NEW YORK (CNNMoney) -- Delta Air Lines announced plans Monday to purchase an oil refinery outside of Philadelphia, a novel approach to reducing its fuel costs.
Delta (DAL, Fortune 500) is buying the Trainer refinery for $150 million, and intends to spend $100 million to convert the refinery's existing infrastructure in order to maximize jet fuel production, the company said in a statement. The site offers easy access to New York airports and Delta hubs La Guardia and JFK.
"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," Delta CEO Richard Anderson said. "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."
The refinery was formerly owned by ConocoPhillips (COP, Fortune 500), which shuttered it 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.
No comments:
Post a Comment