Delta Air Lines may sell a stake in its Trainer oil refinery outside Philadelphia, six-years after it made the questionable move into the oil refining business.
The Atlanta-based carrier has engaged Barclays Capital and Jeffries to "explore opportunities to form a joint venture" with a strategic partner, Delta says. The airline plans to maintain a stake in the refinery, through its Monroe Energy subsidiary, to ensure jet fuel production levels while selling the balance of ownership in the facility.
“After several years of ownership it is natural for Delta to seek other opportunities that might exist to optimise the benefits to Delta and maximise the value of other aspects of the refinery for a potential joint venture partner," says Paul Jacobson, chief financial officer of Delta.
The airline could still decide to not sell a stake in Trainer, it says.
Delta bought Trainer for $150 million from Philips 66 in 2012. The facility, which the carrier has expanded to refine up to 205,000 barrels a day of crude oil, did not meet initial forecasts that it would yield 32% jet fuel and failed to turn an annual profit - despite management comments that it would - until 2014.
However, Trainer has produced alternative benefits for Delta and the industry. One unexpected benefit was the tightening the crack spread on jet fuel, or the difference between the price of a barrel of crude and the refined product.
Trainer has been marginally profitable for Delta since 2014, with the facility generating an $89 million profit during the first six months of 2018. The carrier's overall fuel expense for the period was $4.2 billion.
Delta aims to complete the evaluation of possible partners in Trainer by the end of the year, it says.
Source: Cirium Dashboard