Trainer losses to continue in Q1 for Delta

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Delta Air Lines anticipates its Trainer Refinery to post a “modest” loss in the first quarter, continuing an almost unbroken streak of quarterly losses since the facility opened.

The modest loss will occur as one unit at the Pennsylvania facility is out of service for modifications to increase the production of high-value distillates during the quarter, says Paul Jacobson, chief financial officer of the Atlanta-based carrier, during an earnings call today.

Delta anticipates a “modest profit” at Trainer in 2014, he says.

Jacobson said the same thing about the refinery’s profitability a year ago, when discussing its guidance for 2013. Instead, it lost $116 million during the year.

Trainer reported its only profit in the third quarter, when it made $3 million for Delta.

“I think there’s been lots of learning opportunities there,” Jacobson told Airline Business on the profitability of Trainer in November. “But when you look at it overall, one of the key reasons that the profitability has fallen short of expectations is that jet crack [spreads] have come down, which is ultimately the reason for doing it.”

Delta’s fuel costs were down about $91 million in the fourth quarter compared to the same period in 2012, he says today. Trainer was a factor in this decline, he adds.

The airline is focused on increasing the supply from domestic crude oil sources, including the Bakken play in North Dakota and the Eagle Ford play in Texas, with a goal of sourcing 50% of crude needs domestically in 2014.

Jacobson says that its supply of domestic crude will average about 50,000 barrels per day in the first quarter and about 70,000 barrels per day for the full year at Trainer.

The facility has a capacity of about 185,000 barrels per day, however, it is operating below capacity while the unit is out undergoing modifications.

Delta did not comment on jet fuel production levels at Trainer, but Jacobson previously told Airline Business that it targets producing an average of about 40,000 barrels per day during the first quarter.

Trainer began production in September 2012.