Delta Plans To Produce Its Own Jet Fuel | Aero-News Network
Aero-News Network
RSS icon RSS feed
podcast icon MP3 podcast
Subscribe Aero-News e-mail Newsletter Subscribe

Airborne Unlimited -- Recent Daily Episodes

Episode Date

AMA Drone Report

Airborne-Monday

Airborne-Tuesday

Airborne-Wednesday

Airborne-Thursday

Airborne-Friday

Airborne-Unmanned w/AUVSI

Airborne On ANN

AMA 08.17.17

Airborne 08.21.17

Airborne 08.22.17

Airborne 08.23.17

Airborne 08.24.17

Airborne 08.18.17

Airborne-Unmanned 08.22.17

Airborne-YouTube

AMA 08.17.17

Airborne 08.21.17

Airborne 08.22.17

Airborne 08.23.17

Airborne 08.24.17

Airborne 08.18.17

Airborne-Unmanned 08.22.17

NEW!!! 2017 AirVenture Innovation Preview -- YouTube Presentation / Vimeo Presentation

Wed, May 02, 2012

Delta Plans To Produce Its Own Jet Fuel

Airline Buys A Refinery To Combat Rising Fuel Costs

Delta Airlines has decided on a novel approach to rising fuel costs and has announced the purchase of its own oil refinery. Delta will spend a reported $150 million for the Conoco/Phillips 66 refinery in Trainer, PA. The airline plans to spend another $100 million in improvements to the refinery in order to increase its output of jet fuel. The State of Pennsylvania will kick in an addition $30 million for job creation.

According to a report in USA Today, fuel makes up between 25 and 40 percent of an airline’s costs, and soaring prices in the past several months have cut deeply into industry profits and led to higher fares for the flying public. "Acquiring the Trainer refinery is an innovative approach to managing our largest expense," Richard Anderson, Delta's CEO, said in a statement. Anderson said the "modest investment," which he likened to the cost of a new wide-body jet, would cut the airline's fuel bill by $300 million a year.

Beyond producing its own jet fuel, Delta plans to sell or trade off the diesel, gasoline and other petroleum products it will produce for additional jet fuel. Together these moves are expected to fulfill about 80% of Delta’s fuel needs in the U.S., the airline said.

Some analysts cautioned that refineries are hard to make profitable, and the airline is taking on a venture that is not its primary expertise. But it’s not as if Delta’s upper middle managers are suddenly going to be reporting to work wearing hard hats. The airline is expected to hire a refinery manager to run the unit. "This investment isn't risk free," said Henry Harteveldt, an airline and travel industry analyst. "It's possible that jet fuel costs could fall. And this is clearly not part of the airline's core business."

But he  praised the purchase as a creative way to deal with an unpredictable and escalating cost. "The investment is an interesting defensive move," Harteveldt said. "Based on Delta's estimates, the investment should pay for itself in slightly more than one year's time, which means it's a net positive for Delta after that."

The key question now is, in an industry that tends to play a lot of follow the leader, will other airlines follow suit and seek their own fuel production facility? The purchase of the refinery is expected to be completed by June with production starting in the next three months.

FMI: www.delta.com, www.conocophillips.com

Advertisement

More News

RFP: ANN Seeking New Site/Facility For Major Studio Upgrade

It's Official: Aggressive Upgrades For New Airborne Programs WILL Require New Digs It's been in development for years, but we're getting to a point where we think we can pull off s>[...]

AMA Drone Report 08.17.17: MULTI-GP Int'l Open, Drone v Chicago, Reno Drone Race

Also: Yuneec Extended Service Plan, UAV on A/C Carrier, Blue Angels Incident, Drone Operator Safety Act MultiGP’s 2017 MultiGP International Open, conducted on the grounds of>[...]

Airborne-Unmanned 08.22.17: Flightwave, Robotic Skies, Sky Hopper Cargo Drone

Also: Kratos Mako, Dronecode's Meier, Virginia Tech, Edwards AFB, Department Of The Interior A California-based startup company plans to introduce a new, long-range, high-endurance>[...]

Airborne 08.22.17: Privatization $$$, A Hangar for Doc, Wingsuit Jet

Also: Next X-37B Mission, Aero-Calendar, Ryanair, Citation X, Aurora, Commercial Spaceflight Federation, A&P Designation ATC Privatization will be even costlier than thought...>[...]

Airborne 08.21.17: CAF's Brown Resigns, EA700 Prototype, Heli Sales Report

Also: KSFO Night Landings, Kitfox S7 Speedster, USGS, Spirit Pilots, Kratos Mako, NASA Flight Suits, CAW Five Stephan C. Brown has resigned from his post as president/CEO of the Co>[...]

blog comments powered by Disqus



Advertisement

Advertisement

Podcasts

Advertisement

© 2007 - 2017 Web Development & Design by Pauli Systems, LC