Southwest announced that they're pushing back 737-800 deliveries today. I think it's because they're keeping the 717s. We won't need them anyway if we pass this TA.

Since Ed admitted this TA was about RJs today, I'll repost this:

 

Commenting on your own post? really????

 

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.

 

No. Reposted for truthiness. Looks pretty spot on to me.

 

I've seen worse.

Do you disagree with my logic?

 

Well I could be wrong, but I don't ever remember it taking the full 7 days in previous section 6 negotiations. They don't have to review the whole contract, just the changes.

 

I don't think they do but they didn't buy the refinery for profit. I think it costs X amount to refine the crude. Given that the crack spread on gasoline is well below the crack spread for Jet A, it makes sense that delta will cover more of the refinery costs by refining more Jet A. But Delta has to put $100 million in to do that. Those upgrades will change X. We'd know more if we knew what the Nelson Complexity Index wold change to from it's current 8. However, if they can cover their refining costs for less than the Jet A crack spread, they win. If not, they lose.

 

About the 717... Before more undergarments are needlesslessly trashed... Don't you think it's possible to distinguish between actual mainline fleet and rumored fleet when establishing ratios????

 

You're right.. that IS the question. Let's play a little game though.

What if, PSX's problem with that refinery was not the actual refining process, but rather the transportation of that finished product. Because transportation prices are so volatile (for whatever reason) that they couldn't count on consistency for that transportation. So... PSX decides to go out and buy Joe's tanker fleet so that they can control the costs of that part of the business.

Now Joe.. who's core business is transporting goods around the world, was having trouble because pipeline transportation prices were cutting too hard into his business. He just couldn't make it work. So here comes PSX who is in the refining business, but needs Joe's services to move product. They (PSX) don't necessarily care whether the trucking business turns a profit, but rather just control the cost of that part of the business.. so they decide to make Joe an offer for his fleet. They hire all his drivers, rebuild the engines and tanks on the tankers so that they can carry extra fuel.. etc. They tell American Pipeline Corporation to get bent, that they now have a better way to move their product. Wall Street goes nuts because what on earth does a refining company know about driving trucks??

Now PSX has just brought into their control, a piece of the puzzle that heretofore was NOT in their control yet was so vital to their bottom line so as to render their bottom line flirting with red ink, and fighting against it's competition where they might be at a disadvantage. They aren't driving trucks... they aren't scheduling or maintaining trucks, but they have cut out the middleman.. American Pipeline Corporation. Joe was retained as CEO of the trucking division, and all his drivers are now working for PSX. (They get discounted gasoline for their POVs too)

How would this scenario be any different?

 

I wonder how much cost goes into transportating each barrel of oil to the consumer, and how much of that cost is taken out of the profit.

If we trade our future position, swapping inventory supplies, then we reduce transportation expenses dramatically. If this is the theorized plan, we may be on to something.