Delta Air Lines announced plans Monday to purchase an oil refinery
outside of Philadelphia, a novel approach to reducing its fuel costs.
A Delta spokesman said the company believes the purchase is the first of its kind by a major U.S. airline.
Delta (DAL, Fortune 500) will buy the Trainer refinery for $150 million from Phillips 66 (PSXWI), a company that is set to be spun off from energy firm ConocoPhillips (COP, Fortune 500) on Tuesday. The purchase is expected to be finalized by the end of June.
"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," Delta CEO Richard Anderson said in a statement. "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."
Delta said it intends to spend $100 million to convert the refinery's existing infrastructure in order to maximize jet fuel production. The site, it noted, offers easy access to New York airports and Delta hubs LaGuardia and JFK.
ConocoPhillips shuttered the Trainer refinery in the fall. Refineries throughout the Northeast have been suffering because they are old and cannot process the cheaper, heavier types of oil that are increasingly in supply from Canada's oil sands, Saudi Arabia, Venezuela and elsewhere.
Read more: http://money.cnn.com/2012/04/30/news/companies/delta-oil-refinery/index.htm?iid=Lead
A Delta spokesman said the company believes the purchase is the first of its kind by a major U.S. airline.
Delta (DAL, Fortune 500) will buy the Trainer refinery for $150 million from Phillips 66 (PSXWI), a company that is set to be spun off from energy firm ConocoPhillips (COP, Fortune 500) on Tuesday. The purchase is expected to be finalized by the end of June.
"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," Delta CEO Richard Anderson said in a statement. "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."
Delta said it intends to spend $100 million to convert the refinery's existing infrastructure in order to maximize jet fuel production. The site, it noted, offers easy access to New York airports and Delta hubs LaGuardia and JFK.
ConocoPhillips shuttered the Trainer refinery in the fall. Refineries throughout the Northeast have been suffering because they are old and cannot process the cheaper, heavier types of oil that are increasingly in supply from Canada's oil sands, Saudi Arabia, Venezuela and elsewhere.
Read more: http://money.cnn.com/2012/04/30/news/companies/delta-oil-refinery/index.htm?iid=Lead
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