I agree with this. How much did they invest on GOL? 150 million is peanuts and would not precipitate a need for adding 500ln-900bln to the pilot costs. Its something else.

On a side note, I have been sitting here today pondering RA's comments about LHR. I have been focusing on OneWorld and BA, but his words could also be an indication that they want to go ahead and buy Singapore's 49% stake in Virgin Atlantic. Now that would require financing, and that would precipitate a desire for a quick deal with the pilots.

 

bravo...probably a good time to buy in that arena

 

Exactly. We need to have outside the box thinking in this group to see where the airline is headed, and this is exactly the type of thinking and maneuvering I see DAL doing.

AMR assets are important, but so if feed to those assets. From a corporate perspective VA would be critical in that. So would JAL and beyond access in HND.

The ball is rolling guys, we need to see over two or three hills down the road.

 

It's official, refinery announcement is on the Deltanet.

 

smart move. I do think that their valuation of a 300m a year savings is a little low.

 

Why buy when you can have a revenue sharing JV?

If we keep focusing on RJs we might miss that this is currently permitted:

• 4 flights/week to LHR -> check.
• 175 seats on every VA flight -> approved!

The 76 seat RJ issue looks trivial if you picture what our current PWA permits for revenue sharing JVs...

How about 175 seats on every Emirates flight?

Cheers
George

 

That's all we need, more JV outsourcing.

 

Also, ALK and HAA are ALPA carriers and an acquisition would require a new agreement between the pilots, us and DAL. For this reason I do not think the company's motivation is these two carrier, not yet. There will come a time when DAL moves on one or both of them, but this agreement is not their catalyst. (just my hunch)

 

Would buying that much of VA require some scope relief on our part????

Here is part of the definition of "Control" from Section 1.

Control” for the purposes of Section 1, will exist by entity A over entity B, only if A,
whether directly or indirectly through the control of other entities:
a. owns securities that constitute and/or are exchangeable into, exercisable for or
convertible into more than:
1) 30 percent (49 percent with respect to the Company’s interest in a foreign air
carrier) of B’s outstanding common stock, or if stock in addition to common stock
has voting power,

Denny

 

Delta Subsidiary to Acquire Trainer Refinery Complex - Yahoo! Finance

ATLANTA, April 30, 2012 /PRNewswire/ -- Delta Air Lines (DAL) wholly-owned subsidiary, Monroe Energy LLC, has reached agreement with Phillips 66 (NYSE: PSX-WI) to acquire the Trainer refinery complex south of Philadelphia. As part of the transaction, Monroe will enter into strategic sourcing and marketing agreements with BP (NYSE: BP) and Phillips 66. The acquisition includes pipelines and transportation assets that will provide access to the delivery network for jet fuel reaching Delta's operations throughout the Northeast, including its hubs at LaGuardia and JFK.
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After receipt of $30 million in state government assistance for job creation and infrastructure improvement from the Commonwealth of Pennsylvania, Monroe's investment to acquire the refinery will be $150 million, and Monroe will spend $100 million to convert the existing infrastructure to maximize jet fuel production. Production at the refinery combined with multi-year agreements to exchange gasoline, diesel, and other refined products from the refinery for jet fuel will provide 80 percent of Delta's jet fuel needs in the United States.
"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," said Richard Anderson, Delta's chief executive officer. "This modest investment, the equivalent of the list price of a new widebody aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast. This strategy is aligned with the moves we have made to build a stronger airline for our shareholders, employees and customers."
Monroe is partnering with leading energy companies to supply crude oil and receive jet fuel in exchange for Trainer's non-jet fuel outputs. Under a three-year agreement, BP will supply the crude oil to be refined at the facility. Monroe Energy will exchange gasoline and other refined products from Trainer for jet fuel from Phillips 66 and BP elsewhere in the country through multi-year agreements.
The Commonwealth of Pennsylvania and Delaware County have agreed to provide assistance to ensure the refinery continues its economic contribution to the region.
"By working with world class partners like BP and Phillips 66, we can benefit from their expertise in energy sourcing and product distribution," said Ed Bastian, Delta's president. "We are also pleased to partner with Governor Corbett and the Commonwealth of Pennsylvania, the Pennsylvania Congressional delegation, and Delaware County to create jobs and economic growth for the region while generating substantial fuel savings for Delta."
"This supply and off-take agreement demonstrates BP's continued commitment to supply U.S. customers with the feedstock and products they need. We are delighted to bring BP's global scale and access to the world's energy markets to this strategic agreement with Delta," said Paul Reed, CEO, Integrated Supply and Trading, BP.
Trainer will be run by a seasoned leadership team headed by 25-year refinery veteran Jeffrey Warmann. In his last position as refinery manager for Murphy Oil USA, Inc.'s Meraux, La. refinery, Warmann led Meraux's restructuring efforts, increasing refinery output by more than 30 percent and significantly improving Meraux's profitability.
Monroe expects to close on the acquisition in the first half of 2012. Jet fuel production is expected to begin during the third quarter, and changes to the plant infrastructure to increase jet fuel production would be complete by the end of the third quarter, resulting in expected 2012 fuel savings of more than $100 million.
"We expect the Trainer acquisition to be accretive to Delta's earnings, expand our margins, and to fully recover our investment in the first year of operations," said Paul Jacobson, Delta's chief financial officer. "We look forward to closing this transaction and moving quickly to begin capturing its benefits."