Delta board signs off on deal to buy Trainer refinery
Financial news channel CNBC is reporting that the airline's board has OKed an effort to buy the ConocoPhillips' refinery in Delaware County.
Delta board signs off on deal to buy Trainer refinery
Filed Under: Energy, Utilities
Mike Armstrong, Inquirer Columnist
Is Delta Air Lines closer to buying ConocoPhillips' idle oil refinery in Trainer?
That's what CNBC is reporting here.
CNBC Kate Kelly cited an unidentified source as saying the Delta board has "signed off" on the acquisition of the refinery on the Delaware River in Delaware County in a deal worth $100 million to $125 million.
Why does an airline want to buy a refinery that an oil company said it wasn't able to operate profitably? Two words: jet fuel. Delta spent about $12 billion on fuel for its planes in 2011, and the airline apparently thinks it can save 10 percent by owning its own refinery.
Idled since September, the Trainer complex has the capacity to refine 185,000 barrels of crude oil per day.
Contacted today, Delta Air Lines said it had no commment on the report.
Comments (19)
Why does an airline want to buy a refinery that an oil company said it wasn't able to operate profitably?.......Thats right, corporate PR statements are always 100% truth. How silly of anyone to think otherwise— storebrandmayonnaise- If this is so, it's jobs for a depressed region of the county. And for the former owner - the CEO of this division was to receive a 35 million dollar bonus if this refinery was sold by a certain date. Um, I would guesstimate the profits were plenty! If you can't refine oil, the price of gas rises. Think about that, Folks.— Vinnie
- If it smells like a rat looks like a rat..GEE?? So do those guys get their Jobs back?? thats what people want to know get on it, get some details!— FoRealTruth
- I think that they should keep that evil oil refinery closed. All it does is produce oil, jobs, and taxes. AND it will be owned by an evil coporation. let all of those laid off refinery workers look for a green technology job.— DeerHunter123456
- Ok, you better be driving an electric car...and you better not use a propane grill, cause I used to make propane at the Trainer Refinery.... and just to set the record straight, Refineries don't produce oil, they refine it into gasoline, jet fuel, kerosene, propane, butane, and numerous gasoline blending products. — upperchi
- Makes you proud to fly Delta. Anyone that thinks this is bad for the Trainer area is sentenced to take Economics 101.— drbob1
- Good for all the trolls who live in Trainer I guess.— beegal99
- Give it up, the jobs are gone for good.— Louie DePalma
- You are a real tool box, you know that? How about a little sensitivity. I happen to be one of the laid off workers, a single mother with three kids. And guess what, I guarantee you that we will be back. — upperchi
It is good for everyone. The lack of profitability is a relative term. Since jets can not fly without fuel, it does not matter to the airline. All they have to do is run it without a margin of productivity that does not price their customers tickets out of the market. They don't need to run the place into the ground, they do need to maintain it so that it will produce jet fuel in enough quantities to give them a competitive edge in the air travel market.- Delta doesn't need it to be profitable. It can be less efficient than newer refineries, but when they cut out the profits of the oil companies, they still come out on top.— soybot
- Virgin and Southwest airlines were laughed at five yrs ago when they signed long term contracts locking in their jet fuel prices. That let them be profitable these past few years. Those agreements have run out now. But Delta is probably making a smart move here.— Tiller
- Good news. Immensely better than the alternative. Way to save jobs Delta.— SilliBilli
- I still can't figure out how JPMorgan will make money here, unless they have cut some unbelievable deal with Nigerian producers. They will sell the jet fuel to Delta at what amounts to a discount, and then will have to sell the balance of the product roster (you can't just make jet fuel from crude) at a higher than market profit. The refiners couldn't do that, what makes JPMorgan think that they can? Only time will tell now.— UKnowWho
- SPhillyRob - Delta has hubs and JFK and LGA, and operations at BWI, BOS and DCA. Plus jet fuel is a commodity so it doesn't really matter that their operations aren't nearby, the fuel produced here could be traded on the market for fuel produced near Atlanta.— Politburo
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Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980.
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