Air Travel News
Delta goes into the jet fuel business
What’s a struggling airline to do when it’s being beaten down by the ever-rising cost of jet fuel? Start buying fuel from itself.
Delta Air Lines said its wholly-owned subsidiary Monroe Energy has agreed to purchase a refinery near Philadelphia for $150 million from Phillips 66. The Monroe unit will also spend $100 million converting the plant’s infrastructure to maximize the production of jet fuel, and will enter into sourcing and marketing pacts with Phillips 66 and BP, Delta said.
“The acquisition includes pipelines and transportation assets that will provide access to the delivery network for jet fuel reaching Delta’s operations throughout the Northeast, including its hubs at LaGuardia and JFK,” the airline said.
Delta CEO said the refinery purchase “is an innovative approach to managing our largest expense. This modest investment, the equivalent of the list price of a new widebody aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast.”
One energy analyst told the aviation journal Air Transport World that the refinery purchase will essentially give Delta a big cost advantage over its competitors, especially in the New York market.