost created on May 15 2012 17:59 ET by Kevin Cornish

http://online.wsj.com/article/BT-CO-20120515-704911.html

Just an update on it. Looks like the stock "experts" dont get it either. Why do people think Delta is doing this soley to make money? I'm sure Delta would like to make money from this, but that IS NOT what they're doing with it.

Kevin Cornish

Captain, B737-800

Posted onPost created on May 19 2012 21:20 ET by Dustin Thames

Kevin Cornish wrote:

http://online.wsj.com/article/BT-CO-20120515-704911.html

Just an update on it. Looks like the stock "experts" dont get it either. Why do people think Delta is doing this soley to make money? I'm sure Delta would like to make money from this, but that IS NOT what they're doing with it.

No kidding. Don't get why it's so difficult to comprehend. It's quite simple, really.

1) Refinery XYZ charges a markup on refining 'costs'.
2) Delta buys own refinery so that they don't have to pay the markup charged by XYZ.

Dustin Thames

First Officer, B777-200

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