Delta Air Lines Taps Own Refinery for Jet to Offset High Fuel Price

Delta Air Lines on Wednesday said it expects jet fuel supplied by its wholly owned 208,000 b/d Trainer, Pa., oil refinery to provide a $300 million benefit in the second quarter, partially offsetting sharply higher fuel prices due to the Iran war.

In its Q1 earnings announcement, the U.S. air carrier said it expects the refinery benefit to help lower its projected all-in fuel price to about $4.30/gal for the quarter ending June 30, based on April 2 prices.

Dan Janki, Delta’s chief operating officer, told analysts on the earnings call that even with the refinery’s help, the airline would still be paying double last year’s average fuel price. The company paid more than $2 billion in additional fuel expense for Q1, Janki added.

The refinery, located about 10 miles southwest of Philadelphia, owns pipelines and other transportation assets that deliver jet fuel to Delta’s Northeast hubs, including New York’s John F. Kennedy International and LaGuardia airports.

In addition to making its own jet fuel, the refinery, which Delta bought in 2012 and operates through its Monroe Energy subsidiary, exchanges its non-jet fuel products with third parties for additional jet fuel. Together, in-house production and fuel swaps have provided Delta with about 200,000 b/d of jet fuel, or about 75% of its total demand.

Reporting by Frank Tang, ftang@opisnet.com; Editing by Allegra Fradkin, afradkin@opisnet.com