Originally Posted by
sailingfun
Management has faced critism in financial circles over the refinery and is working hard to justify it. Listen again however to his statement on paying off the refinery. He talks only of initial investment. He does not talk about the cost to upgrade the refinery or the losses it sustained over several years. They are a ways from paying off those items. With the recent plunge in oil they may get there but it has not happened yet. The initial investment was only 150 million.
My understanding is that the "impact on the profitability" (not the same as "profit and loss") of the refinery is not easy to read in the 10K reports.
The operation at the refinery the airline owns lost $50m, but the airline's savings in fuel is only expressed as an average cost per gallon. Delta was something like 8-cents better than peers for the year. Part of that was a better-than-peers tax payout for JetA because you don't pay tax on fuel you give to yourself. That benefit was not expressed as a separate item in the reports.
Even when the price of oil plunges, the amount of tax on a gallon of JetA does not. The tax benefit of giving it to ourselves is real, and not required to be reported.