Delta seeks to buy oil refinery
Delta Air Lines may purchase an oil refinery, which would be the first for a major airline.
According to a report Wednesday, Delta may pay $100-150 million for the refinery in Trainer, PA, which is presently owned by ConocoPhillips.
The Atlanta, GA-based Delta, like many airlines, is currently experiencing financial troubles as fuel prices continue to climb. This has led to rival airlines declaring bankruptcy or spurring consolidations. The International Air Transport Association estimated that the global industry’s fuel bill will grow by $40 billion this year.
Delta has experienced financial recovery in recent years. This is due to its purchase of Northwest Airlines and its attempts to fly fewer planes. In 2011, the company recorded a 44 percent profit increase. However, some find the refinery purchase a bizarre move on Delta’s part.
“It’s a little like a rabbi buying a church,” said Oil Price Information Service analyst Tom Kloza. “It’s so counterintuitive.”
Delta had no comment.
“Refining is a tough business, probably tougher than the airlines,” said Aaron Brady, an analyst at the energy consulting firm IHS CERA. “These refineries on the East Coast are shutting down because they are not competitive. They are just not making money. They need investments to be reconfigured and be competitive. Why would an airline do that? That seems strange to me.”