HSLD, one of the founders, closed it. Basically the thread had run it's course and there's info in there that would not be beneficial to pilots likely now fighting for their jobs.

 

Didn't NWA used to own the Narita layover hotel?

 

NW and KLM owned (own) it.

 

Um why?

And don't give me that crap about seniority jumping outta base. Every senior pilot would have the choice to bid out of base to do the same thing. It's just a gamble. If you choose to gamble with your seniority you should be able to.

 

That was a great 411, and I'm glad he's our guy as well. The takeaway for me is that the refinery and hedging are tools to control fuel cost in the same way insurance reduces financial exposure for unforseen events.

Prior to this Delta's fuel strategy has been using so called collars, a type of hedge that limits upward and downward exposure while limiting expense.

The refinery takes this one step further. It doesn't matter what comes out of the refinery and I doubt much if any "jet fuel" will ever make it from that refinery into a Delta jet. It's more about having a tool to fine tune hedges minimizing risk and maximizing yield.

No other player in the oil trading space, absent hedges, benefits from a market downturn the way Delta does. Now can we please hire some Wall Street guy to tell Delta to become just as vertically integrated and bring more flying in-house...

Cheers
George

 

I think they're different things. Hotels and rental cars are attempts to expand your business opportunities with the danger of getting too far outside your core business. The refinery is an attempt to control your supply chain. It's definitely thinking outside the box. We either end up with a refinery or the speculators get nervous and look for other opportunities............or we get our a$$ kicked

 

agree...............

 

NWA did own the hotel and property in downtown Tokyo...different deal.

 

I would agree that it is an "attempt" to control the chain, but if it is a good deal there should be more groups doing it. However knowing this group, I'm sure they have the up and downside covered.

 

Plus hotels and rental car companies actually compete fairly without an entire paper industry around them that bids them up and trades rooms and cars on paper dozens of times, marking them up as they go, so crackberry day traders can make big money contributing nothing to society. If anything, hotels and rental cars actually help the airline industry sell seats because as a rule their goods and services are very cheap and competitive. The only industry that has sprung up around them are low price clearing houses and last minute good deal services.

Compare and contrast priceline and many others to the massive day trader paper mark up crowd that's now threatening to cull refining capacity to put even more upwards pressure on gas.

This seems like a really smart idea in theory, if its done right. Even then, and especially if others follow suit, that could deal a big blow to at least the crack spread portion of the insane petroleum mark ups. If it does, even a well run refinery could appear to be a money loser at that point...but that's probably part of the goal. If it depresses the end price of jet-A to the point that the refinery itself isn't making money or even losing money, then by default we're getting jet fuel a lot cheaper.

Then it will be a constant struggle to stay the course because the quarterly bonus monger hatchet men will see an opportunity to get rid of an isolated paper loss on the balance sheet today for a nice quarterly result tomorrow and then back to where we are now with the over all gas manipulation mark ups. The same logic that says to pull flights out of any market you're not "making money on". While that sounds great, it puts you in the position that any competitor can seat dump/cherry pick anything in your network they want to and as long as it hurts your performance you bail. You have to stick to those markets, and sometimes even double down and make them bleed more, because to instantly submit and yield market share at a competitors discretion is exactly how today's cutsey start up LCC in endless growth mode with a massive fantasy order book ends up becoming tomorrow's SWA.

The refinery thing could be a good long term deal, if its done right, even if the nose of wall street doesn't like the perceived line item profit lines its snorting that quarter. Being done right is a pretty big if though.