Originally Posted by
tsquare
Sorry, but I believe (it is my opinion) that WS folks who do not see the reason behind DAL's acquisition of the refinery are clueless. It is ABSOLUTELY part of the core business. It is NOT a profit center. Fuel is $12 billion/year (or something like that). Any significant reduction in that cost is directly transferred to the bottom line. Hedge fund managers and WS types look for the quick kill, and therefore have a certain myopic view. A $300 million reduction (2.5%) in the number one cost to a company in an industry that has thin operating margins like the airline industry is damn smart business. Besides, we are not running the refining operation... geeeez
I agree with you. However, what concerns WS about the refinery is that ConocoPhillips, whose expertise is refining oil, couldn't produce a profit. And now DAL, whose core business is not refining oil, is telling the market they can buy, contract it out, and turn a profit/lower the price of jet fuel.
Does DAL management know something that the oil refining experts don't?
That is the $250 million question.