"A new report from Reuters says that Delta Air Lines Inc. (DAL) is planning to sell gasoline and diesel. The sales are hoped to offset the losses incurred by Delta’s Monroe Energy subsidiary.
In 2012, Delta purchased a shuttered Pennsylvania refinery, according to The New York Times. The airline invested $250 million to purchase and convert the refinery for jet fuel production. Delta had estimated it would save $300 million per year on the cost of jet fuel.
The same year, Monroe reported a loss of $63 million. In 2013, Monroe lost $116 million. The refinery began operating profitably in 2014 and earned $96 million. This profit increased to $290 million in 2015. However, during the first nine months of 2016, Delta’s refinery lost $83 million, according to Reuters.
In response, Reuters reports that the refinery will increase sales by marketing gasoline and diesel. Currently, Monroe is swapping its motor fuel with Phillips 66 in return for jet fuel. That agreement is set to expire in 2017.
By selling gasoline and diesel directly, Delta’s refinery will be able to adjust its motor fuel production based on market conditions. By changing its output to maximize margins, Delta can increase profit, according to Reuters."