Delta Air Lines is buying a refinery in a novel - and some say risky - attempt to slice US$300 million (S371 million) a year from its escalating jet fuel bill.
The airline said Monday that it is buying the refinery near Philadelphia for US$150 million from Phillips 66, a refining company being spun off from ConocoPhillips. The refinery has struggled to make money, and ConocoPhillips planned to shut it down if it couldn\'t find a buyer.
So why is Delta buying it? Fuel is the largest and most volatile expense for the major airlines. Nobody likes to see the price of gas climb, but for airlines consuming billions of litres a year, it can be downright crippling.
Consider this: Delta\'s planes burned through 14.76 billion litres of fuel last year, costing the airline US$11.8 billion - 36 per cent of its operating expenses.
The airline said Monday that it is buying the refinery near Philadelphia for US$150 million from Phillips 66, a refining company being spun off from ConocoPhillips. The refinery has struggled to make money, and ConocoPhillips planned to shut it down if it couldn\'t find a buyer.
So why is Delta buying it? Fuel is the largest and most volatile expense for the major airlines. Nobody likes to see the price of gas climb, but for airlines consuming billions of litres a year, it can be downright crippling.
Consider this: Delta\'s planes burned through 14.76 billion litres of fuel last year, costing the airline US$11.8 billion - 36 per cent of its operating expenses.