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Delta’s oil refinery sinks to loss in 1H 2016

The refinery was profitable in both 2014 and 2015. ( Ещё...

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Alan Tegel 4
My 2 cents ... anything they can do to have a predictable cost structure for fuel is probably the most important thing. If they make money it is even better; however, given the volatility in the world the risk of cost overruns in a factory like this is far less then one where you don't know what is going to happen.

Plus ... the factory has american workers in an american factory .....
joel wiley 3
So, Delta's refinery entity went $38 mil in the red for the 1st half of the year.
Delta's airplane entity bought fuel that cost $38 mil less than the production cost.
What is the overall effect on the total Delta bottom line. Am reminded of the test question 'if a cow weighs 3000 pounds on 4 legs, how much does it weigh on 3 legs?
Exactly! We're just talking accounting.
canuck44 1
And for tax purposes a loss will offset any taxes paid on profits the last two years and might even qualify them for a government grant or two. That is a great aspect of selling your product to yourself....the price can be "flexible".
patrick baker 2
I was fascinated with the news about delta purchasing this refinery several years ago, for it seemed to be clever and farsighted to do so then. Now I wonder if delta should have gone further by adding some production oil fields. By purchasing more of the production elements, so as to get an even better price and supply certainty.
R J 0
Delta has a hard enough time just running an airline, I think they are better off sticking to one thing.
canuck44 4
Having just experiencing United's "upgraded" service, Delta looks pretty good. Part of United's upgrade seems to be trading corporate watches for calendars.
patrick baker 2
in fact, delta runs a very good airline, and is smart enough to look for enhancements and improvements throughout its operations. Refinery is a smart thing, and over ten or twenty years it will continue to impress bottom liners everywhere. Nobody sticks to one thing, unless they lack imagination and nerve to step out and grow smarter.
James Wilson Jr 2
Delta would be better if someone would show the pilots the correct airport to land at.
canuck44 2
Tough call when the price of oil is volatile. They got burned by making a bad call on predicting prices on the futures market or hedging. Many others did as well as oil fell well below their hedge prices.

Once their bad hedges are used up if they get deliveries at current prices (or the earlier lower ones) this should return to profitability. At the moment there is a glut of oil available, but it doesn't take much to disrupt the market and push up prices.


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