25 July 2012 17:08 [Source: ICIS news]
HOUSTON (ICIS)--US-based Delta Air Lines expects its Trainer refinery in Pennsylvania to have third-quarter losses following its start up, but predicted it will be profitable by the fourth quarter of 2012, a company executive said on Wednesday
During the second quarter, Delta’s subsidiary, Monroe Energy, closed its acquisition of the 180,000 bbl/day Trainer refinery.
Delta’s CFO Paul Jacobson said that the turnaround at the refinery is progressing and is on track for the mid-September re-start date. The cost to convert the existing infrastructure in order to maximise jet fuel production is currently in line with the $100m (€83m) Delta said it would invest, Jacobson added.
With Trainer at full capacity, Delta expects to save more than $300m/year on its fuel expense.
“We expect to begin realising some of these benefits in the December quarter and into 2013,” Jacobson said.
For the second quarter of 2012, Delta reported an average fuel price of $3.37/gal, which includes 16.00 cents/gal in settled losses from its fuel hedging programme.
Since fuel costs are an airline’s biggest expense, companies use fuel hedging in order to reduce their future exposure to volatile fuel costs by setting a fixed cost for fuel.
In the first quarter, fuel costs were predicted to stay high through the second quarter. However, the rapid decline in prices in the second quarter caused the loss in Delta’s results.
The company said it expects a fuel price decline for the second half of 2012, and it projected an average fuel price of $3.09/gal and $3.05/gal for the third and fourth quarters, respectively.
This excludes any impact from the Trainer refinery, which will manage the company’s fuel expense and ensure jet fuel availability in the northeast.
Delta President Ed Bastian said the profits from owning a refinery in the northeast is something the company has been testing over the past six years.
($1 = €0.83)
Follow Anna on Twitter
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections